# RAMAGYA PRASAD GUPTA 8f OR~ v. MURLl PRASAD & ORS

- **Citation:** [1974] 3 S.C.R. 915
- **Court:** Supreme Court of India
- **Decided:** 1974-04-11
- **Case number:** Civil Appeal Nos. 1710 of 1967
- **Bench:** P. Jaganmohan Reddy; H. R: Khanna, K. GosWAMI
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/ramagya-prasad-gupta-8f-or-v-murll-prasad-ors-6114
- **Pages:** 16

## Headnote

li1dia11 Electricity Act-1910 read with the Indian Contract A.er-Whether
1no11tY ndvanced by partners in pursuance of an agree111ent whicli subsequenlly
beco111ts l'Ofd is recoi•erable.
One M obtained a licence for electrification of the Chapra town. Later
the licence was assigned to J and thereafter ·to the Chapra Electric Supply Co.·
Ltd; which went into voluntary liquidation in 1944.
Thereafter,
.5
penons
entered into an oral agreement of partnership to buy the undertaking and .. their
respective ~hares were :- A 8 annas. M 4 annas, P had 2 annas and G &: N
had one anua each. lt was also agreed- that the licence will be obtained in the
name of Mu alone. 'Thereafter, the Electrical undertaking was sold by the
official liquidator on S~pt. 15. 1.944 to Mu.
Each partner contributed in pro·
portion to their respective shares in the partnership and the total purchase price
was paid in 3 instalments. Before the last instalment was paid, the oral agrce--
ment entered into between the partners was incorporated into a partnership deed
executed on July 10, 1945 and registered under the Indian Registration .t\ct.
Thereafter; A advanced some money to buy some new plant and machinery and
when Mu. and another sold one anna share each out of their i-espective shares.
Thus the share of A. increased to 10 annas. while that of Resp. I & P reduced to
3 annas ·and one anna respectively. 1"hereafter, the partners contributed the
amount in accordance with their respective shares and
a second deed
was
executed to ·this effect on Aua-. 31. 1950.
After the registration of the second partnership, the Electrical Inspector,
Government of Bihar addressed a letter to Resp. I in \Vhich be stated that the
partnership was illegal and void as it contravened the provisions of Indian
Electricity Act and that, therefore, the Government did not recognise
the
partnership. Thereafter. one of the partners filed a suit for a declaration that
the partnership had been dissolved by service of notice .on the partners and for
rendition of accounts. During the pendency of the suit, however, the Government of Bihar acting under S. 4(1) of the Indian Electrictiy Act, 1910 revoked
the licence. to Resp. I with the result that according to S. S(l)(a) of the Act,
all powers and .liabilities
Of the licensees stood determined. A recti\ler W3.S"
appointed who took over the electrical concern from Resp. I and R. . After th«
receh.•er had taken possesslon, 1he Government decided to. purchase the under·
taking and deposited a sum of 3 lakhs in the Court as part of purchase money
payaQle to the owners of the undertaking. Resp., I thereafter, filed a suit for
a declaration that he. being- the sole ·licensee was the exclusive owner of the
undertaking and as such. he was entitled to receive the entire price paid or payable bv the Government.
He also averred that he alon~ paid the
entire
purcha~e money and others are only his employees.
The· trial Court dismissed Resp. l's Title Suit but :the Hi~h .Court reversed
lhe trial Court's judgment and decree by granting a declaration that Resp. .I
wa."! entitled to the entire money deposited by the State; because the partne~hip
wa!I i11e.~a1 and void.
Before this Court two questions arose for decision :-
\!) Whether because of dismissal of C.A. No. 1711/67 and 1985/68 which
arose out ot the 1"itle Suit No. 68/54, the present two appeals are barred on the
ground of res-iudicata and (2) Whether Resp. I was entitled to the entire mpney.
Allowing the appeals,
·
HELD. (1) 'the doctrine of res-judicata applies where a suit has been tried
and finally decided on the merits, if the defeated party wishes in another suit
916
SUPREME COURT REPORTS
L1974] 3 S.C.R,
between the same parties, relating to the ~e property, to re-agitate the same
t,1uestion~. he cannot be allowed to do so because his cause of action has passed
into a iudgment and the matter has become res-iudicata. The test is "whether
the judge has applied his mind to tf1e decision of the issue i

## Text

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RAMAGYA PRASAD GUPTA 8f OR~.
v.
MURLl PRASAD & ORS .
April 11, 1974
[P. JAGANMOHAN REDDY; H. R: KHANNA AND p, K. GosWAMI, JJ.]
li1dia11 Electricity Act-1910 read with the Indian Contract A.er-Whether
1no11tY ndvanced by partners in pursuance of an agree111ent whicli subsequenlly
beco111ts l'Ofd is recoi•erable.
One M obtained a licence for electrification of the Chapra town. Later
the licence was assigned to J and thereafter ·to the Chapra Electric Supply Co.·
Ltd; which went into voluntary liquidation in 1944.
Thereafter,
.5
penons
entered into an oral agreement of partnership to buy the undertaking and .. their
respective ~hares were :- A 8 annas. M 4 annas, P had 2 annas and G &: N
had one anua each. lt was also agreed- that the licence will be obtained in the
name of Mu alone. 'Thereafter, the Electrical undertaking was sold by the
official liquidator on S~pt. 15. 1.944 to Mu.
