A three-judge Bench of Justice DY Chandrachud, Justice Vikram Nath, and Justice Hima Kohli has held that in a Suit filed under Section 92 of CPC all persons interested in the subject matter would be bound by the Judgment in the Suit and such interested persons would be barred by the principle of res judicata from instituting a subsequent Suit on the same or substantially the same issue.

An appeal was preferred before the Supreme Court against the Judgment passed by the High Court of Karnataka which had held that the Suit was barred by the operation of Res Judicata, upholding the judgment of the Trial Court and the First Appellate Court.

The Appellant (Jamia Masjid) had instituted a Suit seeking a declaration that the State Wakf Board is the owner in possession of the Suit schedule property. Whereas, the Respondents contended that the Suit is barred by Res Judicata as the matter was already adjudicated upon in the earlier three Suits. The cause of action arose when the successors of Abdul Khuddus, who was the mutawali according to the Appellant alienated the Suit property in favor of Defendants 1-4.

In the first Suit, the members of the Jamia Masjid had instituted a Suit against Abdul Khuddus (the predecessor of Defendants 5-9) as a party. In the said Suit, the District Judge declared the Suit schedule property to be the personal property of Abdul Khuddus.

The second Suit was filed by the Mysore Board of Wakf against Abdul Khuddus seeking a declaration that the Suit property is a wakf and for possession of the suit property. However, the Suit was decreed in terms of the compromise petition filed by the parties and therefore, the Wakf Board gave up its claim in respect of the suit schedule property.

The third Suit was filed by the Karnataka Board of Wakf seeking an injunction restraining the defendants (the heirs of Abdul Khuddus) from interfering in the peaceful possession of the suit property. This Suit was withdrawn by the plaintiff.

The Court considered the issue of Res Judicata as a preliminary issue and pronounced that matter is barred by the principle of Res Judicata. This decision was upheld by the First Appellate Court and the High Court of Karnataka.

After considering the contentions of the Appellant and the Respondent at length, the Court noted the following observations –

1) Res Judicata as a Preliminary Issue

The Court relied upon Alka Gupta v. Narender Kumar, Madhukar D Shende v. Tarabai Aba Shedage, Sushil Kumar Mehta v. Gobind Ram Bohra and Mathura Prasad Bajoo Jaiswal v. Dossibai N.B Jeejeebhoy and held, "The court while undertaking an analysis of the applicability of the plea of res judicata determines first, if the requirements of section 11 CPC are fulfilled; and if this is answered in the affirmative, it will have to be determined if there has been any material alteration in law or facts since the first suit was decreed as a result of which the principle of res judicata would be inapplicable. We are unable to accept the submission of the appellants that res judicata can never be decided as a preliminary issue."

2) The Plea of Res Judicata and the three previous Suits

In the first Suit, the Court took up three issues for consideration, which were –

a. The scope of the first Suit which was instituted under Section 92 of the CPC;

b. Whether the parties in the first Suit and the instant proceedings are the same; and

c. Whether the issue of title over the Suit property was conclusively decided in the first Suit.

The Court while answering these issues relied upon certain precedents and held that determination of the title of the Suit property with respect to the mosque was ancillary to the main relief, under Section 92 of the CPC; the judgment of the Court in the first Suit was binding on the Jama Masjid as it was of a representative character which is binding on all the interested parties.

The Court relied upon a twin test which is used for the identification of whether an issue has been conclusively decided in the previous Suit and held that the suit which gave rise to the present proceedings before the Court was not barred by the principle of Res Judicata.

In the second Suit, which led to a compromise between the State Wakf Board and Abdul Khuddus, the Court held, "while a compromise decree in a prior suit will not bar a subsequent suit by virtue of res judicata, the subsequent suit could be barred by estoppel by conduct. However, neither the compromise petition dated 27 October 1969 nor the final decree in the second suit dated 27 October 1969 indicate that a compromise on the title to the suit property was arrived at. The compromise was restricted to the issue of the erstwhile lessee handing over possession of the suit property at the end of the lease."

In the third Suit, which was withdrawn by the Plaintiff, the Court held, "The third suit was a suit for an injunction simpliciter. The third suit was withdrawn after the suit out of which the instant proceeding arises was filed for seeking a substantive declaration and an injunction. No adjudication on the rights of the parties was made in the third suit."

Accordingly, the Court allowed the appeal, set aside the impugned judgment of the Karnataka High Court and restored the Suit with a direction to complete the trial within one year.