Case: Gulabchand Chhotalal Parikh Vs. State Of Bombay (Now Gujarat)

8. The facts leading to the appeal are these. The appellant stood surety for a number of contractors who had taken contracts in 1947 for felling timber trees and removing timber in various forests in the erstwhile State of Baria. The contracts were taken as a result of auctions which took place under the Conditions of Auction Sale of Forests in the Baria State in the Samvat year 2002 corresponding to 1945-46 A.D., though in the plaint these conditions were referred to as Forest Auction Rules. On April 7, 1948, the appellant presented an application to the Baria State stating therein that certain brokers owed money to the various contractors mentioned in the application and praying that they be restrained to pay the amount due to the contractors until further orders and that those brokers and contractors be also restrained from directly removing the contractors jungle goods stored in the godowns at Piplod, Baria and Limkheda without the permission of the State Government. It was further mentioned in the application that if those contractors would arrive at an arrangement with him and carry out the vahivat, he would do the needful in that behalf. On this application, it appears, the State Government issued notices to the contractors stating therein that the surety, i.e., the appellant, had moved, under cl. 8 of the Conditions of the Auction Sale of jungle goods for attachment of their goods that be lying in the godowns at Baria, Piplod and Limkheda in the State and the debts or other movable or immovable property belonging to them and for delivering the same to him and directed the contractors not to sell, mortgage, gift away or otherwise dispose of whatever movable or immovable property they had in the State without the permission of the State.9. Subsequently, the State of Baria merged with the State of Bombay on June 10, 1948. Thereafter, the contractors were allowed by the Government to remove the materials on certain conditions.10. The appellant presented a writ petition under Article 226 of the Constitution to the High Court of Bombay. That petition is not printed in the appeal record. It was Civil Application No. 261 of 1952. It, along with two other applications, C. As. Nos. 260 and 376 of 1952, was disposed of by a common judgment in C. A. 260 of 1952 which if Ex. P. 194. The parties agree that what was alleged and what was prayed for by the appellant in his petition could be gathered from the order Ex. P. 194. The reply filed by the parties in that petition is Ex. P. 196 and gives the case of the opposite party with respect to the allegations of the appellant in his petition. It, however, appears from the order of the High Court on that writ petition that the reliefs claimed were a direction to the respondents, i.e., the State of Bombay and the Mamlatdar of Baria Taluk to raise the attachment levied on Municipal Nos. 728 and 642 of Deogad Baria, the issue of a writ of mandamus or directions under Art. 226 of the Constitution prohibiting them from selling those Municipal numbers and from proceeding with the auction sale of those properties on February 15, 1952 or on any other date. The appellant had alleged in that petition that the attached properties of the contractors were allowed to be sold by the contractors without the knowledge and consent of the appellant, that the sale was unauthorised and contrary to the terms of the attachment levied by the State of that, therefore, it had put an end to the liability of the appellants under their surety bonds.11. It was urged for the appellant at the hearing of that petition that since the State allowed the contractors to sell their own properties the appellant had been discharged from his suretyship in respect of the said contractors and that the State could no longer claim to recover from him the balance due from the said contractors. The writ application was presented because, in default of the contractors to pay the balance amount due from them the Forest Officers of the Government of Bombay had moved the Revenue Officers to recover the said amount from the appellant who was the surety as an arrear of land revenue. The revenue authorities took steps to attach the immovable properties of the appellant and that led the appellant to present that petition.12. The contentions for the State of Bombay and the Mamlatdar in the writ proceedingsThe petition was misconceived as not maintainable and there was no case for the issue of a writ of mandamus because the proper course for the appellant was to redress his so called grievance by proceeding according to the ordinary law through the Municipal Courts.2. There were no Baria State Forest Auction Rules. What the Baria State Authorities laid down were the conditions of such action sales and the appellants reference to those conditions as rules was not correct.3. The contractors had to furnish a surety who also had to execute a separa and independent agreement with the State in the Form approved by it. The appellant stood surety for the contractors and executed the necessary agreements.4. The said agreements stipulated three important conditions (i) that the surety will pay the instalment amount as stipulated; (ii) that if the instalments were not paid on due dates, he will pay interest at one pie per rupee per day and (iii) that if he fails to pay the instalment amounts and the interest, the State will be at liberty to recover the same from any of his properties and from his successors and assignees.5. Condition No. 8 of the conditions for auction sales of forests was :"So long as the contractor has not paid the deposit or the confirmed sale price in full into the Treasury or to the Surety, the Surety shall, at any time present an application to the Treasury Officer for the recovery of an amount required to discharge his liability in