Each partner contributed in pro·
portion to their respective shares in the partnership and the total purchase price
was paid in 3 instalments. Before the last instalment was paid, the oral agrce--
ment entered into between the partners was incorporated into a partnership deed
executed on July 10, 1945 and registered under the Indian Registration .t\ct.
Thereafter; A advanced some money to buy some new plant and machinery and
when Mu. and another sold one anna share each out of their i-espective shares.
Thus the share of A. increased to 10 annas. while that of Resp. I & P reduced to
3 annas ·and one anna respectively. 1"hereafter, the partners contributed the
amount in accordance with their respective shares and
a second deed
was
executed to ·this effect on Aua-. 31. 1950.
After the registration of the second partnership, the Electrical Inspector,
Government of Bihar addressed a letter to Resp. I in \Vhich be stated that the
partnership was illegal and void as it contravened the provisions of Indian
Electricity Act and that, therefore, the Government did not recognise
the
partnership. Thereafter. one of the partners filed a suit for a declaration that
the partnership had been dissolved by service of notice .on the partners and for
rendition of accounts. During the pendency of the suit, however, the Government of Bihar acting under S. 4(1) of the Indian Electrictiy Act, 1910 revoked
the licence. to Resp. I with the result that according to S. S(l)(a) of the Act,
all powers and .liabilities
Of the licensees stood determined. A recti\ler W3.S"
appointed who took over the electrical concern from Resp. I and R. . After th«
receh.•er had taken possesslon, 1he Government decided to. purchase the under·
taking and deposited a sum of 3 lakhs in the Court as part of purchase money
payaQle to the owners of the undertaking. Resp., I thereafter, filed a suit for
a declaration that he. being- the sole ·licensee was the exclusive owner of the
undertaking and as such. he was entitled to receive the entire price paid or payable bv the Government.
He also averred that he alon~ paid the
entire
purcha~e money and others are only his employees.
The· trial Court dismissed Resp. l's Title Suit but :the Hi~h .Court reversed
lhe trial Court's judgment and decree by granting a declaration that Resp. .I
wa."! entitled to the entire money deposited by the State; because the partne~hip
wa!I i11e.~a1 and void.
Before this Court two questions arose for decision :-
\!) Whether because of dismissal of C.A. No. 1711/67 and 1985/68 which
arose out ot the 1"itle Suit No. 68/54, the present two appeals are barred on the
ground of res-iudicata and (2) Whether Resp. I was entitled to the entire mpney.
Allowing the appeals,
·
HELD. (1) 'the doctrine of res-judicata applies where a suit has been tried
and finally decided on the merits, if the defeated party wishes in another suit
916
SUPREME COURT REPORTS
L1974] 3 S.C.R,
between the same parties, relating to the ~e property, to re-agitate the same
t,1uestion~. he cannot be allowed to do so because his cause of action has passed
into a iudgment and the matter has become res-iudicata. The test is "whether
the judge has applied his mind to tf1e decision of the issue involved in the two
1iuits twice or whether there bas been in reality but one trial, one finding and
one derisio~." [922 D-Fj
Jn the instant case, whatever may have been the common issues between the
· two suits, one issue which is not common otud makes the subejct-matter of both
tile suits different is tha·t whether the plaintiff in Title Suit No. 94 of 19S6, is
sdlely entitled to compensation from the State of Bihar or whether they are
entitled to recover their respective shares from the compensation amount. This
wa's not the subject-matter of Title Suit No. 68 of 1954. Therefore, no question
of res-judicata could arise in the circumstances of the two cases. l921 E-F1
923 H-924 HJ
(2) From the documentary and other ornl evidence, it is clear that the first
respondent did not contribute the entire amount for the purchase of the underui.klng arid under S. 65 of the Contract Act, when an agreement is discovered to
be void. or even a contract becomes void. any ~rson whu has re«ived any
advantagf." under such agreement or contract is bound to restore it or to make
compenscition to the person from whom he received it. [929 A-C]
Budhu Lal
v.
Deccan Banking Company Ltd. A J.R. 1955 Hyd. 69,
referred to.
Therefore, whether the agreement was void ab initio or was void or valid initially
but bt:came void or discovered to be void subsequently, the appellants ai:e entitled
to share the compensation money in proportion to their respective shares as
specified in the partnership deed of August 31, 1950, after paying the outstanding Jiabilities of the Chapra Electric Supply Works. [930 C-E]
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 1710 of 1967
and 1986 of 1968.
From the Judgment and Decree/Order dated the 7th May, 65 of
the Patna High Court iu Appeals from O:iginal Decree No>. 160 and
161 of 1959 and in First Appeal No. 160 of ·1959 respectivdy.
A. /). N. Sinha, .R. N. Sahay, B. Kumar and S. N. Prasad, for the
"'ppellants (in CA 1710/67).
P. C. Bhartari and D. N. Misra, for the Respondents No. 9 & 10
(in CA 1710/67).
U, P. Singh and S. R. Tiwari, for Appellants (in CA 1986/78).
S. C. Agarwa/a, R. K. Garg and V. J. Francis, for respondent No.
17 (in CA 1986/68).
