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Judgment
One Kolakula Themmareddi 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 u/s 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.
The first question at issue between the parties was essentially one of law, and must depend upon the effect of a vesting order u/s 37 of the Pro
viricial 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) u/s 37 it is the Insolvency
Court which retains control of it, and the Insolvency Court must direct its disposal in the interests 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.
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 Subba
Chariar v. Muthuveeran Pillai 36 M 553 : 14 Ind. Cas. 264 : 24 M L J 545, and Palancheri Govinda Menon v. Pookote Kutti Krishna Munnadiar
45 M L J 71 : 72 Ind. Cas. 397 : 17 L W 566 : (1923) M W N 299 : A I R 1923 Mad. 649, and has not been disputed before us by the learned
Advocate for the respondent.
Mr. Kotayya s next position is that the determination of an issue which depends upon an erreneous decision on a point of law is nonetheless res
judicata if the other conditions for the application of that doctrine are satisfied. For this position also Palancheri Govinda Menon v. Pookote Kutti
Krishna Munnadiar 45 M L J 71 : 72 Ind. Cas. 397 : 17 L W 566 : (1923) M W N 299 : A I R 1923 Mad. 649, can be cited as an authority,
and it is further established by Deervas Seshadri Aiyar v. Govindaswami Pillai 40 M L J 556 : 63 Ind. Cas. 189 : 13 L W 529 : 29 M L T 28 :
(1921) M W N 344 , by Ramachandra Deo v. Sutapalli Ramamurty 57 M 73 : 148 Ind. Cas. 221 : (1933) M W N 510 : 33 L W 755 : 65 M L J
684 : A I R 1933 Mad. 925 : 6 R M 449 and by the well-known decision reported in Sri Rajah Bommadevaro Venkata Narasimha Naidu v.
Andavolu Veakataratnam 32 M L J 63 : 37 Ind. Cas. 857 : 5 L W 682 : (1917) M W N 321, 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 arguments before us. The learned Advocate for the respondent, however, takes his stand upon
a consideration of jurisdiction. He argues that the decision of the former Subordinate 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.
Gunnwpuram Deenabhandu Patnaik 28 M 42. The facts there were that the zamindar of Jeypore brought a suit against certan 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.
The second case, however, affords a very close parellel indeed to the present case. It is a decision of a Bench of this Court reported in Subba
Rao v. Perumal Reddy (1917) M W N 318 : 37 Ind. Cas. 906 : 5 L W 467. The facts there were that the plaint iffs 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 jurisdition 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.
If his proposition thus broadly stated, is correct, it is very difficult to distinguish the present case from Subba Rao v. Perumal Reddy (1917) M
W N 318 : 37 Ind. Cas. 906 : 5 L W 467. 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.
There are two such cases to be considered. The first is Girwar Narayan Mahton and Others Vs. Kamla Prasad and Others, . It is concerned
with suits for rent by landlords against tenants. A suit was first instituted u/s 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 bighas. 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 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.
The other case is the judgment, but a long and elaborately reasoned judgment of a single Judge in Rajaram Tukaram Vs. Central Bank of India
Ltd., . It is an even stranger case as it deals with a matter of territorial jurisdiction. There were two suits considered in that case, one filed in 1921
and the other in 1926 in the same Court in Bombay. According to the law as understood in 1921 that Court had jurisdiction, according to the law
as laid down in a Full Bench ruling in 1926 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.
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 has no inherent jurisdiction to entertain it. He had the decree before him, the parties were parties to the decree, and no question arises
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 nonetheless 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.
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.