Supreme Court in the matter namely, Jaswant Singh and Anr. Vs. Custodian of Evacuee Property, New Delhi, Civil Appeal No. 648 of 1972 and decided on 07.05.1985 (AIR 1985 SC 1096: (1985) 3 SCC 648) laid down the test to be followed while deciding on the issue of res judicata as provided for in Section 11 of the Code of Civil Procedure, 1908.
It was held that in order to decide the question whether a subsequent proceeding is barred by res judicata, it is necessary to examine the question with reference to:
A cause of action for a proceeding has no relation whatever to the defence which may be set up, nor does it depend upon the character of the relief prayed for by the plaintiff or the applicant. It refers entirely to the grounds set forth in the plaint or the application as the case may be as the cause of action or in the other words to the media upon which the plaintiff or the applicant asks the court to arrive at a conclusion in his favour. In order that a defence of res judicata may succeed, it is necessary to show that not only the cause of action was the same but also that the plaintiff had an opportunity of getting the relief which he is now seeking in the former proceedings. The test is whether the claim in the subsequent suit or proceedings is in fact founded upon the same cause of action which was the foundation of the former suit or proceedings.
Expressions – ‘matter in issue’ and ‘cause of action’
The expression 'matter in issue' under Section 11 connotes 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, which 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.
In Forward Construction Co. vs. Prabhat Mandal (Regd.), Andheri and Ors., decided on 26.11.1985 (AIR 1986 SC 391: MANU/SC/0274/1985), it was further clarified that Explanation IV to Section 11 C.P.C. provides that any matter which might and ought to have been made ground of defence or attack in such former suit shall be deemed to have been a matter directly and substantially in issue in such suit. An adjudication is conclusive and final not only as to the actual matter determined but as to every other matter which the parties might and ought to have litigated and have had it decided as incidental to or essentially connected with the subject matter of the litigation and every matter coming with the legitimate purview of the original action both in respect of the matters of claim or defence. 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. It is true that where a matter has been constructively in issue it cannot be said to have been actually heard and decided.
The expression 'cause of action' was interpreted by the Supreme Court in Kunjan Nair Sivaraman Nair v. Narayanan Nair, decided on 06.02.2004, (MANU/SC/0101/2004: (2004)3SCC277) which laid down that the expression "cause of action" has acquired a judicially settled meaning. In the restricted sense cause of action means the circumstances forming the infraction of the right or the immediate occasion for the action. In the wider sense, it means the necessary conditions for the maintenance of the suit, including not only the infraction of the right, but the infraction coupled with the right itself. Compendiously the expression means every fact which would be necessary for the Plaintiff to prove, if traversed, in order to support his right to the judgment of the court. Every fact which is necessary to be proved, as distinguished from every piece of evidence which is necessary to prove each fact, comprises in "cause of action".