M. B. Lal, for Respondent No. 1 (in both the appeals).
B. P. Singh, for Respondent No. 2 (in both the appeals).
The Judgment of the Court was delivered by
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JAGANMOHAN
REDDY, J.-These appeals
are by
certificate
against the judgment of the Patna High Court which reversed
the judgment a.nd decree of the Trial Court in Title Suit
No. 94 of 1956 filed
by
the first
respondent-Murli 'Prasad,
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A
brief history of this case will
be necessary . for understanding the several contentions urged before us. One Ma\lendra l•1asad obtained a licence for electrification of the Chhapra town
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Jl. p, GUPTA v. MVJlLI PllASAD (Jaganmohan Reddy, J.)
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w~h W'IS granted to lliJ!1 ii! 1932.
Th~ !i\:tllce was thereafter assi¥n-
, ,
ell to J;m111dh11,11 Prasad Varma after the deatb of his father Mahendra Prasad in 1936. Tbis licence w~s subsequently assi,We4 to the Cnluipra Eli:ctric Supply Co., Ltd.,. whi~h. however, went into voluntary
Jiquidation in 1944. · It Wl!S decided to sell the electricity undertaking b) public auction and. assign the licenc~ lo the purchaser with the
previous sanction of the Government. In pursuance of th:S dechion,
the liquidator invited bidders for purchasing the electricity c.oncern.
But before the :date of public auction, it is l!ileged that five persons,
nallll'ly, Ayodbya Prasad, Murli Prasad Respondent No. 1, Par.isnath
Prasad, Gurbll\lran Shah an<! Nandkishore Prasad entered into an
oral agreellll'nt of partnership to purchase the electticJI undertaking
in the name of Murli Prasad, the share of Ayqdhya wru; 8 annas, thlt
or Murli Prasad 4 annas, Parasnath Pruad had 2 annas and Gurbharan Shah and Nandkishore Prasad had one anna ea:h. It was also
agreed tliat the licern:e will be obtained In the name o[ Murli Prasad
atone, though each partner had to contribute to the total purchase
mon~y in proportion of their respective shares in the
partnership.
Thereafter the. elettrical undertaking was sold by the official liqaida•
tPl on September 15,1944 to Murli Prasad as his was the highest bid
of Rs. 4,10,000/-. Thereafter each of the plrtners including Murli
Prasad contriblited in proportion to their
resp,ctive shares in the
partnership to ma)<e up the total sum of Rs. 4,10,000/-. Payments
to the official liquidator were made in three instalments.
It also
appears that before the last. instalment of Rs. 2,50,000/- was paid
on July 13, 1945, the oral agreement entered. into between the partners was incorpor~ into a partnership deed executed on July 10,
1945 and registered un!ler the Indian Registration Act: (Exbibit 'G').
Each of the partners had plid the following sums in accordance with
their respective shares and in this manner all of them contri'Juted Rs.
4,10,000/-
towards .the purchase' money paid to 'the
liquidator:
Ajodhya
Prasad · Gupta-Rs.
2,05,000/-; Murli
Prasad-Rs.
1,02,500/-; Parasnath Prasad-Rs. 51,250/-; Gurbharan Shah Rs.
25,62~/- and Nandkishore Prasad-Rs. 25,625/-. Nandkishore Prasad, however, retired from the plftner~hip with the consent of all the
partners and his one anna share was taken over by Gurbharan Shah.
It' also appea~ that in 1950 a further sum of Rs. 1,50,000/-
was
urgently requited for taking delivery of some new phnt and machinery
which had arrived at the Chhapra Railway Station. Murli Prasad·
and Parasnath Prasad expressed t1ieir inabilitv to contribote the sum
of Rs. t,50,000/- in 'PfOportion to their shares, so this amount was
al<o paid bv Ajodhya Prasad Gupta to whdm Murli .Prasad ahd Paras~
nath Prasad sold one anna share each out of their respective sh1res.
Thus. the share of Aioclhva Prasad inctea<ed to 10 annas while that
of Murli Prasad and Parasnath Prased reduced to 3 annas and one
anna fC!'PCCtively.
Thereafter tne partners contributed the amount
in accordance with their nspective shares. This
re-allrc•tion or
shares became. the occa•ion for
execution of a Recond Dartnership
deed Ill! Aul!lfst 31. 1950 which was al~o re!istered under tlie Tn~ian
~e•istntion Act: Ext. 9. The oartnenhio Act ~n Mav B. 1'l53,
Ext. 'C'. One other·fact must also be stated at this stage. and th•t
911
SUP,lll!ME COUll.J' llEPO.llTS
[1974) 3 S.C.R.
is, Ajodhya Prasad ·and Murli Prasad being Kartas of their. respective
joint ·ramilities, had entered into partnership in that capacity.
Tbc
IO anuas share held by' Ajodhya Prasad and 3 annas snare oeld by
Murli Prasad were- divided &m0\111 the members of their respective
joint families. The share of Murli Prasad was divided bctwoen himsell, Dnarindhar Prasad each having one anna share, while tnc sons
of Murli Prasad and Dharmdhar Prasad, namely, Chandrcsbwar l'rilsad Gupta and Kamles.bwar Prasad Gupta and each 6
pies Jhare.
