Banking / SARFAESI — belated MSME restructuring defence · F2J-C-2920
M/s Soubhagye Road Builders & Ors. v. Reserve Bank of India & Ors.
VALIDATED · ACTUAL COURT DOCUMENTSource transparency: The local PDF is an actual court document retained from the complete public source. The official court portal is recorded separately. Verify the official record and subsequent history before reliance.
Holding (ratio)
An MSME borrower cannot reserve a restructuring or revival contention and raise it for the first time in later litigation merely to obstruct continuing SARFAESI measures after earlier proceedings have concluded.
Operative order (extract)
The writ appeal was dismissed and the SARFAESI action was permitted to continue.
Scope limits
The holding is confined to the issues actually decided in the retained judgment; no view is attributed to the court on questions expressly left open or remanded.
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Complete searchable judgment text
CNR : KLHC010593872026
W. A. No. 1560 of 2026
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2026:KER:66606
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE THE CHIEF JUSTICE MR. SOUMEN SEN
&
THE HONOURABLE MR. JUSTICE SYAM KUMAR V.M.
TUESDAY, THE 1ST DAY OF SEPTEMBER 2026 / 10TH BHADRA, 1948
WA NO. 1560 OF 2026
AGAINST THE JUDGMENT DATED 09.06.2026 IN WP(C)
NO.40284 OF 2025 OF HIGH COURT OF KERALA
APPELLANT/S:
1 M/S SOUBHAGYE ROAD BUILDERS,
REPRESENTED BY ITS PROPRIETOR, MOHANAN V.,
PATHRAMALIL HOUSE, MARACKAR ROAD, PERUMBAVOOR,
ERNAKULAM DISTRICT, PIN - 683542
2 MOHANAN V.,
AGED 67 YEARS
PATHRAMALIL HOUSE, MARACKAR ROAD, PERUMBAVOOR,
ERNAKULAM DISTRICT, PIN - 683542
3 MRS. SUSHAMA MOHANAN,
AGED 61 YEARS
W/O. SHRI MOHANAN, PATHRAMALIL HOUSE, MARACKAR
ROAD, PERUMBAVOOR, ERNAKULAM DISTRICT, PIN -
683542
BY ADVS.
SMT. MARIA NEDUMPARA
SHRI.SHAMEEM FAYIZ V.P.
SHRI.ROY PALLIKOODAM
SHRI. MATHEWS J. NEDUMPARA
RESPONDENT/S:
1 RESERVE BANK OF INDIA,
REPRESENTED BY ITS GOVERNOR CENTRAL OFFICE
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BUILDING, SHAHED BHAGAT SINGH ROAD, MUMBAI, PIN -
400001
2 BOARD OF DIRECTORS OF CANARA BANK LTD.,
REPRESENTED BY ITS CEO & MANAGING DIRECTOR 112,
J.C. ROAD, BENGALURU, PIN - 560002
3 CANARA BANK LIMITED,
REPRESENTED BY ITS CEO & MANAGING DIRECTOR 112,
J.C. ROAD, BENGALURU, PIN - 560002
4 AUTHORISED OFFICER,
CANARA BANK LTD., REGIONAL OFFICE-II, METRO
BUILDING, III FLOOR, M.G. ROAD, ERNAKULAM, PIN -
682035
5 MINISTRY OF MICRO SMALL AND MEDIUM ENTERPRISES,
REPRESENTED BY ITS SECRETARY. UDYOG BHAWAN, RAFI
MARG, NEW DELHI, PIN - 110001
6 UNION OF INDIA,
REPRESENTED BY ITS SECRETARY, DEPARTMENT OF
FINANCIAL SERVICES, MINISTRY OF FINANCE, 3RD
FLOOR, JEEVAN DEEP BUILDING, SANSAD MARG, NEW
DELHI, PIN - 110001
7 STATE OF KERALA,
REPRESENTED BY ITS CHIEF SECRETARY, GOVERNMENT
SECRETARIAT, THIRUVANANTHAPURAM, PIN - 695001
8 GENERAL MANAGER,
DISTRICT INDUSTRIES CENTRE, KAKKANADU, ERNAKULAM,
PIN - 682030
9 CHAIRMAN,
MICRO AND SMALL ENTERPRISE FACILITATION COUNCIL
