Friday, 22 July 2016

What is distinction between extension of lease and renewal of lease?


  In this context, the cardinal distinction between the terms

"extension" and "renewal" must be remembered.                Normally the term

'extend' means to enlarge, lengthen, prolong, etc.           Settled law is that

renewal of a lease denotes the creation of a new lease for all practical

purposes. Supreme Court in Provash Chandra Dalui's case (supra) re-

stated the principles thus:

                    "It is pertinent to note that the word used is

              'extension' and not 'renewal'. To extend means to

              enlarge, expand, lengthen, prolong, to carry out

              further than its original limit. Extension, according to

              Black's Law Dictionary, means enlargement of the

              main body; addition of something smaller than that

              to which it is attached; to lengthen or prolong. Thus

              extension ordinarily implies the continued existence

              of something to be extended. The distinction



              between 'extension and 'renewal' is chiefly that in

              the case of renewal, a new lease is required, while

              in the case of extension the same lease continues

              in force during additional period by the performance

              of the stipulated act. In other words, the word

              'extension' when used in its proper and usual sense

              in connection with a lease means a prolongation of

              the lease........"
IN THE HIGH COURT OF KERALAAT ERNAKULAM

                                                         PRESENT:

                            THE HONOURABLE MR. JUSTICE A.HARIPRASAD

                WEDNESDAY, THE 7TH DAY OF OCTOBER 2015
                                                RSA.No. 282 of 2015 ()
                                                  

       M/S. INDIRA MOTOR SERVICE
          Vs

        PANAKKAT NAZARUDDIN
        

             This second appeal raises the following substantial questions

of law:

                  "(i)   When the renewal clause in a lease deed

           expressly incorporates the renewal clause also as one

           of the terms of renewal, does the term of the lease

           expire with one renewal or only on expiry of two

           consecutive terms?

                  (ii)   Whether the terms of Ext.A1 lease deed

           have been correctly interpreted by the lower courts in

           limiting the term of renewal to twenty years alone?

                  (iii)  Whether a finding not required for the

           determination of the lis will operate as res judicata in a

           subsequent suit?"

      2.     Relevant facts, shortly stated, are thus: Defendants 1 to 3 in a

suit for recovery of vacant possession of the plaint schedule property and

also for realisation of money are the appellants. Plaintiff is the contesting

respondent. For the sake of convenience, the parties are referred to as the


plaintiff and defendants.

       3.      Property described in the plaint schedule belonged to

deceased Panakkad Abdul Khader. He had created the commercial lease

in question in favour of the first defendant firm represented by its then

managing partner, deceased Balakrishnan. Ext.A1 document, styled as an

indenture of lease, is dated 29.12.1971. The purpose of lease was for

erecting/installing and maintaining a petrol/high speed diesel pump,

storage tank, service and lubricating station, etc. Original term fixed in

Ext.A1 was 20 years commencing from 01.01.1972.            Rent agreed to

between the parties was `400/- per month for the first ten years and at the

rate of `450/- per month for the remaining ten years. After granting the

lease, the first defendant firm erected a petrol pump with all accessories in

the plaint schedule land. Even now the business is continuing. The

managing partner of the firm later died and the firm is at present

represented by the contesting defendants. Panakkad Abdul Khader also

died. His legal heirs effected a partition of larger properties belonged to

him, including the property in dispute, as per a partition deed dated

11.05.1982. Item No.2 in that partition deed is described in the plaint

schedule. It was allotted to the share of one Ahamed with absolute right of

disposition. After the death of Ahamed, all his legal heirs, except one son

by name Mohammed Sajin, assigned their rights over the plaint schedule

property to the plaintiff as per a registered document dated 12.12.2000.


Subsequently, Mohammed Sajin also released his share in the property in

favour of the plaintiff by another registered document dated 17.12.2000.

Thus, the plaintiff became absolute owner of the plaint schedule property.

       4.      Aforementioned Ahamed had filed a suit, viz.,O.S.No.49 of

1996, against the first defendant for recovery of possession of the plaint

schedule property and for damages for use and occupation. Pending the

suit, he died. His legal heirs were impleaded in the proceedings. While so,

the disputes between the plaintiffs and defendants therein were settled out

of court. Thus the suit was compromised. Ext.A2 is the certified copy of

the judgment and decree in O.S.No.49 of 1996, which contains the

compromise petition also. As per the terms of compromise, the first

defendant agreed to pay rent at the rate of `2,000/- per month. Other

contentions available to the parties were left open in the compromise.

       5.      The plaintiff after obtaining ownership over the plaint schedule

property, informed the first defendant of the change of ownership and

thereupon, the firm attorned to the plaintiff. Rent upto and inclusive of

31.03.2004 was paid. Then the plaintiff instituted O.S.No.1 of 2005 against

the defendants before the Munsiff's Court, Kannur for recovery of

possession and arrears of rent. The defendants appeared and contested

the suit. The defendants inter alia contended that the lease created as per

Ext.A1 is a permanent lease and it could not be terminated. The trial court

decreed the suit in part allowing the plaintiff to recover certain amounts



towards arrears of rent. Although the defendants were allowed to continue

as per the terms in Ext.A1, their claim for permanent tenancy was

disallowed. Against the judgment and decree in the above suit, the fifth

defendant filed an appeal, viz., A.S.No.217 of 2006 before the Additional

District Court, Thalassery. The plaintiff also filed an appeal challenging the

judgment and decree as A.S.No.204 of 2006. Both these appeals were

considered together and the appellate court dismissed both the appeals

confirming the judgment and decree of the trial court. The contesting

defendants took up the matter in second appeal to this Court, viz.,

R.S.A.No.725 of 2011. Learned Single Judge disposed the appeal, at the

stage of admission itself finding that there was no substantial question of

law involved. The said judgment is Ext.A7. According to the plaintiff, a true

interpretation of Ext.A1 would show that the defendants are not entitled to

continue in possession after the renewed period of 20 years stipulated

therein.

        6.     The contesting defendants strongly opposed the suit.

According to them, Ext.A1 created a permanent lease. The lessor is not

given any option to terminate the lease on attaining a period of 20 years

initially fixed. Lease will be automatically renewed as per the terms in

Ext.A1. That means, the agreement will be automatically renewed in every

20 years. There is nothing wrong in law in creating a perpetual lease.