Similarly, Ajodhya Prasad's and his brother Ram Sharan Shah got
3 -annas 9 pies each while the two sons of Ram Sharan Shah, Brahmadev Prasad Gupta and Ramagya Prasad Gupta and respectively
I anna 3 pies. There was no change in the shares oJ the two remaining parteners Parasnath Prasad and Gurbharan Sh•h who held one
anna and two annas share respectively.
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It appears that some time after this revised partnership was registered, the Electrical Inspector, Government
of Bihar, addrescd
a
letter to Murli Prasad In which he stated that the partnership was
illegal and void as it contravened the provisions of the Indian Electricity Act . and that, therefore, the Government did not recognise the
partnership. The Government ultimately cancelled the licence. It is
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alleged that all this was due to .the manipulation of. Murli Prasad who,
taking advantage of the letter of the Electrical Inspector, tried to take
forcible possession and wanted to dispossess the managing partner
of the electrical undertaking.
This attempt gave rise to proceedings
under s. 144 of the Code of Criminal Procedure, which, however,
were decided on April 14, 1954, in favour of Rarnagya Prasad Gupta
and the other partners. Thereafter it is allegec! that Murli Prasad got
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Parasnath Prasad a partner and sqn-in'law of Murli Prasad's brother
t-0 institute Title Suit No. 68 of 1954, on May 28, 1954 .. This suit
was for a . declaration that the pannership had been dissolved by service of notice on the partners and for rendition of accounts by Rama-
)!ya Pr_asad Gupta principally and by other p•rtners. During the pendency. of the suit, as stated earlier, the Government of Bihar llC!ing
F
under s. 4(1) of the Indian Electricity Act, 1910--hereinafter referred to as 'the Act'-revoked the licence of Murli Prasad \\ith the
result that according to s. 5(1){a) of the Act all powers and liabilities of the licensee stood determined. l'arasnath Prasad the phintiff
·in that suit prayed for' appointment of the Additional District Maeistrate, Chhapra,- as receiver. Tile Court granted his prayer and the
Receiver in due course took over the electrical concern from Murli
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Prasad and Ramagya Prasad.
After the Receiver had taken possession, the Government dor.:ided to purchase the undertakin)! on October 20, 1955 and deposited
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on the same day a sum of Rs. 3,00.000/- in the Court as part of the
purchase money payable to the owners of the undertakin~. Murli
Pra<ad thereafter filed a Title Suit No. 94 of 1956 on November S,
t 956, for a declaration th•t he boing the sole licensee, was the exclusive owner of the undertalcin~. and as such he was the only person
who was entitled to receive the entire price paid or payable by the
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R. P. GUPTA v. MURLI PRASAD (Jagamnohan Reddy, !.)
919
Government in respect of the assets of the Chhapra Electric Supply
Works.
In this sun Murli Prasad had averred that it was he and he
alone who had paid the entire auction money for the purchase of the
undertakmg on July 13, 1945 and thereafter he became
the sole
licencee in charge of the undertaking and that Ramagya Prasad Gupta
was a mere employee and. servant und.er him. The partnership was
~!so characterised as illegal and void. Both the Title Suits No. 68/54
hied by .Parasnath Prasad and No. 94156 filed by Murli Prasad were
COlll>olidated.
It may also be .mentioned that N andkishore Prasad·
who was the original partner and who had retired from the partnership and whose share had been taken ov~r by Gurbharan Shah also
filed a suit No. 113/5T on September 21, 1957 for a declaration that
he was still a partner and has 1 anna share. This suit was transferred to the Court where the other two title suits were b•ing tried. Ail
the three suits were thereafter consolidated and tried togetl)er. They
were also disposed of ·by a . ~ommon judgment dated February 10,
J 959 passed by the 5th Add1t1onal Subordinate Judge, Chhapra.
The Trial Court decreed P.i!rasnath Prasad's Title Suit No. 68/54
anti dism,issed Murli Prasad's Title Suit No. 94/56 and Nandkis~re
Prasad's Title Suit No •. 11~/57. Murli Prasad. filed First Appeal No.
160 /59 against the ju~gnient and decree of the Trial Court in his
Title Suit No. 94/96 and First .Appeal No. 161/59 against the judg_rnent and decree of the Trial Court passe_d in Title Suit No. 68/54.
Nandkishore Prasad 'filed a First Appeal No. 154/59 against
the
decree in his Title Suit No. 113/57 but .l•ter he withdraw it and
aecor<lingly it was dismissed for non-prosecution. .The remaining
two appeals filed. by Murli Prasad were heard together and were dispo.sed of by a common jud$ment by which the High Court reversed
the Ttial Court's judgment and decree in Title Suit No. 94/56 by
;;ranting a declaration to Murli Prasad •as prayed for that he alone
was entitled to the entire money deposited or to be deposited by the
State of Bihar as price for the assets purchased by them. This decisiol\ was based on the view that the partnership contravened t)!e provisions <>f the Act and was accordingly illegal and void.
Against this
decision of the High Court, Ramagya Prasad Gupta one of the respondents in the two First Appeals before tpe H,igh Court filed two
appeals in. this Court, namely Civil Appeal No. 1710/67 against the
judgment and decree of the High Court passed in First Appeal No.
160/59 ·which arose out of Title Suit No.,. 94/56 and Civil Appeal
No. 1711/67 against the judgment and decree passed by the High
Court in First Appeal No. 161159 whkh arose out of Title Suit No.