(MSEFC) DIRECTORATE OF INDUSTRIES COMMERCE, VIKAS
BHAVAN P.O., THIRUVANANTHAPURAM, KERALA, PIN -
695033
10 CHAIRMAN,
STATE LEVEL INTER-INSTITUTIONAL COMMITTEE
REGIONAL OFFICE, RESERVE BANK OF INDIA BAKERY
JUNCTION, P.B. NO. 6507, THIRUVANANTHAPURAM, PIN
- 695033
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11 RAJAN JOSEPH,
S/O. JOSEPH, THOZHUTHUM PARAMBIL, THRISSUR ROAD,
IRINGALAKKUDA P.O., THRISSUR, PIN - 680125
12 ANIL DHIRAJLAL AMBANI,
39, SEA WIND, CUFFE PARADE, COLABA, MUMBAI, PIN -
400005
13 MUKESH AMBANI,
CHAIRMAN, RELIANCE INDUSTRIES, 3RD FLOOR, MAKER
CHAMBERS IV, 222, NARIMAN POINT, MUMBAI, PIN -
400021
14 THE CHAIRMAN,
STATE BANK OF INDIA CORPORATE CENTER, 16TH FLOOR,
MADAM CAMA ROAD, NARIMAN POINT, MUMBAI, PIN -
400021
BY ADVS.
SRI.MILLU DANDAPANI
SMT.V.GEETHA POTTI, CGC
SRI. ANEESH K.M.
SRI. K. SANTHOSH KUMAR
THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON
01.09.2026, THE COURT ON THE SAME DAY DELIVERED THE
FOLLOWING:
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JUDGMENT C.R.
Dated this the 1st day of September, 2026
Soumen Sen, C. J.
Heard Mr. Mathew Nedumpara, learned counsel for
the appellants, Mr. Millu Dandapani, learned counsel for
respondent No.1 and Mr. Aneesh K.M. representing Mr. K.
Santhosh Kumar (Kaliyanam), learned counsel for respondent
Nos. 2 to 4.
2. The appeal is arising out of the judgment dated 9 th
June 2026 in a writ petition filed by the appellants seeking
protection of Ext. P1 MSME Notification No. S.O.1432(E)
dated 29th May, 2015 and Ext. P2 Circular issued by the
Reserve Bank of India dated 17th March, 2016, apart from
challenging the entire proceedings initiated by the Bank
under Sections 13(2), 13(4) and 14 of the Securitisation and
Reconstruction of Financial Assets and Enforcement of
Security Interest Act, 2002 (hereinafter referred to as, “the
SARFAESI Act”) being violative of the aforesaid Notification.
3. The learned Single Judge dismissed the writ petition
with a finding that the writ appellants have not claimed the
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benefit of the terms of the framework after the issuance of the
demand notice under Section 13(2) of the SARFAESI Act. The
said benefit has been claimed by the petitioners for the first
time in the writ petition when proceeding was initiated under
Section 14 of the SARFAESI Act. The learned Single Judge
has also taken into consideration that in the earlier round of
litigation before the learned Single Judge, the 1 st writ
petitioner has not raised any claim based on Exts. P1 and P2.
The learned Single Judge relying upon the decision of the
Hon’ble Supreme Court in Pro Knits (M/s.) v. Board of
Directors of Canara Bank1 and Shri Shri Swami Samarth
Construction & Finance Solution v. Board of Directors of
NKGSB Co-op. Bank Ltd.2 held that the petitioners cannot at
this belated stage turn around and claim the benefit of Exts.
P1 and P2 and thwart the proceeding taken under the
SARFAESI Act.