From the lease agreement, it can be seen that the property leased out was



a barren land. The lessee had invested huge amounts for reclaiming the

land and for erecting a petrol bunk in the property. It is the contention that

the land was lying more than 15 feet lower than the ground level of the

neighbouring properties. The land was not fit for any purpose. Considering

the expenses that would be incurred by the lessee in reclaiming the land,

the parties intended to create a lease for a long period. The parties never

intended to confine the term of lease for 20 years. In this background,

Ext.A1 will have to be interpreted. The views taken by the trial court and

lower appellate court are legally incorrect. Crux of the matter lies in the

interpretation of Ext.A1 document.

       7.      Heard     Shri  B.G.Bhasker,      learned    counsel    for   the

appellants/defendants and Shri P.B.Krishnan, learned counsel for the

contesting respondent/plaintiff.

       8.      Pivot of the controversy lies in the interpretation to be given to

the relevant clause in Ext.A1. As mentioned above, the lease deed is dated

29.12.1971. The tenancy created thereunder commenced from 01.01.1972.

Purpose of the lease was to erect and establish an outlet for storage and

sale of petroleum products. Instead of narrating about the terms in the

indenture of lease in my words, I would prefer to extract the words used by

the parties in Ext.A1. The following excerption from page No.3 of Ext.A1

will throw light on the nature of jural relationship intended to be established

between the parties:


                    "................whatsoever to the said piece or

              parcel of land belonging or therewith held or

              enjoyed and together also with the right for the

              Lessee to install, erect and maintain in upon and

              underneath the said piece of land petrol and/or

              High Speed Diesel Oil Pumps, storage tanks,

              service and lubricating stations, weigh bridges,

              roads, culverts and erections, ancillary thereto and

              together also with the right for the lessee, its

              agents, customers and representatives of INDIAN

              OIL CORPORATON Ltd. and other authorised

              persons to use the premises hereby demised at all

              times and for all purposes whatsoever TO HOLD

              UNTO THE Lessee for a term of twenty years

              commencing from the 1st day of January, 1972 but

              renewable       and     determinable     as hereinafter

              provided yielding and paying therefore during the

              said term a monthly rent of Rs.400/= (Rupees Four

              hundred only) for the first ten years and Rs.450/-

              (Rupees Four hundred and fifty only) for the next

              ten years payable by regular monthly payments

              and also on the determination of the said term

              during any month, then paying the proportionate

              part of the month's rent in respect of the portion of

              the month elapsed at the time of determination and

              upon the conditions of the performance and

              observance of the covenant and conditions

              hereinafter contained..................."


       9.      Most important clause in Ext.A1 is the one contained in I(h). In

fact, the proviso therein is the most relevant part for our purpose. Clause I

(h) and the proviso in Ext.A1 is re-produced hereunder:

                    "(h)    The Lessee shall at the expiration or

             sooner determination of the said term yield up and

             deliver peaceful and vacant possession of the

             demised     premises.      All  buildings, structures,

             installations, fittings, fixtures, and erections of

             whatsoever kind, and nature whether in, upon or

             underneath the demised premises shall during the

             said term and at the expiry thereof entirely belong to

             and revert to the Lessee who shall be entitled to take

             away the same. The Lessor will not have any right,

             title or interest therein nor shall they be entitled to

             appropriate or retain the same or any part thereof.

                    PROVIDED ALWAYS AND IT IS AGREED

             AND DECLARED that at the expiration of the said

             term of twenty years this lease will be automatically

             and without any further act of any of the parties

             hereto be renewed for a further term of twenty years

             from the expiration of the said term hereby granted

             unless the Lessee shall prior to the expiration of the

             first mentioned term give to the Lessor one calender

             month's previous notice in writing of their intention

             not to take any renewed lease. The renewed lease

             will be under and subject to the same covenants and

             conditions and agreements as are herein contained

             including the present covenant for renewal."


                                (underline supplied by me)

       10.     Based on the above clause in Ext.A1, learned counsel for the

defendants/appellants contended that even if the contention of a perpetual

lease is found against in the previous round of litigation, the lessee under

Ext.A1 is entitled to get renewal of the lease atleast for another term as

provided therein.     According to him, the expressions "lease will be

automatically and without any further act of any of the parties hereto be

renewed for a further term of twenty years" is an indication that the lessor

has no power or authority to limit the term of lease according to his choice.

Still more, Shri B.G.Bhasker, the learned counsel for the defendants,

contended that the expression in Ext.A1, that "the renewed lease will be

under and subject to the same covenants and conditions and agreements

as are herein contained, including the present covenant for renewal" gives

the lessee a right atleast to claim renewal for the second time, if not more.

       11.     Per contra, learned counsel for the plaintiff Shri P.B.Krishnan

contended that the recitals in clause I(h) of Ext.A1 will have to be construed

limiting them to 20 years only. Since the original term of lease has expired

and the lessee continues in possession of the property at present, it can

only be assumed that he had availed a right of one time renewal for

another term of 20 years. As that period is also over, the plaintiff/lessor has

every right to recover possession of the property with compensation for use

and occupation from the defendants. No question of renewing the lease for



a second time arises as that is not the intention of the parties deducible

from clause I(h) of Ext.A1.

       12.     Before I venture to discuss the precedential law cited at the

Bar, I would like to recount and restate certain basic principles regarding

the interpretation of deeds. First and foremost principle is that whenever a

document is couched in a language which is clear and definite and no

doubt arises in its application to the facts, there is no need to resort to the

rules of interpretation. Rules of interpretation of deeds are intended to

ascertain, to the extent possible, the exact meaning of a document which is

not clear and definite. Many a time, language proved to be an imperfect

vehicle for expressing thought and intention. The rules of interpretation or

canons of constructions are the products of real life experiences of Judges

and Jurists. Prime purpose of interpretation of a document is to ascertain

the intention of the parties manifested at the time when the document was

executed. To ascertain the intention of the parties, the document must be

considered as a whole. It is from the whole of the document, coupled with

the surrounding circumstances, that the general intention of the party or

parties is to be ascertained. Attempt must be made to gather the intention

of the parties from the exact words used in the deed. When the words

used in a deed are in their literal meaning unambiguous and when such

meaning is not excluded from the context and is sensible with respect to

the parties at the time of executing the deed, such literal meaning must be



taken. Where, the words used in a deed, if taken in its literal sense lead to

absurdity and inconsistency, then an interpretation to avoid that absurdity

and inconsistency should be made. It is also a settled principle that when

the intention of the maker or makers of a deed cannot be given effect to in

its full extent, effect is to be given to it as far as possible. Where the

intentions are sufficiently clear from the deed itself, mis-recital in some part

of the deed cannot vitiate it. Anything expressly mentioned in the deed

excludes another view impliedly possible.