68/5\l'.
Brahmadeo Prasad, another part11er who was a defendant
in both the Title Suits Nos; 68/54 and 94/56 and one of the respondents in the two appeals, namely, First Appeal Nos. 160-161/59 in
the High Court, preferred an appeal, namely, Civil Appeal No. 19$6/
68 against the judgment pf the High Court in First Appeal No. 160/
59 in respect of Title Suit No. 94/56 and Civil Aopeal No. 1985/68
passed in Civil Appeal No. 161/59 in resoect of Title Suit No. 68/54.
It mav here be statoo that in the Title Suit No. 68/54 filed by Parasnath Prasad for dissolution of partnership and rendition of accounts,
920
(1974] 3 S,C.R.
J(uldip Narain, Jagdish Narain μnd Kedar Nath Sah applied for and
were lidded as defendants 12, 13 and 14 on the ground that they as
members of the joint family of Parasnath Praslld, should ~. partie~
to the suit.
Accordingly, th~y were also parties in the High Court
appeii]s as well as in !he Supreme Court appeals Nos. 1711/67 and
1985/68 arising out of Title Suit No. 68/54. It may furth~r bo mentioned that these interveners were not parties either in the Title s~it
No. 94i56 or in the First Appeal arising therefrom, or in lhe appeal
before this Coμrt, namely, Civil Appeals No. 1710/67 and No. 1986/
68 which are the two appeals before us.
Before those four appeals
came up for hearing, J agdish Narain one of the interveners/ defendanL<, namely, defendant No. 13 and who was a respondent in Civil
Appeals Nos. 1711/67 and. 1985/68 died.
His legal representatives
were not brought on record and conseq"ently these two appe'1s were
said to have abated as a whole and were dismissed on that account.
At the very threshold it was sought to be contended that
the
appeals only abated as against Jagdish Narain for not bringing his
legal representatives on record but not as a whole.
This que;tion
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was CO!!Sidered by this Court in. Ramagya Prasad Gupta v. Murii Prasll</(1) where by a majority, Vaidialingam & Palekar, JJ., Mathew, J.
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dissenting, held that the appeal could not be pro:eeded w:tb and must
be dismissed.
We are not concerned with the reasoning for !)le dismissal. except to say that the question whether these two appeals
would also abate seems to have been considered by this Court, because they observed at p. 68 :
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"We are not concerned with those two appeals at dm
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stage because J agdish Narain bad not been made a party
to the Original Suit filed by Murli Prasad nor bad be app·
lied to be made a party.
Con5equently Jagdisb Narain
docs not and did not figure in the appeals from the de;:ree
passed in ·Suit No. 94/56."
At the hearing, a preliminary objecticm has been r •ised by the
learned Advocate for the respondents that having regard to· the abatement and dismissal of Civil Appeals Nos. 1711 of 1967 and 1985 of
1968 which arose out of '.Title Suit No. 68/54, the present two a~als
are barred under s. II of the Code of Civil Procedure and/ or on the
general principles of rt!S judicata and should be dismissed. It is contended that the existence of a valid partnership was
a ground of
attack in Tiile Suit No. 68/54 and the ground of dofence in Title Su'.t
No 94/56 and, therefore, that question was directly and sub;tanfally
in issue in both suits; (2) that the plrlies in the two suits "-ere also
th., same; at any rate the parties in the present suit No. 94/S6 who
will be affected arc the same. The learnect Advocate for the respon·
dents
therefore contends
t]lat
the
tri'1 of
the suit bc'M
by the same
court,
the two other conditions necessary for a bar
of res judicate, namely, the subject-matter of the two suits and the
(I) (1973) I S.C.R. 63.
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92(..
panics being the s~me .. are fully sati&ficd. TllC appellants' Advocate,
nowe~r, i:onlfOve~ these contentions and subm1u that not only is
the subject-Jllatter in dispute in Tiile Suit No. 68 of 54 different
from tlie subject-matter of title in Suit No. 94 of 56, but the
panics in Title Suit No. 68 Of 54 are not the same as
tnose ill Tiile Suit No. 94 of 56, inasmuch as defendanll! Nos. 12,
13 and 14 wh.o were parties in Title Suit No. 68 of 1954 were not
parties in Title Suit No. 94 of 1956. It is contended that in the fortner
suit, which was instituted during the. subsistence of both electti-·
ci1y licence and electrical undertaking, the subject-matter was limited
to a consideration of: (1) Existence of a legal and v.!lid partnership;
and (2) Legality and validity of the notice of dissolution oi partnership alleged to have been served prior to the suit; and (3) tte
liability of Ramagya Prasad
Gupta
or
other
partners to
rcltder accounts to the plaintiff.· Jn other words, it was a simple suit
for rendition of accounts, for dissolution and for such sum of money as
might be due to the plaintiff in that suit. The suit out of which these
two appeals arise having been filed a yeJr and a half thennfter was
not concerned with any of the question because by that time the sub·
ject-matter of the partnership havin~ d"sappeired by the cm:ellation
of the licence of Murli Prasad and by the purchase of the un~ertak·
ing by the Government under s. 7(a) of the Act, the pn"y question
was whether Murli Prasad is entitled to the entire money deposited
in Court and to be deposited thereafter by the Government or whether the persons who were erstwhile partners and who had -contributed
the eapital could have a claim to that money in accorcfance with their
shares. As the subject-matter of the two suits was different it is
contended that the appeals are neither barred by s. 11 nor by any
ot11er principle on Res Judicata.