4. The petitioners are aggrieved by this impugned order.
5. Mr. Mathews J. Nedumpara, learned counsel
appearing on behalf of the writ appellants, has submitted
1 (2024) 10 SCC 292; 2024 KHC OnLine 6408
2 2025 SCC OnLine SC 1566; 2025 KHC OnLine 6647
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that the learned Single Judge has completely overlooked the
fact that appellant No.1 is admittedly an MSME and initiation
of recovery proceedings under the Notification S.O.1432(E)
dated 29th May, 2015 (in short, “the said Notification”) is
without prior recourse to the measures laid down in the said
notification. In fact, the said Notification mandates Banks
and Financial Institutions to identify incipient stress on
MSME loan accounts, to create a SMA-0 (Special Mention
Account-zero) and thereafter to constitute a stress MSME
Committee in terms of the said Notification and to make an
application to such Committee for the resolution of the
incipient stress. The specially constituted Committee as
envisaged under the said Notification alone is empowered to
permit recovery only after it arrives at a conclusion that
resolution of the incipient stress is not feasible. It is
submitted that the judgment in Pro Knits (M/s.) (supra)
supports the contention of the writ appellants as in
paragraphs 17 and 18 of the said decision, it has been clearly
stated that the instructions and directions issued by the
Central Government under Section 9 of the Micro, Small and
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Medium Enterprises Development Act, 2006 (for short, the
“MSMED Act”) and by the RBI under Sections 21 and 35A
have statutory force and are binding to all the Banking
Companies. The judgment in Shri Shri Swami Samarth
Construction & Finance Solution (supra) has also been
misconstrued and misappreciated by the learned Single
Judge as the said judgment has categorically emphasised
that if a borrower asserts that it is an MSME and claims the
benefit of the framework, the secured creditor would be
mandatorily required to look into such claim keeping further
action under the SARFAESI Act in abeyance. Insofar as the
finding of the learned Single Judge that in the earlier
proceedings no relief was claimed as regards protection of
Exts. P1 and P2, it is submitted that the writ petition was
filed with a fresh cause of action resulting from the auction
notice being issued by the secured creditor.
6. Mr. Mathews J. Nedumpara has submitted that there
cannot be a res judicata on a pure question of law as held in
Isabella Johnson (Smt.) v. M. A. Susai (Dead) By LRS 3.
Attention of the Court is drawn to paragraph 5 of the
3 (1991) 1 SCC 494
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judgment where it has been held that when the question is
one purely of law and it relates to the jurisdiction of the court
or a decision of the court sanctioning something which is
illegal by resort to the rule of res judicata to prevent the party
affected by the decision from challenging the validity of the
order would not be sustainable.
7. Per contra, Mr. Aneesh K. M., learned counsel
appearing on behalf of the secured creditors, has submitted
that initially, the writ appellants availed an overdraft limit of
₹2 Crores with specific sanctioned terms and conditions. As
per sanction dated 14th August, 2023, the OD limit is tenable
for one year from the date of sanction, i.e. 14 th August, 2024,
it is alleged that the borrowers had not conducted the
account as per the sanctioned terms and has failed to opt for
renewal of the limits on or before the date of expiry of 14 th
August, 2024 even after much follow up from the Bank. The
learned counsel has also referred to a communication dated
9th August, 2024 by which a final reminder was issued
requesting the 1st writ appellant to furnish the documents
mentioned in the said letter for renewal of the overdraft
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facility. Since the limits could not be renewed for want of
request for renewal and connected documents from the writ
appellants, the Bank was constrained to classify the account
as NPA on 8th February, 2025, after a lapse of nearly six
months from such renewal date. Upon classification of the
account as NPA, recovery proceedings were initiated under
the provisions of the SARFAESI Act by issuing a demand
notice dated 10th February, 2025. The said recovery
proceedings were challenged in W.P.(C) No.31231 of 2025.
The writ petition was dismissed by a judgment dated 22 nd
September, 2025 relegating the writ appellants to challenge
the measures taken by the secured creditors as provided
under the SARFAESI Act. In view of the aforesaid, it is
submitted that the 2nd writ petition on the same cause of
action or challenging the measures taken by the secured
creditors in the meantime would not be maintainable.
8. The issues raised in this appeal have been dealt with
by this Court in W.A.No.1192 of 2026 [M/s. Irine Agro Spices
and Another v. The Board of Directors of Axis Bank Ltd. and
Others4] decided on 10th July, 2026 and W.A.No.649 of 2026
4 2026 SCC OnLine Ker 6753
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[M/s. Sree Matha Cosmetic Industries v. The Board of
Directors of the UCO Bank and Others ] decided on 10th
August, 2026. In both the appeals, we have elaborately
discussed the said Notification and the MSMED Act. We have
also considered the circumstances where the provisions
under the SARFAESI Act cannot be invoked against an
MSME.