       13.     As far as possible, effect is to be given to all words used in a

document. This is yet another important principle in the interpretation of

deeds. A document should be construed in its entirety. Further, if possible,

it should be construed so as to give effect to every word employed therein.

The court is not at liberty to discard a word, if some meaning can be

ascribed to it. Normally, the words employed in a deed should be taken in

its ordinary sense, unless there are indications to do otherwise. It is also

an important rule that plain words should be given plain meaning.

       14.     The Supreme Court in Sant Ram v. Rajinder Lal (AIR 1978

SC 1601) enunciated certain principles regarding the interpretation of a

lease deed.     His Lordship V.R.Krishna Iyer, J., speaking for the three

Judges bench, quoting with approval from " Lux Gentium Lex - Then and

Now, 1799" held as follows:



                     "Two   rules  must    be  remembered         while

             interpreting deeds and statutes. The first one is:

             "in drafting it is not enough to gain a degree of

             precision which a person reading in good faith can

             understand, but it is necessary to attain if possible to

             a degree to precision which a person reading in bad

             faith cannot misunderstand." The second one is more

             important for the Third World countries. Statutory

             construction, so long as law is at the service of life,

             cannot be divorced from the social setting................"

Apex Court in Provash Chandra Dalui v. Biswanath Banerjee (1989

Supp (1) SCC 487) laid down the following proposition:

                       "'Ex  praecedentibus    et  consequentibus

               optima fit interpretatio'. The best interpretation is

               made from the context. Every contract is to be

               construed with reference to its object and the whole

               of its terms. The whole context must be considered

               to ascertain the intention of the parties. It is an

               accepted principle of construction that the sense

               and meaning of the parties in any particular part of

               instrument may be collected 'ex antecedentibus et

               consequentibus;' every part of it may be brought

               into action in order to collect from the whole one

               uniform and consistent sense, if that is possible. As

               Lord Davey said in N. E. Railway Co. v. Hastings:

               "......the deed must be read as a whole in order to

               ascertain the true meaning of its several clauses,


               and ....... the words of each clause should be so

               interpreted as to bring them into harmony with the

               other provisions of the deed if that interpretation

               does no violence to the meaning of which they are

               naturally susceptible......"

                In construing a contract the court must look at the

               words used in the contract unless they are such

               that one may suspect that they do not convey the

               intention correctly. If the words are clear, there is

               very little the court can do about it. In the

               construction of a written instrument it is legitimate in

               order to ascertain the true meaning of the words

               used and if that be doubtful it is legitimate to have

               regard to the circumstances surrounding their

               creation and the subject matter to which it was

               designed and intended they should apply."

With these principles in mind, I shall venture to interpret Ext.A1 indenture of

lease.

       15.     The first two substantial questions of law formulated above

can be considered together. Shri B.G.Bhasker vehmentally contended that

the courts below failed to appreciate the relevant clause in Ext.A1 in the

light of the principles in Green v. Palmer ((1944) 1 All.E.R. 668), which

was approved by the Supreme Court in State of U.P. and others v. Lalji

Tandon and others (AIR 2004 SC 32). I shall start with Green v. Palmer.

       16.     Uthwatt, J. sitting in Chancery Division decided Green v.



Palmer in the following factual settings. By a tenancy agreement made on

1st July, 1940 between the plaintiff Green and the defendant Palmer,it was

agreed that the landlord would let and the tenant would take a house

together with furniture, fixtures and effects therein at a weekly rent of three

guineas. The term of tenancy was to commence on 9th July, 1940 and to

end on 7th January, 1941. It was for six months. Then there were certain

other provisions. The first of which was to pay the rent on particular dates.

The next was to make good, repair and restore all articles of furniture or

fixtures which might have been damaged or destroyed by the tenant, his

servants, etc. during the said term. The most important clause which gave

rise to the litigation read as follows:

                     "The tenant is hereby granted the option of

            continuing the tenancy for a further period of six

            months on the same terms and conditions including

            this clause, provided the tenant gives to the landlord

            in writing four weeks' notice of his intention to

            exercise his option".

The question that came up for decision of the court was about proper

construction of this clause giving the tenant an option of continuing the

tenancy.      Learned Judge after considering various aspects ruled as

follows:

                    "Turning to the actual language of the clause,

             the first thing one observes is that, in terms, there is


             granted to the tenant a single option exercisable only

             once upon the named event, and the subject-matter

             of that option is an option "of continuing the tenancy

             for a further period of six months on the same terms

             and conditions including this clause." To my mind,

             what that means is this: the tenant is to be allowed

             once, and once only, the opportunity of continuing the

             tenancy-continuing it for a further six months. Then

             we come to the critical words "on the same terms and

             conditions including this clause." As I read it, that

             means there is included in the new tenancy

             agreement a right in the tenant, if he thinks fit, to go

             on for one further six months, and when you have got

             to that stage you have finished with the whole matter.

             In other words, it comes to this: "Here is your present

             lease. You may continue that, but I tell you, if you

             continue it, you continue it on the same terms as you

             were granted the original lease. You may continue it

             for a further 6 months with the right to go on for

             another 6 months."

              Upon that footing, in the events which have

              happened, all the landlord was bound to do under

              this arrangement was to permit the tenant to occupy

              for a period not exceeding 18 months in the whole

              from the time when the original lease was granted."

In Yohannan v. Vasudevan Chakkiyar (1954 KLT 671), a Division Bench

of this Court considered the ratio in Green v. Palmer and quoted it with



approval. Later the Supreme Court in Lalji Tandon's case considered the

principles in Green v. Palmer, inter alia, decisions rendered by Indian High

Courts. Summary of the facts in Lalji Tandon's case is thus: The property

in question was a plot of land in Allahabad District over which a bunglow

had been built.      Ownership of the land vested in the State.         The

superstructure seemed to have been brought up by the lessee or his

transferee, as the facts were not very clearly presented before the

Supreme court. The suit property was given on 50 years lease to one

J.W.Walsh. The lease contained a clause for renewal which, as far as

ascertainable from the materials placed before the Supreme Court and

also from the findings of the High Court, conferred an option on the lessee

to seek renewal of the lease for another term of 50 years and on such

option being exercised before the expiry of the term of 50 years of the

existing lease, the lessor shall "act upon forthwith and execute and deliver

to the lessee upon his duly executing a counter part or renew the lease for

the said premises for a further term of 50 years and with and subject to the

same covenants, conditions and provisions as are herein contained." The

Supreme Court observed that the original deed of lease, though very

material for ascertaining the covenants thereof, including the one for

renewal, had not been placed on record by either party. From a reading of

the decision rendered by the Apex Court, it is evident that the court had no



occasion to go through the original lease deed and with the materials

available on record, the case was decided. The High Court as well as the

Supreme Court expressed the view that the State ought to have produced

the lease deed or its copy to assist the court in arriving at a just decision.