At the hearing a gr~at many authorit;zs were cited and certain broad
propositions were sought to be canvassed, as for instance, the priciple that
when there are two suits which have been tried togeth-~r and disposed of
by a common judgment and two appeals are taken therefrom, the judgment app~aled against ceases to be res judicata even if one of the
appeals is dismissed on the ground of limitation or otherwise because the
vrry judgment, which is sought to be pleaded in bar, is still subjudice.
Tn support of this proposition. the view expresSed by the Lahore High
Court Full Bench in Lakshmi v. Bhuli(1) has been cited and it was
submitted that this view was approved by this Court in
Narhari v.
Sankar('i. which it is submi'ted; has been followed in various decisions of the different High Courts. As against this view, it is claimed
that this Court subsequently in Sheoilan Singh v. Mst. Daryao Kaur(')
tool; a different view, but according to the learned Advocate for the
appellants, this case did not consider the correctness either
~f
Naihi:rrs (supra) decision or of the Lahore Full Bench case m
IAkshmi v: BhuU (supra). Jn a case where a suit or an appeal is said
(1) tt.11.. 8 Lahore 384 •
. (2) (19501 S.C.R. 754.
0) [1966] 3 S.C.R. 300.
922
SUPREME COURT REPORTS
[1974] 3 S.C.R.
to be barred by res judicata the. question would arise whether that bar
is by virtue of s. 11 of the. Code. of. Civil Procedure, or dehors tbat
section by the general principles of res judicata, and if s. 11 is appli·
cable, whether it applies to suits only and not to appeals, and if to
suits only, whether the general principles of res judicata
apply
to
appeals. Where two suits having common issues are either by consent
of the parties or by order of the Court tried together, the evidence
being written in one record and both suits disposed of by a single
judgment, the question would arise as to whether there have been two
distmct and independent trials.
Tek Chand J., who delivered the
majority judgment of the Full Bench in Lakshmi's case (supra) gave
ti1e answer at p. 400 thus :
"There has been in substance as well in form but one
trial and one verdict, and I venture to think, it will be a travesty of justice to stifle the hearing of the appeal against such
a judgment on the ground that the findings contained in it ope·
rat·> as res judicata. In such. a case there can be no question
of the succ·ossful being "vexed twice" over the same matter, nor
does the hearing of the appeal in any way militate against any
rule of public policy, which requires that there must be an
~nd of litigation. There is not only μothing here to attract the
principles underlying the rule of res judicata, but, on the other
hand, it seems to me, that the acceptance of such a plea in such
circumstances would strike at the very root of the basic conception of the doctrine which requires that a party must have at
least on~ fair trial of the issue resulting in a decision by the
Court of ultimate appeal as allowed by the law for the time
being in forces."
The test suggested by the learned Judge at p. 401 was "whether the
judge has applied his mind to the decision of the issue involved in the
two suits twice or whether there has been in reality but one trial. one
finding and one decision".
According to him, the detern1ining factor
is not the decree but the decision in the matter in controversy.
It is clear thab where a suit has been tried and finally decided on the
merits, if the defeated parby wishes in another suit between the same
parties relating to the same property to have the same questions re·
agitated, he cannot be allowed to do so, because his cause of action has
passed into a judgment, and the matter has become res judicata. Even
where two appeals have been taken from the same judgment by two different parties to which all others are parties either as appellants or respondents and one of the appeals is dismissed either on merits or for any
oth<r reasons, it has been held by some of the High Courts, but we express
no Opinion th·!reon, that the other appeal' has,also to be dismised, be~ause
it is barred by the principles of res judicata as otherwise there will be
conflict in the decrees.
In the Lahore decision there were two _cross
suits about the same subject·matter filed simultaneously between the
same parties and two decrees were prepared. An appeal being filed in
respect of one decree and not in respect of the other, the questio11 was
whether the non-filing of the appeal against that decree creates an estoppel
against the hearing of the other appeal. In Narhari's case (supra) what
this Court held was, where there has been on·e trial, one finding and one
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923
decision, there need not b~ two appeals even though two decrees may
have been drawn up and consequently the fact that one· of the appeals
was time barred does not bar the other appeal on the ground of res judicata. In this case, these questions need noi be considered; Nor is· it
relevant to consider whether there is any con,llict between· the decision
in this case and Sheodan Singh's case (supra). In Sheodan Singh's case
two suits were field in the Court of the Civil Judge, one for a declaration of the tiVe to the suit property and the second for other re!iefts
and consequently two other suits were filed by the respondents in the
Munsif's court against the appellant claiming joint ownership to the
suit property and other reliefs. The four suits were tried together by the
Civil Judge. Some of the issues were common to all the suits and one
of the commons issues relating to the title of the parties was found in
favour of the respondent.
The Civil Judge dismissed the appellant's
title suit, decreed his other suit partly, and decreed the two suits of the
respondent.