9. The writ appellant No.1 admittedly filed the writ
petition being W. P. (C) No. 31231 of 2025 praying for the
following reliefs:-
“i. To issue a writ of Certiorari or any other
appropriate writ, order or direction to quash Exhibit-P9
as unjust and unsustainable.
ii. Issue a writ of mandamus or any other
appropriate writ, order or direction compelling the
respondents to provide breathing time to pay of arrears of
instalments and to regularise the bank account.
iii. Issue a writ of mandamus or any other
appropriate writ, order or direction compiling the bank to
release the gold ornaments to the petitioner in Loan A/C
Numbers:180351696420, 180351724568 and
180351727408.
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iv. Grant such other reliefs to the petitioner, as this
Honourable Court may deem appropriate as the nature of
the case.”
10. Ext.P9 was the first reminder letter for NPA
AGRI/Gold Loan Account 190351696420 dated 11 th
February, 2025. The said reminder letter was preceded by
notice under Section 13(2) of the SARFAESI Act dated 10 th
February, 2025 and notice issued under Section 13(4) of the
SARFAESI Act dated 13th May, 2025. These two letters were
annexed to the said writ petition as Exts.P1 and P6
respectively. It was thus implicit that a challenge to Ext.P9
must precede a challenge to the notice under Section 13(2)
and measures taken under Section 13(4). Ext.P9 is only a
consequential action taken by the Bank in terms of Ext.P1
notice and culminated in a measure under Ext.P6 notice.
Significantly, the prayers would show that the writ appellant
prayed for instalments and regularisation of the Bank
account. During the pendency of the said writ petition, an
interim order was passed on 21st August, 2025, which reads
as follows:-
“Notice before admission. Sri.Gopikrishnan Nambiar
takes notice for the respondents and seeks time to get
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instructions. For deciding the maintainability of the writ
petition and to consider the prayers seeking instalment
facility and to defer further coercive steps against the
petitioner, as an interim measure, there will be a
direction to the petitioner to remit an amount of Rs.30
lakhs (Rupees thirty lakhs only) on or before 19.09.2025.
It is made clear that if the above payment is not made,
the respondents will be at liberty to proceed further, in
accordance with law. Post on 22.09.2025.”
11. Admittedly, the said order was not complied with by
the writ appellant. On such consideration, the writ petition
was disposed of with the following observation:-
“4. This Court exercises very limited jurisdiction in
matters arising under the SARFAESI Act, as repeatedly
held by the Honourable Supreme Court in several
judgments, including in South Indian Bank Ltd. and Ors.
v. Naveen Mathew Philip and Ors. [2023 17 SCC 311]
that the powers conferred under Article 226 of the
Constitution of India are rather wide but are required to
be exercised only in extraordinary circumstances in
matters pertaining to proceedings and adjudicatory
scheme qua a statute, more so in commercial matters
involving a lender and a borrower, when the legislature
has provided for a specific mechanism for appropriate
redressal. When this Court is approached with a prayer
to permit the borrowers to clear the liability in
instalments, the borrowers must prove bona fides. The
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non-compliance of the interim order indicates that the
petitioner in this case has not shown any bona fides to
enable this Court to permit him to clear the liability in
instalments.
5. Therefore, I find no reason to grant the reliefs
sought for in this writ petition, and the same will stand
dismissed without prejudice to the right of the petitioner
to challenge the measures taken by the secured creditor
as provided under the SARFAESI Act, if so advised.”
12. Instead of approaching the Tribunal for redressal
of their grievance, another writ petition was filed seeking
protection under the said Notification. It appears that the
Bank, before initiating the proceedings, gave six months’ time
for renewal of the said account. The letter dated 9 th August,
2024 has clearly stated the documents required for the
purpose of renewal of the overdraft facility. Although it has
been strenuously argued that the second writ petitioner
visited the Aluva branch of the Canara Bank and handed over
a bunch of documents, including the financial statements
and MSME certificates, there is nothing on record to show
that the said letter was ever replied nor in any subsequent
communication there has been any reference of the letter
dated 9th August, 2024 and submission of the required
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documents. The writ appellants did not make any application
for rehabilitation.