But the same was not done in spite of several opportunities having been

allowed. The High Court had even chosen to draw an adverse inference

against the State, without expressly stating so, for the non-production of

the original lease deed. Facts showed that original lessee Walsh alienated

his interest in the suit property to Lalji Tandon, the respondent-plaintiff, who

later died and his legal representatives were brought on record.             Lalji

Tandon having stepped into the shoes of Walsh sought for renewal of the

lease consistently with convenant for renewal as contained in the original

lease. State Government agreed for renewal and the renewed lease deed

came to be executed on 20th February, 1945. Although the State

Government was agreeable to renew the lease for a term of 50 years, by

20th February, 1945, the day on which the renewed lease came to be

executed, a period of 42 years, two months and 20 days had remained

available out of the 50 years of the second term. Therefore, the term of the

renewed lease was confined to the said period of 42 years, two months

and 20 days. This lease deed was produced on record and that is marked

as Covenant 2. The relevant clause therein read as follows:

                    "It is hereby mutually covenanted and agreed


              by and between the lessor and the lessee that the

              obligations hereunder shall continue throughout the

              term hereby created and shall be binding on their

              respective successors-in-interest in the demised

              premises that they will perform and observe the

              several covenants, provisos and stipulations in the

              aforesaid lease expressed as fully as if the same

              covenants, provisos and stipulations had been

              herein repeated in full with such modifications only

              as are necessary to make them applicable to this

              demise and as if the name of the parties hereto had

              been substituted for those in the aforesaid lease

              provided always that the building referred to in the

              aforesaid lease having been erected the lessee

              shall not be under any obligation to erect another."

       17.     Proceeding on the assumption that the renewed lease

incorporated all the covenants of the original lease, including the covenant

for renewal, the plaintiff (Lalji Tandon) sought for renewal of the lease for

yet another term of 50 years. The District Collector recommended the

renewal.      Board of Revenue also directed renewal to be expedited.

However, the State Government did not renew it as recommended, which

resulted in his filing a writ petition before the High Court. The High Court

dismissed the writ petition summarily with certain observations. The High

Court expressed hope that the State would renew the lease at the earliest.

But, those observations did not bring in any result. Therefore, Lalji Tandon


had to file another writ petition which led to the passing of the order

impugned before the Supreme Court.          The grievance raised by Lalji

Tandon, as writ petitioner before the High Court, was that he was entitled

for a renewal of lease for yet another term of 50 years and since the State

failed to do so, he requested the Court to issue a writ of mandamus

directing the State Government to renew the lease. The High Court held

that the State Government was bound to renew the lease held by the legal

representatives of deceased Lalji Tandon in accordance with the covenant

for renewal. That was challenged before the Supreme Court.

       18.     The Supreme Court after considering various statutory

principles and the decision of the Andra Pradesh High Court in Syed

Jaleel Zane v. P.Venkata Murlidhar and others (AIR 1981 A.P. 328), that

of the Calcutta High Court in Secretary of State for India in Council v.

A.H.Forbes ((1912) 17 IC 180) and also the principles in Green v. Palmer

(supra), approved the principles in those decisions and held as follows:

                    "18. We find ourselves in full agreement with

             the view of the law taken in the decisions cited

             hereinabove. It is pertinent to note that the

             respondent is not claiming a lease in perpetuity or

             right to successive renewals under the covenant for

             renewal contained in the 1887 lease. The term of

             50 years under the 1887 lease came to an end in

             the year 1937 and the option for renewal was



             exercised by the respondent as assignee of the

             original lessee which exercise was honoured by the

             lessor State executing a fresh deed of lease

             belatedly on February 20, 1945. This lease deed

             does not set out any fresh covenants, mutually

             agreed upon between the parties for the purpose of

             renewal.    Rather   it  incorporates,   without    any

             reservation,   all  the   covenants,    provisos    and

             stipulations as contained in the principal lease as if

             they had been herein repeated in full. Not only was

             a fresh deed of lease executed but the conduct of

             the parties also shows that at the end of the term

             appointed by the 1945 lease, i.e. in or around the

             year 1987, the lessor did not exercise its right of re-

             entry. On the other hand, the respondent exercised

             his option for renewal. The officials of the appellant

             State, i.e. the Collector and the Board of Revenue,

             all recommended renewal and advised the State

             Government to expedite the renewal. The State

             Government was generally renewing such like

             leases by issuing general orders/instructions to its

             officers. At no point of time prior to the filing of the

             counter-affidavit, on the present litigation having

             been initiated, the State or any of its officers took a

             stand that the right of renewal, as contained in the

             principal deed of lease, having been exhausted by

             exercise of one option for renewal, was not available

             to be exercised again.

                    19.   Now that the covenant for renewal has



             been    referentially  incorporated      without  any

             reservation in the lease deed of 1945 the exercise of

             option for renewal cannot be denied to the

             respondent.     However, in the lease deed to be

             executed for a period of 50 years commencing May

             20, 1987, the covenant for renewal need not be

             incorporated and, therefore, the term of the lease

             would come to an end on expiry of 50 years

             calculated from May 20, 1987. This view also

             accords with the view of the law taken in Green v.

             Palmer (supra)."

With these observations, the Apex Court dismissed the appeal preferred by

the State.

       19.     Glaring differences in the facts to be noticed between Green v.

Palmer and the case on hand is that in Green v. Palmer, the tenant was

bound to issue a notice in writing four weeks prior to the expiry of the lease

revealing his intention to exercise the option to renew. But in the present

case, the fact situation is just the reverse. The words employed in the

proviso to clause I(h) in Ext.A1 is that after the term of 20 years the lease

will be automatically and without any further act of any of the parties hereto

be renewed for a further term of twenty years. Again it says that automatic

renewal will take effect unless the lessee, prior to the expiration of the first

mentioned term, give to the lessor one calender month's previous notice in

writing of their intention not to take any renewed lease. In Lalji Tandon's



case, the lessor was bound to execute a lease deed after the original term

of 50 years for renewal of the lease. Such a condition is not incorporated in

Ext.A1. Relevant clause in Ext.A1 shows that automatic renewal would

take place if the lessee did not issue one month's prior notice before

expiration of the term evincing an intention not to take a renewed lease.

Meaning of the expression "renewal" shall be considered below.