connection with the confirmed sale price or of the amount paid by him without filing a suit for the same in a civil Court. In that case the property, effects and debts of the contractor that may be within the territory of the State shall, as in the case of land revenue, be attached and auctioned at the cost and risk of the contractor and out of the sale proceeds realised at the auction, the amount due to the surety or an amount equivalent to the amount required to discharge his liability shall be paid to the Surety."6. The appellant had not applied for attachment and sale of all the properties and outstandings of the contractors but had requested the State to see that the brokers did not pay their dues to the contractors that the materials in the depots were not directly disposed of by the contractors and that the contractors carried on the business after settling with the petitioner.7. The State issued the necessary injunction orders of attachment, even though the appellants request, dated April 7, was not at all consistent with the provisions of sale condition No. 8.8. In order to obviate the complete hold up of the timber trade, a system was devised whereby the contractors were allowed to dispose of the stock of timber, if the sureties consented to its removal and the contractors guaranteed to pay the price realised to the sureties concerned.9. According to the record, the appellant had requested the State to release the goods of certain contractors by his letters, dated May 19 and 22, of 1948. This scheme adopted by the State of Baria was solely motivated in view of the inevitable delay on account of the sureties first realising the amount and then depositing the amount in the Government treasury and the appellant was aware of that slight modification in the procedure.10. At a meeting convened by the Divisional Forest Officer, Panchmahals, Godhra, on August 1, 1948, the appellant was present and it was decided that the contractors be permitted to remove the material on payment of the price of the materials sold.11. It was denied that as a result of the alleged action of the Forest Officers, the petitioners security was considerably diminished and the eventual remedy of the petitioner against the contractors was very much impaired and the petitioner was discharged from his suretyship in respect of the said contracts.The High Court dismissed the writ petition on July 22, 1952 holding that there was no substance in the contention that the petitioners had been discharged from their liability as sureties. The sole basis on which the contention was raised was that the contractors were permitted by the State to sell their properties which were under attachment contrary to the terms of the attachment, in view of the sales being held without the knowledge and consent of the appellant. The High Court held that it was a wrong assumption of the appellant that the attached goods were not to be sold without his knowledge and consent. The prayer made by the appellant in his application, dated April 7, 1948 did not include a prayer to the effect that the attached goods be not sold without his knowledge and consent. The High Court, therefore held that the plea that the sale absolved the appellant from his liability as surety could not be accepted.14. We are no more concerned with the other point raised by the writ petition to the effect that the revenue authorities were not entitled to recover the amount due from the appellant under the summary procedure prescribed by the Land Revenue Code. The High Court did not accept this contention.15. On August 29, 1952, the appellant instituted the suit which has given rise to this appeal. It was alleged that the Baria State had its own laws and rules and regulations, that the contractors of that State were bound to act according to them, that the Baria State had rules known as Forest auction rules for the auction of timber of the forests and auctions were held according to those rules and that the people acted on the understanding that the auctions and the surety bonds were in pursuance of the said Rules. Auctions were held in September-October 1947. The appellant stood surety with respect to the 11 contracts mentioned in para 2 of the plaint. The alleged rule No. 8 (condition No. 8 of the Forest Auction Conditions) was quoted in the plaint. The appellant executed all the surety bonds on the understanding that the Baria State Forest Auction Rules were the basis of the auction sales and that the surely bonds were in accordance with those rules. Due to certain reasons mentioned in para 5 of the plaint, the appellant, on or about April 13, 1948, applies to the Baria State praying for the assets and properties of the contractors to be taken in attachment and sold and for facilities being made available to him to fulfil his liabilities under the suretybonds. The Baria State authorities attached the assets and properties of the Contractors as prayed. It may be mentioned here that in his deposition the appellant admitted the application, Ex. 195, dated April 7, 1948, to be the application he had presented for the aforesaid purpose.16. It was further alleged in the plaint that subsequent to the merger of the Baria State with the Bombay State on October 6, 1948, the Bombay State Forest Authorities, without asking the plaintiff or without his consent, allowed the said contractors to remove and sell their respective teak and sundry goods which were taken in attachment and thus behaving in contravention of the attachment made in his interest and put an end to his security and that according to law the plaintiff thus became discharged of liability as surety for the said contractors. Another reason for his alleged discharge from liability was alleged to be that even fresh sureties had been obtained from some contractors. It was also mentioned in the plaint that the appellant had to