13. In the light of the aforesaid facts, we need to
decide whether we should exercise our discretion under
Article 226 of the Constitution of India to interfere with the
order passed by the learned Single Judge, in dismissing the
writ petition on the ground of availability of an efficacious
alternative remedy.
14. We have carefully read the Framework and the
provisions of the SARFAESI Act. The Framework dated 29 th
May, 2015 precedes the SARFAESI Act. However, the
interplay of the two provisions has been considered and
explained in Pro Knits (M/s.) (supra) and Shri Shri Swami
Samarth Construction and Finance Solution (supra). We have
also considered the said decisions in a similar challenge in
M/s. Irine Agro Spices (supra).
15. One common thread in both the decisions was
that there was an obligation on the enterprise to voluntarily
initiate proceedings under the Framework if the enterprise
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apprehends failure of its business or its inability to pay its
debts and before the accumulated losses of the enterprise
equals to half or more of its entire net worth. While the
Framework casts an obligation for the Bank to identify the
incipient stress in the loan account by creating sub
categories, the obligation on the part of the enterprise to
make such application remains. The petitioner did not
approach the Bank with any rehabilitation package.
16. In M/s. Irine Agro Spices (supra), we have
considered the circumstances under which proceedings
under the SARFAESI Act can be initiated against an M.S.M.E.
in paragraph 28, which reads as follows:
“28. The duties and obligations of an MSME to
voluntarily initiate the proceedings under the Framework
of the MSMED Act have been discussed in Pro Knits
(supra) elaborately, as well as in the subsequent decision
in Shri Shri Swami Samarth Construction and Finance
Solution (supra) It has also been clearly stated that even
in a case where the secured creditor may, in absence of
any conscious knowledge that the defaulting borrower is
an MSME, issue a notice under Section 13(2) of the
SARFAESI Act, still the borrower, in its response under
Section 13 (3A) of the SARFAESI Act, can assert that it is
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an MSME and claim the benefit of the Framework citing
reasons supported by an affidavit, and in such a
situation, the lending bank/secured creditor would then
be mandatorily bound to look into such claim, keeping
further action under the SARFAESI Act in abeyance; and,
should the claim be found to be worthy of acceptance
within the framework of the Framework, to act in terms
thereof for securing revival and rehabilitation of the
defaulting borrower. In the instant case, we do not find
from the record that the appellants have ever approached
the financial creditors to avail the benefit of the terms of
the Framework after the demand notice under Section
13(2) of the SARFAESI Act was issued. In fact, under
Clause 4 of the Framework for Revival and Rehabilitation
of Micro Small and Medium Enterprises, any eligible
stressed MSME is entitled to file an application to the
Committee, in the manner specified by the Bank, for a
decision on a corrective plan. It was only at the stage of
implementation of an order passed by the learned
Magistrate under Section 14 of the SARFAESI Act that
the writ petition was filed questioning the jurisdiction of
the secured creditors to proceed under the SARFAESI
Act. Both the aforesaid decisions in the facts and
circumstances of the case cannot be either accepted as
judgment sub silentio or per incuriam.”