       20.      Before    proceeding  further,  an   important   development

happened to the legal principle in Green v. Palmer will have to be taken

cognizance of. Another Chancery Division judgment rendered by Harman,

J. in re Greenwood's Agreement (Parkus v. Greenwood - 1949 G.886)

distinguished the principle enunciated in Green v. Palmer. Facts involved

in the said case are that by an agreement made between the defendant as

landlord and the plaintiff's predecessors-in-title as tenants, the defendant

agreed to let certain premises for a term of three years, and the agreement

contained a provision that "the landlord will on the written request of the

tenants made three calendar months before the expiration of the

term ...........grant to them a tenancy of the said premises for a further term

of three years from the expiration of the said term at the same rent and

containing the like agreements and provisions as are herein contained

including the present covenant for renewal."         The plaintiff took out a

summons for determination of the question whether this provision created



a lease for 2000 years by virtue of the Law of Property Act, 1922. After

considering the matter, the learned Judge ruled that the Act only operated

where the lease was on the face of it perpetually renewable, and contained

an express covenant for perpetual renewal; and, there being no such

covenant in the agreement in suit, a lease for 2000 years was not created.

Regarding the ratio in Green v. Palmer, the following observations were

made:

                    "I ought to mention that there was also cited

             to me a decision of Uthwatt J., as he then was, of

             Green v. Palmer, where he held, without regard to

             this present point, that words in somewhat similar

             form as these created a right to renew twice and no

             more.      That was an instance of a six monthly

             furnished tenancy and the improbability that the

             parties had thought of creating a 2000 years term

             was very high. The learned Judge stated that he

             was entitled to take into account and into

             consideration all the surrounding circumstances.

             How he came to the conclusion that he did I find

             difficult to follow, but I say no more about it because

             it does not seem to me that it touches the point

             which I have to decide here."

       21.     Single Judge's decision in Parkus was taken to the Court of

Appeal. Three learned Judges heard and decided the matter. (see -

Parkus v. Greenwood ((1950) Ch. 644). Correctness of the decision in



Green v. Palmer was also questioned. Ultimately the Bench ruled that the

provisions in that particular lease were to be taken as an expression of

intention that the right of renewal was to be perpetual and that the

agreement therefore came within the definition of a perpetually renewable

lease contained in Section 190 of the Law of Property Act, 1922 which

lease was converted into a demise for a term of 2000.              With that

reasoning, the decision by Harman, J. was reversed.                Following

observations of the Bench are profitable in the context of this case:

                     "Green v. Palmer was a case in which

              perhaps any Judge would feel even stronger

              inclination than in the present to avoid a result

              which on the face of it would appear unlikely to

              have been contemplated by the parties, for it was a

              furnished tenancy for a six-month period only. The

              material passage which the court had to construe

              was: "The tenant is hereby granted the option of

              continuing the tenancy for a further period of six

              months on the same terms and conditions,

              including this clause, provided the tenant gives to

              the landlord in writing four weeks' notice of his

              intention to exercise his option." Uthwatt J., having

              regard to the circumstances of the case, read this

              qualification, as I understand his judgment, into the

              provision which I have just quoted: that "the same

              terms and conditions including this clause" must be

              read as meaning "including this clause on the first


              occasion; but that, when the clause came to be

              operated again, there was no ground for once more

              reproducing the whole formula, including the right

              or option to renew. I share with Harman J.

              considerable difficulty in following the logic of the

              argument, but it may well be a circumstance which

              has to be borne in mind that this was a six-month

              tenancy of furnished premises. The report does not

              contain a full statement of all the terms of the lease.

              It may have contained covenants or obligations with

              regard to specific furniture which might have forced

              a court to give a strained or artificial construction to

              a formula which otherwise in essentials I should

              have thought hardly possible to distinguish from

              that of the present case."

Learned Judges were of unanimous opinion that if Green v. Palmer were

to be followed in another case, it would have to be shown that the facts in

Green v. Palmer were very special and that those of the case which

sought to follow it were for practical purposes identical with them. On the

facts of the case in Parkus, the learned Judges did not think that Green v.

Palmer should be followed.

       22.     Fact that the principles in Green v. Palmer was deviated by a

Bench of Chancery Division was not noticed either by this Court in

Yohannan's case (supra) or by the Supreme Court in Lalji Tandon's case.

Upshot of the present discussion is that the legal principles in Green v.


Palmer cannot be said to be absolute and it cannot be blindfoldedly

applied to all fact situations. As rightly argued by Shri P.B.Krishnan, the

principles in Green v. Palmer should be considered in the background of

the special facts and circumstances revealed in that case, especially in the

context of the facts that the lease was for a period of six months only and

the subject matter of the lease was a furnished building. I am of definite

view that the principles in Green v. Palmer can never be boldly lifted and

applied to the facts in this case.

       23.     Despite the fact that non-approval of the principles in Green v.

Palmer by a larger bench of Chancery Division went unnoticed by this

Court and the Supreme Court, those decisions are still binding on this

Court for obvious reasons. In Lalji Tandon's case, the Supreme Court

placed reliance on the principles in a Division Bench decision of the

Calcutta High Court in A.H.Forbes (supra). There a dispute relating to

renewal of a lease granted by the Collector to the original grantee for a

period of 27 years came up for consideration. It was held that although the

agreement in question contained a covenant for renewal, such a clause in

a lease does not necessarily import permanency. A lease which creates a

tenancy for a term of years may yet confer on the lessee an option of

renewal. If the lease does not state by whom the option is exercisable, it is

exercisable by the lessee only. The option is exercisable not merely by the



lessee personally but also by his representative-in-interest. If the option

does not state the terms of renewal, the new lease will be for the same

period and on the same terms as the original lease in respect of all the

essential conditions thereof except as to the covenant for renewal itself.

The decision further laid down that there is no sort of legal presumption

against a right of perpetual renewal. The burden of strict proof is imposed

upon a person claiming such a right. It should not be inferred from any

equivocal expressions which may fairly be capable of being otherwise

interpreted. The intention in that behalf should be clearly shown; otherwise

the agreement is satisfied and exhausted by a single renewal. A covenant

for renewal runs with the land. All these principles in A.H.Forbes were

approved by the Supreme Court in Lalji Tandon's case.

       24.     In Lalji Tandon's case, the legal principle in Syed Jaleel

Zane's case (supra) was also approved.         In that case, a lease was

executed in favour of the tenant for a period of five years from 01.01.1964.