make a petition to the High Court in order to prevent his property from being sold and that he had been informed that the said petition had been dismissed on the ground that he could lawfully get his reliefs in the civil Court.17. On the above facts the appellant prayed inter alia asIt may be declared that I have become discharged from all liability as surety for the contractors mentioned in para 2 of this plaint and a decree may be passed against the defendant No. 2 and defendant No. 1 herein and their servants, officers and agents, in the form of a permanent injunction prohibiting them for all times from attaching my property selling or causing it to be sold.2. A permanent injunction may be issued to the defendant No. 1 herein and their servants, agents and officers that these defendants, under the facts mentioned in this plaint shall not, unless in execution of a decree in their favour obtained from a proper and authorised Court, attach any property of this plaintiff and sell it in the revenue manner or cause it to beState of Bombay contested the suit mostly repeating what they had urged in their reply affidavit filed in the proceedings on the writ application. It did not admit that the writ application filed by the plaintiff was dismissed by the High Court because another remedy was open and stated that his contentions were not upheld.18. Several issues were framed. Issue No. 8Athe suit barred by res judicata in view of the High Courts judgment in Civil Applications Nos. 260, 261 and 376 oftrial Court held on this issue that the judgment operated as res judicata in the suit. It recorded its findings on the other issues as well, but we are not concerned with those findings. It dismissed the suit.19. On appeal by the appellant the District Judge agreed with the Trial Court that the suit was barred by res judicata in view of the judgment of the High Court on the writ petition. He accordingly dismissed the appeal. He also recorded his findings on the other points urged before him.20. On second appeal, the learned single Judge of the high Court agreed with the Courts below that the decision of the High Court on the question whether the plaintiff was absolved from liability under the surety agreement must be regarded as res judicata and could not be opened in the suit. He further considered the question whether in the circumstances of the case the appellant was entitled to the injunction prayed for and held that it was open to the appellant to maintain the suit for the determination of the amount due from him as that had not been considered and determined in the writ petition. He, therefore, allowed the appeal, set aside, the order of the District Judge and passed a decree in favour of the appellant declaring that he was liable to pay the amount due under the surety agreement less the amount paid by the contractor and such amount as had been recovered by the State by sale of the property of the contractor attached under condition No. 8. He further ordered issue of an injunction restraining the State from enforcing the liability for the amount in excess of the amount declared to be due from the appellant.21. The appellants application for leave to file an appeal under cl. 15 of the Letters Patent of the Bombay High Court was rejected. Thereafter, the appellant filed this appeal after obtaining special leave from this Court.

Court's reasoning:
The contention is not sound as the provisions of R. 2, O. 2 apply only to suit. Sub-r. (1) requires that every suit shall include the whole of the claim which the plaintiff is entitled to make in respect of the cause of action; but a plaintiff may relinquish any portion of his claim in order to bring the suit within the jurisdiction of any Court. Sub-r. (2) then provides that where a plaintiff omits to sue in respect of or intentionally relinquishes any portion of his claim, he shall not afterwards sue in respect of the portion so omitted or relinquished. By its very language, these provisions do not apply to the contents of a writ petition and consequently do not apply to the contents of a subsequent suit.As a result of the above discussion, we are of opinion that the provisions of S. 11, C. P. C., are not exhaustive with respect to an earlier decision operating as res judicata between the same parties on the same matter in controversy in a subsequent regular suit and that on the general principle of res judicata any previous dicision on a matter in controversy, decided after full contest or after affording fair opportunity to the parties to prove their case by a Court competent to decide it, will operate as res judicata in a subsequent regular suit. It is not necessary that the Court deciding the matter formerly be competent to decide the subsequent suit or that the former proceeding and the subsequent suit have the same subject-matter. The nature of the former proceeding is immaterial.We do not see any good reason to preclude such decisions on matters in controversy in writ proceedings under Arts. 226 or 32 of the Constitution from operating as res judicata in subsequent regular suits on the same matters in controversy between the same parties and thus to give limited effect to the principle of the finality of decisions after full contest. We therefore, hold that, on the general principle of res judicata, the decision of the High Court on a writ petition under Art. 226 on the merits on a matter after contest will operate as res judicata in a subsequent regular suit between the same parties with respect to the same matter.We may make it clear that it was not necessary and we have not considered, whether the principles of constructive res judicata can be invoked by a party to the subsequent suit on the ground that a matter which might or ought to have been raised in the earlier proceeding was not so raised therein.We, therefore, dismiss this appeal with costs.