17. The argument that the present writ petition was
filed after the bank has proceeded with the auction of the
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secured assets cannot be accepted. The petitioner has not
been able to demonstrate that due procedure for the auction
sale has not been followed. The said notice is a sequel to the
initiation of the proceedings under Sections 13(2) and 13(4) of
the SARFAESI Act. The scheme of the SARFAESI Act clearly
laid down the stages and the procedures to be followed before
a sale is concluded. If the writ appellants were to contend
that disregarding the MSME notification, measures have been
initiated by the secured creditor, then in the first writ petition
itself, it should have been challenged. The writ appellants
were not under disability at the relevant point of time to
challenge the classification of the account as NPA on the
grounds on which now the action taken by the secured
creditor for sale of the secured assets have been assailed. The
writ appellants cannot be selective about their claims and
reliefs. When the cause of action for challenging the
actions/measures now proposed were earlier available,
merely because now an auction notice has been issued, the
challenge to the very initiation cannot be entertained. The
writ appellants have failed to demonstrate that the procedure
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adopted for the auction purchase is contrary to the procedure
prescribed under the SARFAESI Act. They cannot, therefore,
be heard to contend that they are entitled to the benefit of the
MSME Notification, which appears to have been abandoned
at the first stage of the litigation. It is trite law that the
litigant must raise all claims and issues that arise in a
particular dispute. It was open to the writ appellants to
agitate in the first writ petition that the SARFAESI
proceedings has been initiated disregarding the said
notification and the RBI guidelines. The party cannot be
permitted to open the same subject of litigation when the
facts ought to have been brought forward in the first round of
litigation.
18. The consequence of failure of a litigant to raise
all claims and issues that arise in a particular dispute has
been recently considered by the Hon’ble Supreme Court in
CELIR LLP v. Mr. Sumati Prasad Bafna & Ors. 5. The
Henderson Principle which dates back to 1843 has laid down
the law in clear terms as it states that where a given matter
becomes the subject of litigation and the adjudication of a
5 2024 INSC 978
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court of competent jurisdiction, the parties so litigating are
required to bring forward their whole case. Once the litigation
has been adjudicated by a court of competent jurisdiction,
the same parties will not be permitted to re-open the lis in
respect of issues which might have been brought forward as
part of the subject in contest but were not, irrespective of
whether the same was due to any form of negligence,
inadvertence, accident or omission. It was further held, that
principle of res judicata applies not only to points upon which
the Court was called upon by the parties to adjudicate and
pronounce a judgement but to every possible or probable
point or issue that properly belonged to the subject of
litigation and the parties ought to have brought forward at
the time. The plea of res judicata applies, except in special
cases, not only to points upon which the Court was actually
required by the parties to form an opinion and pronounce a
judgment, but to every point which properly belonged to the
subject of litigation, and which the parties, exercising
reasonable diligence, might have brought forward at the time.
19. In Yat Tung Investment Co. Ltd. v. Dao Heng
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Bank Ltd.,6 it has been held that it would be an abuse of
procedure to permit further action based on another ground
that could have been advanced earlier.
20. Once a court of competent jurisdiction has
adjudicated the matter in a particular lis, it is not open to the
parties to bring forward new grounds that could have been
raised on the earlier occasion. Similarly, an action which is a
sequence to the action that had remained unchallenged
cannot by applying circuitous method be re-opened and
raised in a subsequent litigation in order to render the
decision that has already been arrived at in the earlier ground
of litigation, otiose. Without there being a challenge to the
proposed action of the bank, the Sale Notice would not
furnish another ground to re-open the issue where it has
been conclusively decided that the writ appellants have an
efficacious alternative remedy under Section 17 of the
SARFAESI Act. The Henderson Principle is founded on the
principle that there should be finality in litigation. The same
principle is also reflected in Order II Rule 2 of the Code of
Civil Procedure, which requires that every suit shall include
6 [1975] A.C. 581
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the whole of the claim which the plaintiff is entitled to make
in respect of the cause of action. This principle would equally
apply to writ petitions filed under Article 226 of the
Constitution of India. In CELIR LLP (supra), the Apex Court
has specifically held that the parties must ensure that all the
grounds of challenge or defence are taken in the said
proceedings, and any omission to do so is at their own peril.
We feel that the argument made on seeking protection of the
said notification and RBI guidelines could not be raised at
this stage. The present cause of action cannot be viewed in
isolation as it is the continuation of the earlier cause of action
originated with issuance of notice under Section 13(2) of the
SARFAESI Act dated 10th February, 2024. No independent
ground exists for challenging the auction sale other than the
ground of protection under the MSME Act and the
notification dated 29th May, 2015. Although available, this
relief was not claimed in the earlier round of litigation.