The lease contained a clause for renewal also. The landlord brought a suit

for eviction on the ground of waste and damage on 10.01.1969. The suit

was dismissed on 16.02.1973. An appeal was preferred. By the time the

appeal came up for hearing more than three years had elapsed after the

renewal period and still the tenant was continuing in the premises on the

same terms and conditions. The appellate court held that the tenant was


not guilty of waste and damage but allowed the appeal on 24.03.1977

observing that the lease was not perpetual. Thereafter a suit for eviction

was filed on the basis of the observations and the tenant preferred a

letters patent appeal against the appellate judgment.         Considering the

entire issues, the court held that it was unjust to allow the tenant to

continue in the premises on the same terms and conditions agreed to in

1963. Indeed, the tenant was trying to reap an unfair advantage over the

landlords by insisting upon and by continuing in possession of the

premises even after the second term of five years. The tenant was clearly

taking an unreasonable and unjust stand which could not be allowed and

there should be a decree for eviction of the tenant. Since Lalji Tandon's

case considered various decisions touching on the subject, it cannot be

said that dilution of the principles in Green v. Palmer by a larger bench of

the Chancery Division, although it went unnoticed in Lalji Tandon's case,

will diminish its binding force.

       25.     It will be apposite to note that the Court of Appeal in Parkus

had observed that tenancy agreements with an option for successive

renewals were in accordance with the old conveyancing practice whereby

the words "including" or "excluding this present covenant"were used to

confer or exclude a perpetual right of renewal.

       26.     Reverting to the contentions in this case, I have to notice that



the claim of permanent tenancy raised by the defendants was found

against in the earlier round of litigation as well as in the present one.

There can never be any doubt as to the proposition that the claim of

perpetual lease or permanent tenancy is now barred by res judicata.

Shri.B.G.Bhasker contended for the defendants that neither in the first

round nor in this round of litigation, the question of renewal of lease

created by Ext.A1 for a second time was considered by any of the courts.

It is, therefore, contended that the defendants are entitled to get at least a

third term of lease as per clause I(h) in Ext.A1. The phraseology employed

in clause I(h) proviso to Ext.A1 that "at the expiration of the said term of

twenty years this lease will be automatically and without any further act of

any of the parties hereto be renewed for a further term of twenty years"

and "the renewed lease will be under and subject to the same covenants

and conditions and agreements as are herein contained including the

present covenant for renewal" clearly indicate the right of the defendants to

get a third term and it is an automatic event. Therefore, the defendants

would contend that the suit for eviction is not maintainable.

        27.    Per contra, Shri P.B.Krishnan argued for the plaintiff that even

the first renewal enjoyed by the defendants was without any legal basis

and a true interpretation of Ext.A1 will indicate that the stipulations therein

did not confer any right on the defendants.

        28.    As mentioned earlier, the theory propounded by the


defendants with regard to perpetual lease or permanent tenancy can no

longer be reckoned in the light of the fact that it is barred by res judicata.

The real question surviving for consideration is whether they are entitled to

get a third term of twenty years as per the recitals in Ext.A1? Ancillary

question arising is whether the defendants' plea for a third term is also

barred by res judicata? I shall consider it in the succeeding paragraphs

elaborately. For the time being, I shall proceed on the assumption that the

said contention of the defendants is not hit by res judicata.

       29.     Ext.A1 lease deed was executed on 29.12.1971 for the

purpose of establishing and running a petroleum outlet. Considering the

nature of the business, the expenses that might have been incurred for

making up land for running a petrol bunk, erecting machinery for the sale of

petroleum products, constructing other structures necessary for conducting

the business, making underground storage facility, etc., it can only be

assumed that the parties must have intended to keep the lease for a

sufficiently long period. Excerption from page 3 of Ext.A1 quoted above

clearly shows the foresight of the parties.      It is an admitted fact that

besides the original term of 20 years, the lessee had enjoyed another term

of 20 years as provided in clause I(h) of Ext.A1. The question that falls for

decision is whether the lessee is entitled to get a second renewal, ie., a

third term of 20 years in succession.

       30.     Shri P.B.Krishnan contended that original term of lease itself



was for considerably a long period. That apart, the lessee had already

enjoyed another term of 20 years by virtue of the aforementioned clause.

According to the plaintiff, there was no legal reason to interpret the said

clause in Ext.A1 enabling the defendants to claim renewal at the first

instance itself. Second renewal is legally impossible, according to the

plaintiff. Shri P.B.Krishnan pointed out an anomaly, which may cause great

prejudice to the plaintiff, if the interpretation advanced by the defendants is

accepted. As per the terms in Ext.A1, monthly rent for the premises was

`400/- for the first ten years. Then, for the next ten years, monthly rent

was to be enhanced to `450/-. It is contended on behalf of the plaintiff that

consequent to the renewal of the lease, as provided in clause 1(h) in

Ext.A1, the parties would arrive at a precarious position wherein after 20

years the monthly rent would revert back to `400/- per mensem and again

after ten years it will be enhanced only to `450/- per mensem. This single

factor itself is sufficient to show that the parties never intended to confer

any right on the lessee to claim an automatic renewal of the lease. This is

one of the strongest points of the plaintiff.        According to the learned

counsel for the plaintiff, no sensible land owner would have agreed to

accept a lesser rent for a renewed lease, that too, after a long term of 20

years and after it was enhanced once. Further, long duration of lease itself

is an indication against the right of renewal as it would be idle to think that



the parties might have been oblivious of the possible decline in money

value and appreciation of the land value. The location of the disputed land

is in Kannur town. All these factors are pointers to think that the defendants

had no right of first renewal. However, the facts that it had been renewed

once and that the term is over are now unchallengeable. The right of

defendants to get the first renewal was decided in the earlier round of

litigation.   In this context, the plaintiff would contend that the second

renewal shall never be permitted.

        31.    Clause 1(h) in Ext.A1 quoted above is positioned after the

specific provisions wherein the parties have decided to give and take the

property on lease.       In otherwords, the clause showing the vestiture of

leasehold right preceded clause I(h). For a proper and complete

interpretation of Ext.A1, I have gone through the deposition of DW1. In the

affidavit filed in lieu of the chief examination, he has asserted that they had

spent lot of amounts for reclaiming the land and for erecting the structures

and fixtures for starting a petrol bunk. Considering the age of the witness

at the time of deposition, it goes without saying that he is incompetent to

prove the actual amount that might have been spent by the original lessee

to make up the land suitable for petroleum business. No other evidence

was adduced to establish this case of the defendants. Therefore, there is

no extraneous evidence available in this case to find that the stipulations in

clause I(h) of Ext.A1 regarding renewals were made considering the cost


that would have been incurred by the lessee for making the land suitable

for a petroleum outlet. Even though in the proviso to clause I(h) of Ext.A1

it is mentioned that the lease will be under the same covenants and

conditions including the covenant for renewal, the clause which created the

demise shows that the lease was for a term of 20 years commencing from

01.01.1972. It is specifically mentioned that the lease is renewable and

determinable as provided therein.