The appellant filed appeals against the decree. in each
;uit. The High Court dismissed the two appeals arising out of the
respondent's suits, one as time barred, and the other for failure to
apply for translation and printing of the record.
As the title of the
respondent to the suit property had become final on account of such
dismissal, the respondent prayed for the dismissal of the other two
appeals also, as the main question involve4 therein was the same. The
High Court agreed that the appeals WOTe barred by res judicate and
dismissed them. Against these. order of dismissal, the appellant filed
oppeals to this Court and contended that-( l) title to the propecty
\Vas not directly and substantially in issue in the respondent's suits ;
(•2) the Munsif's Court could not try the title suit filed by the appellant;
(3) it could not be said that appeals arising out of the respondent's
m;is were former suits as such the bar of res judicata will be inappiica·
ble; and ( 4) the two appeals which were dismissed-one on the
ground of limitatior> and the other on the ground of not printing 1he
records, could not be said to be heard and finally decided. This Court
hcid that the High Court was right in dismissing the appeals as being
barred by res judicata inasmuch as the issue as to the title was raised
in respondent's ~uits and it was directly and substantially in issue in
those suits also and did arise out of the pleadings of the parties, and
further the High Court's decision in the 1wo appeals arising from the
respondent's appeals were undoubtedly earlier and, therefore the condition that there should liave been a decision in a former s~it to give
rise to res jμdicata in a subsequent suit was satisfied in that case. The
decision in Narhari's case (supra) was distinguished by this Court in
!hat case so !hat it cou~d. not. be caid that that decision was in any way
m conflict with the dec1S1on m Narhari's case (supra). In appeals arising o~t of a subsequent suit and an earlier suit where there were comm9~ issues, common subject-matter and common trial and the appeals
ansmg out of the subsequent suit were dismissed, a question would
~nse as to whether the. ao_oeals from t~e earlier suit which were pending arc barred by res 1ud1cata A ques!Jon may also arise where the
subject-matter is the same and the issues are common in the two suits
but ~o~e of the parties are di~erent in one suit,. whether the bar of
res 1ud1cata would operate against the parties who are common. All
9.24
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{ 1974) 3 S.C.R.
.these aspects need not be considered in these appeals because, in our
view, the subject-mattet of Title Suit No. 68 of 1954 and that of
Title Suit No. 94 of 1956 are entirely direct. Even if the issues that
.;ire common in the two suits, and it has been admitted by the learned
Advocate for the appellants that some of the issues might be commou
lo both the suits, issues Nos. 4, 9, 12, 13 and 14 !II any rate surviv<,
A
. and consequently ihe bar of res judicata would not apply. The issu.:s
·Which are said to be surViving are as follows :
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"'4. Whether the p!ointiff of T.S. 94 /56 the sole ficensee of the
Chapra Electric Supply Works before it was tak~n over by
the State of Bihar ?
9. ls plaintiff of T.S .. 94/ 56 only entitled to compensation from
the State of Bihar ?
12. Is the suit 94/56 barred urider section 42 of Specific Relief
Act, estoppel and waiver ?
13. ls the amount of court fee filed in T.S. 94/56 sufficient?
14. To what relief or raliefs plaintiff of the two suits entitled?"
Jgnoring issues 13 & 14 it will be seen that issues 4, 9 & . 12 are con-
.tmed only to Suit No. 94 of 1956 in which respondent No. 1 is seeking to have himself declared as the sole licensee and entitled to the
entire amount of compensation on the ground that be and he alone
.has contributed to the capital; that the defendants in that suit were
not his partners but servants and such a suit is not bar;ed under s.
42 of the Specific Relief Act on the ground of estoppel & waiver l:ecause of bis conduct and admissions. As we have seen, Title Suit No .
. 68 of 1954 postulates the existence of a partnership in which
the
lirst respondent is a partner, and for disolution of putne1ship and
r~ndition of accounts. Whatever may have been the common issues between the two suits, one issue which is not common and makes
the
subject-matter of both the suits different is that wheth" the plaintiff
in Title Suit No. 94 of 1956, that is the first respondent in these appeals, is solely entitled to compensation from the State
o'. Bihar.
Thi~ issue is not necessarily confined to the existence or val'doty of
·the partnership but as to whether the other parties to the s"it have
contributed to the capital of the firm or paid Murli Prasad any
.amounts which they are entitled to recover from out of the compensation amount.
This was not the subject-matter of Title Suit No. 68
·of 1954. Even as the learned Advo~ate contends, there is no longer
any question of· partnership being dissolved once the subject-matter
has disappeared by the revocation of the licence and after the entire
assets of the .partnership were taken over by the Governn1ent.
Even
if the partnership was illegal and void as contended by the respondent
in the other title suit, the same question. namely, whether the plaintilI/tirst respondent alone would be entitled to the entire compensation,. was not the subject-matter of the Title Suit No. 68 of 1954.
If so, no question of res judicata would arise.
The preliminary objection is accordingly overruled.
On the merits the appellants' case is unassailable.
The case of
. -the first respondent that he paid the entire money for the purchase of
. ·the undertaking is, in our view, a dishonest pica. .There is ample
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925
evidence in ihe case io establish that !hough Murli Prasad WllS. the
highest bidder at the auction at wh'.ch the undertaking was sold to
him aitd the J:cence was granted to him, the:e was an oral agreement
which preeeded the bidding at the auction whereunder five persons
as stated already, including the first respondent, constituted a partnmhip. They also contributed the capital in
proportion in their
shares. Though at first denied it was subsequently admitted by !he
first
respondent as
we
shall
presently
see.