21. In CELIR LLP (supra), at paragraph 141,
reference has been made to another decision of the Hon’ble
Supreme Court where the Henderson Principle was
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approvingly referred to and applied. The said paragraphs
reads as under:
“141. The Henderson Principle was approvingly referred
to and applied by this Court in State of U.P. v. Nawab
Hussain reported in (1997) 2 SCC 806 as the underlying
principle for res-judicata and constructive res-judicata for
assuring finality to litigation. The relevant observations
read as under: -
“3. The principle of estoppel per rem judicatam
is a rule of evidence. As has been stated in
Marginson v. Blackburn Borough Council
[(1939) 2 KB 426 at p. 437], it may be said to be
“the broader rule of evidence which prohibits the
reassertion of a cause of action”. This doctrine is
based on two theories: (i) the finality and
conclusiveness of judicial decisions for the final
termination of disputes in the general interest of
the community as a matter of public policy, and
(ii) the interest of the individual that he should
be protected from multiplication of litigation. It
therefore serves not only a public but also a
private purpose by obstructing the reopening of
matters which have once been adjudicated
upon. It is thus not permissible to obtain a
second judgment for the same civil relief on the
same cause of action, for otherwise the spirit of
contentiousness may give rise to conflicting
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judgments of equal authority, lead to multiplicity
of actions and bring the administration of justice
into disrepute. It is the cause of action which
gives rise to an action, and that is why it is
necessary for the courts to recognise that a
cause of action which results in a judgment
must lose its identity and vitality and merge in
the judgment when pronounced. It cannot
therefore survive the judgment, or give rise to
another cause of action on the same facts. This
is what is known as the general principle of res
judicata.
4. But it may be that the same set of facts may
give rise to two or more causes of action. If in
such a case a person is allowed to choose and
sue upon one cause of action at one time and to
reserve the other for subsequent litigation, that
would aggravate the burden of litigation. Courts
have therefore treated such a course of action as
an abuse of its process and Somervell, L.J., has
answered it as follows in Greenhalgh v. Mallard
[(1947) All ER 255 at p. 257] : “I think that on
the authorities to which I will refer it would be
accurate to say that res judicata for this purpose
is not confined to the issues which the court is
actually asked to decide, but that it covers
issues or facts which are so clearly part of the
subject-matter of the litigation and so clearly
could have been raised that it would be an
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abuse of the process of the court to allow a new
proceeding to be started in respect of them.
This is therefore another and an equally
necessary and efficacious aspect of the same
principle, for it helps in raising the bar of res
judicata by suitably construing the general
principle of subduing a cantankerous litigant.
That is why this other rule has some times been
referred to as constructive res judicata which, in
reality, is an aspect or amplification of the
general principle.”
(emphasis supplied)
22. The law is summarised in paragraph 144 of the said
decision, which reads as under:
“144. From the above exposition of law, it is clear
that the ‘Henderson Principle’ is a core component
of the broader doctrine of abuse of process, aimed
at enthusing in the parties a sense of sanctity
towards judicial adjudications and determinations.
It ensures that litigants are not subjected to
repetitive and vexatious legal challenges. At its
core, the principle stipulates that all claims and
issues that could and should have been raised in
an earlier proceeding are barred from being raised
in subsequent litigation, except in exceptional
circumstances. This rule not only supports the
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finality of judgments but also underscores the
ideals of judicial propriety and fairness.”
(emphasis supplied)
23. The observation at paragraph 4 in State of U.P.
v. Nawab Hussain7 and as explained in CELIR LLP (supra)
are apposite in the facts and circumstances of the case and
sufficient to reject the submission of the writ appellants on
the said issue.
24. On such consideration, we do not find any reason
to interfere with the order passed by the learned Single
Judge. The observations made are only limited to the issues
involved in this appeal and shall not influence the DRT in
deciding the matter on merits and in accordance with law in
the event the action of the secured creditor is challenged
before the DRT. The learned Single Judge has already given
liberty to the appellants to approach the DRT. In the event
any application is filed before the DRT within three weeks
from date, the Tribunal shall accept the application without
insisting for an application for condonation of delay.
7 (1997) 2 SCC 806
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25. The writ appeal accordingly fails and is
dismissed.
Sd/-
SOUMEN SEN,
CHIEF JUSTICE
Sd/-
SYAM KUMAR V. M.,
JUDGE
eb/uu
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