       32.     In this context, the cardinal distinction between the terms

"extension" and "renewal" must be remembered.                Normally the term

'extend' means to enlarge, lengthen, prolong, etc.           Settled law is that

renewal of a lease denotes the creation of a new lease for all practical

purposes. Supreme Court in Provash Chandra Dalui's case (supra) re-

stated the principles thus:

                    "It is pertinent to note that the word used is

              'extension' and not 'renewal'. To extend means to

              enlarge, expand, lengthen, prolong, to carry out

              further than its original limit. Extension, according to

              Black's Law Dictionary, means enlargement of the

              main body; addition of something smaller than that

              to which it is attached; to lengthen or prolong. Thus

              extension ordinarily implies the continued existence

              of something to be extended. The distinction



              between 'extension and 'renewal' is chiefly that in

              the case of renewal, a new lease is required, while

              in the case of extension the same lease continues

              in force during additional period by the performance

              of the stipulated act. In other words, the word

              'extension' when used in its proper and usual sense

              in connection with a lease means a prolongation of

              the lease........"

       33.       If we read the entire terms and conditions in the document

conjointly, it can only be seen that the parties did not intend to create a

perpetual lease or a right of renewal for more than one time. As rightly

pointed out by the learned counsel for the plaintiff, the ratio in Green v.

Palmer cannot be applied to this case disregarding the facts herein. Even

the judgment of the Court of Appeal in Parkus (supra) would show that the

special features attached to the terms and conditions of lease must have

prompted the learned Judge in Green v. Palmer to allow a second

renewal. The lease in Green v. Palmer was for a short term of six months

and it was in respect of a furnished building. A.H.Forbes's case and Syed

Jaleel Zane's case approved by the Supreme Court in Lalji Tandon's case

show that even though the law does not abhor a perpetual lease, there

must be clear indications emanating from the lease deed itself to think that



the parties intended a perpetual lease. In this case, a stipulation regarding

the determination of the lease has been specifically provided. If all those

conditions in Ext.A1 are harmoniously read with clause I(h) and proviso, it

can be seen that the parties must have intended at the most one renewal

after the original term of 20 years. As mentioned above, the stipulations in

the proviso to clause I(h) is only in accordance with an old conveyancing

practice. Ext.A1 cannot be interpreted only on the basis of clause I(h) and

proviso, completely negating other provisions therein.

       34.     As stated above, the principles in Green v. Palmer were later

deviated by English Courts. They cannot be straight away applied

discounting the facts of this case. Startling differences in facts in both the

cases cannot be ignored. Although the contention raised by the plaintiff

that as in the case of Lalji Tandon, a separate deed is required for

renewal of the lease may not hold good in this case because in Lalji

Tandon's case that was a stipulation borne out from the materials placed

before the Supreme Court. And in this case, no such stipulation could be

seen from Ext.A1. Having regard to the entire facts and circumstances

under which the lease was made, purpose of the lease, original term of the

lease agreed to by the parties, rate of rent, stipulations regarding the

manner in which rent was agreed to be paid, etc., I am of the view that

theory of automatic renewal of lease beyond a term of first renewal for 20


years cannot be read into the terms in Ext.A1. In otherwords, second

renewal of the lease cannot be said to be an automatic event and the

concept of automatic renewal in the said clause can only be made

applicable to the first renewal. Recalling the principles of interpretation of

deeds discussed above, all the clauses in the document must be given

effect to and they should be harmoniously construed. Notwithstanding that

law does not frown upon a permanent lease, there must be clear

indications arising from the terms in the document to hold that the lease in

question was intended to be a permanent one. Applying the relevant

principles mentioned above to the facts of this case, I am of the definite

view that the lessee cannot claim a right to get a second renewal for

another term of 20 years and clause I(h) conferred only a legal right on the

lessee for one renewal after the expiry of the original term. Viewing from

this angle, the courts below are legally justified in dismissing the claim of

the defendants.

       35.     I shall answer the third substantial question of law now.

Learned counsel for the plaintiff heavily relied on the doctrine of res

judicata to contend that the defendants cannot be heard to say that they

are entitled to renew the lease for a second term. According to the learned

counsel, the defendants's plea based on the theory of permanent lease

was negatived by all the courts in the earlier round of litigation. So much

so, they are precluded from raising a contention that they are entitled to get



another term of 20 years from the date of expiry of the renewed lease. Per

contra, learned counsel for the defendants contended that the cumulative

effect of clause I(h) and its proviso is that the defendants are entitled to get

at least a second renewal. I have already seen that clause I(h) in Ext.A1

does not confer any right on the defendants to claim a second renewal.

However, the question of res judicata having forcefully raised by the parties

will have to be examined.

        36.    It is well settled that the doctrine of res judicata is founded on

the principles of justice, equity and good conscience. (see Lal Chand v.

Radha Kishan - AIR 1977 SC 789). It is equally settled that the doctrine

applies to all judicial proceedings and to all quasi judicial proceedings

before the Tribunals. Section 11 of the Code of Civil Procedure, 1908 (in

short, "CPC") operates against both the parties to the suit and not against

the defendant alone. The principle of res judicata is an inhibition against

the court, barring the courts from trying any suit in which the matter has

been directly and substantially in issue in a former suit between the same

parties or between the parties under whom they or any of them claim,

litigating under the same title in a court of competent jurisdiction to try such

subsequent suit. Another important condition is that the former suit must

have been heard and finally decided by such court. It is also axiomatic that

res judicata is a mixed question of fact and law and has to be specifically


pleaded.

       37.     Conditions for attracting res judicata can be generally divided

into five heads. They are:

               (i)   the matter directly and substantially in issue in the

subsequent suit must be the same matter which was directly and

substantially in issue either actually (Explanation III) or constructively

(Explanation IV) in the former suit. Explanation I is also relevant in this

context.

               (ii)  the former suit must have been a suit between the same

parties or between the parties under whom they or any of them claim.

Explanation VI is to be read with this condition.

               (iii) the parties as aforesaid must have litigated under the

same title in the former suit.

               (iv)  the court which decided the former suit must have been

a court competent to try the subsequent suit or the suit in which such issue

is subsequently raised. Explanation II is also to be read with this condition

as also Explanation VIII.

               (v)   the matter directly and substantially in issue in the

subsequent suit must have been heard and finally decided by the court in

the first suit. Explanation V must be read with this condition.