After
the
bidding of Murli Prasad was accepted as alreJdy stated, the partn'Is
contributed their shares and there was. a registered partnership deed.
Another partnership deed was su~sequently executed and registered
after there was a reshuffling in the partners as we·1 as in their respective shares. The definite case of the first respondent as set but in para
5 of the plaint is that he had paid the entire amount of sale money bf
July 13, 1945 and the liquidator granted a rec.eipt to the plaintiff for
the auction money paid to him. In para 8 of. the plaint "(Suit No. 94
of 1956) he says that defendants who had a coveting eye persuaded
him illegally to enter into a partnership with them and the plaintiff.
being misled by them and under a misapprehension entered into a
P'artnership with _the defendants on July 10, 1945 and the same was
renewed on August 31, 1950. It is, therefore, clear that he does not
deny the execution of these partnership deeds and yet claims that he
alone contributed the amounts for the purchase of the undertaking.
If he contributed the entire "amount and the other partners did not
contribute any amounts, where was the question of their persuading
him to enter jnto a partnership. On the very face of ii, the pleadin!!!l
belfo the case of the first respondent. The documentary and <>ral evidence amply supports the conclusion that the first respondent has
put forward a false claim and has not hesitated to suppress the truth
which, notwithstanding his efforts, could not be suppressed. The
first respondent passed a receipt on July 13, 1945, ori the dtte when
the partnership deed was .registered, in favour of Ajodhya Prasad
who, as we have seen had a 8 annas share in the partnership in terms
of the oral agreement which was incorporated _in the
partnership
agreement of July 13, 1945. The half share of the capital of Rs.
4, t 0,000 which Ajodhya Prasad had to pay was Rs. 2,05,000. This
is exactly the amount that he paid to the first rewondent, who passed
a receipt in his favour, Ext. F-1. In the xeceipt Murli Prasad
says that he had previously received Rs. 1,000 out Qf Rs. 2,05,001}
being the proportionate 8 annas
share· out of Rs. 4, 10,000 from
Babu Ajodhya Prasad and the remaining nmount of Rs. 2,04,0:JO
was being paid by a cheque No. 34463 drawn upon the Central Bank,
elated July 13, 1945 from the said Babu Saheb.
This amount was
debiied to the Bank account of Ajodhya Prasad and credited to the
Bank account of Murli Prasad.
Exhibit M-'- Ledger Account of
M/s Ajodhya Prasad Gupta & Co. in the
Central Bank, Chhapra,
shows that on July 14, 1945 Rs. 2,04,000 was deb.i~ to llin1 on
account of cheque No. 34463 drawn in favour of Blbu MurTI Prasad
the number of which tallies with the number mentioned in the receipt
Ext. F-1. Similarly, Ext. M-1. Ledger Ac,count of Murli Prasad
in the Central Bank, Chhapra, shows that 011 July 14, 1945 a sum
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[1974) 3 S.C.R.
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of Rs. 2,04,000 was paid int.o the account by cheque and credited to
his account.
In his evidence Murli Prasad denies in examination-in
chief
that there
was
a
completed
agreement
before
the
auction sale between Ajodhya Prasad, Parasnath, Nandkishore Prasad
and himself-each representing their respective families to enter into
n partnership and that he had not purchased at the auction on behalf
of the partners or on behalf of any other person, but had purchased it
at the auction for himself alone. He also oenies that the licence was
obtained in his name with .their consent or the transfer of the licence
in his favour was secured for their benefit. He also denies that Ajodhya
Prasad paid Rs. 1,000 for bidding and denies that Parasoath Prasad,
Nandkishore Prasad and Gurbharan Shah contributed any sum
towards the auction purchase. He further says that it is not a fact that
later on Ajodhya Prasad paid him Rs. 2,04,000. His case is that he
was fraudulently and illegally induced by the rest of the parties to
enter into a partnership on July 10, 1945 and August 31, 1950 which
are both invalid and illegal. In cross·examination, he admits that he
did not have Rs. 2,00,000 with him at the time but was sure that he
could arrange for .the purchase money. He, however, states that only
4 or S months after the auction sale he had an idea to enter into a
partnership by which time he had already deposited Rs. 2,05,000 towards the purchase money which he did from his personal fund. He
wants us to believe that he signed the partnership deed without reading
nor did any one read and explain to him. He signed it because of his
faith in Ajodhya Prasad. In cross-examination he admits that the in"
tending partners had come to him and expressed their intention o[
having a share in the concern. Ajodhya·Prasad wanted 8 annas share,
Parasnath Prasad two. annas,
Gurbharan Shah and Nandkishorc
Prasad 1 anna share each and that he (Murli Prasad) expressed his
licsirc to have 4 annas share. He also admits that it \\'.1S agreed that
each would contribute in proportion to his respective share. He further admits that though he did not read the partnership dee<l at that
time he had got it read subsequently by Ganga Prasad, Pleader, and
he found that .the deed embodied all the terms they had previously
agreed to.
As for the second partnership deed, he also admits that
his share was reduced to three annas from four annas.