       38.     Learned counsel for the defendants contended that the

doctrine of res judicata is not applicable in this case as in the former round



of litigation what was claimed by the defendants was only a permanent

lease. The right to get a second renewal was not raised by the defendants

in the previous suit and therefore, there was no occasion for the court to

embark on an enquiry in that matter. Ext.A5 is the certified copy of the

judgment in O.S.No.1 of 2005 between the same parties. Learned counsel

for the defendants drew my attention to issue No.4 in that suit where the

question of permanent lease alone was raised. An additional issue was

raised in that suit touching on the clause in Ext.A1 deed regarding the

enforceability of the clause for renewal. It is, therefore, contended by the

learned counsel that the plea now raised by the defendants for getting one

more renewal was not raised in the previous suit and therefore, was not

heard and finally decided. Per contra, learned counsel for the plaintiff

contended that the entire case was examined by the trial court, the lower

appellate court and this Court in second appeal in the first round of

litigation and no claim thereafter can be raised by the defendants regarding

the right of renewal as it is barred by res judicata. In Ext.A5 judgment, the

court below while answering issue Nos. 2 and 4 together, observed that

the case of permanent lease set up by the defendants was not acceptable

and after a renewal for one time, the defendants could not claim a further

term. This was taken in appeal by the plaintiff as well as the defendants.

Ext.A6 is the common judgment in the appeals. There also the whole

issue was examined under points 1 and 2. The lower appellate court


clearly found that the relevant clause in Ext.A1 could be interpreted only

against the theory of a perpetual lease. The lower appellate court further

observed that as the renewed lease would end only on 29.12.2011 the suit

was premature. Second appeal filed before this Court was also dismissed

finding that there was no substantial question of law. We have to analyse

the contention regarding res judicata in this backdrop.

       39.     The principle of constructive res judicata enunciated in

Explanation IV to Section 11 CPC is directly applicable to the facts of this

case. The principle of constructive res judicata, stated shortly, is that any

matter which might and ought to have been made a ground of defence or

attack in a former suit shall be deemed to have been a matter directly and

substantially in issue in such suit. In otherwords, though it has not been

actually in issue directly and substantially, it will be regarded as having

been constructively in issue directly and substantially (see P.K.Vijayan v.

Kamalakshi Amma - AIR 1994 SC 2145). Where a matter has been

actually in issue, then, in order to constitute the matter of res judicata, it is

necessary that it should have been heard and finally decided. But, where

a matter has been constructively in issue, it could not, from the very nature

of the case, be heard and decided and it will be deemed to have been

heard and decided against the party omitting to allege it except when an

admission by the defendant obviates a decision.          It is clear from the


pleadings and findings entered by the courts in the first round of litigation

that the defendants, although did not specifically raise a right for a second

renewal based on clause I(h) in Ext.A1, might and ought to have raised

that contention and the matter can only be deemed to have been heard

and decided against the defendants by operation of the rule of constructive

res judicata in Explanation IV to Section 11 CPC.

       40.     Learned counsel for the plaintiff strongly relied on the decision

in Pawan Kumar Gupta v. Rochiram Nagdeo ((1999) 4 SCC 243). It is

contended by the plaintiff that merely because the defendants had no right

of appeal as the plea for eviction raised by the plaintiff was turned down in

the first round of litigation, there are clear negative findings on the issues

raised by the defendants regarding the right of renewal. Therefore, it is

vehementally contended that the principle in Pawan Kumar Gupta's case

will squarely apply to this case. Paragraphs 16 and 19 of the said decision

are relied on by the plaintiff, which are quoted hereunder:

                    "16. The rule of res judicata incorporated in

              Section 11 of the Code of Civil Procedure (CPC)

              prohibits the court from trying an issue which "has

              been directly and substantially in issue in a former

              suit between the same parties," and has been

              heard and finally decided by that Court. It is the

              decision on an issue, and not a mere finding on any

              incidental question to reach such decision, which


              operates as res judicata. It is not correct to say that

              the party has no right of appeal against such a

              decision on an issue though the suit was ultimately

              recorded as dismissed. The decree was not in fact

              against the plaintiff in that first suit, but was in his

              favour as shown above. There was no hurdle in law

              for the defendant to file an appeal against the

              judgment and decree in that first suit as he still

              disputed those decisions on such contested issues.

                    xxxxxxx

                    19.Thus the second legal position is this: if

              dismissal of the prior suit was on a ground affecting

              the maintainability of the suit any finding in the

              judgment adverse to the defendant would not

              operate as res judicata in a subsequent suit. But if

              dismissal   of  the    suit   was    on    account   of

              extinguishment of the cause of action or any other

              similar cause a decision made in the suit on a vital

              issue involved therein would operate as res judicata

              in a subsequent suit between the same parties. It is

              for the defendant in such a suit to choose whether

              the judgment should be appealed against or not. If

              he does not choose to file the appeal he cannot

              thereby avert the bar of res judicata           in the

              subsequent suit."

       41.     Learned counsel for the plaintiff, to strengthen his argument

that the claim of the defendants is barred by constructive res judicata,

relied on a decision of the Apex Court in Ramadhar Shrivas v.



Bhagwandas ((2005) 13 SCC 1). Following quotation is relevant for our

purpose:

                   "........ The expression "matter in issue" under

             Section 11 of the Code of Civil Procedure, 1908

             connotes the matter directly and substantially in

             issue actually or constructively. A matter is actually

             in issue when it is in issue directly and substantially

             and a competent court decides it on merits.          A

             matter is constructively in issue when it "might and

             ought" to have been made a ground of defence or

             attack in the former suit. Explanation IV to Section

             11 of the Code by a deeming provision lays down

             that any matter which "might and ought" to have

             been made a ground of defence or attack in the

             former suit, but which has not been made a ground

             of defence or attack, shall be deemed to have been

             a matter directly and substantially in issue in such

             suit.

                   The principle underlying Explanation IV is that

             where the parties have had an opportunity of

             controverting a matter, that should be taken to be

             the same thing as if the matter had been actually

             controverted     and   decided.      The     object of

             Explanation IV is to compel the plaintiff or the

             defendant to take all the grounds of attack or

             defence in one and the same suit. ............"

       42.     To sum up the discussion on this point, I have no hesitation to



hold that the defendants' claim for second renewal is barred by the

doctrine of constructive res judicata embodied in Section 11, Explanation

IV, CPC. Therefore, on this count also, the appeal has to fail.

               In the result, the appeal is dismissed confirming the judgments

and decrees passed by the courts below.            Considering the facts and

circumstances, there is no order as to costs.




                                               A. HARIPRASAD, JUDGE.

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