Holding

Res judicata does not apply between co‑defendants where there is no conflict of interest and the prior decree was obtained by fraud, so the High Court’s reliance on it was erroneous.

Issues considered

The decree in OS No. 3/1/1951 operates as res judicata between co‑defendants?
Whether the four conditions for applying res judicata to co‑defendants are satisfied?
The effect of fraud or collusion on the operation of res judicata?
The essential conditions for a valid gift under Mahomedan law?
Whether a mother can act as guardian of a minor’s property under Mahomedan law?

Legislation cited

Code of Civil Procedure, 1908s. 11
Guardians and Wards Act, 1890s. 348, s. 349, s. 359, s. 362, s. 363
Indian Evidence Act, 1872s. 44

Subjects

res judicataco-defendantsfraudcollusionMahomedan lawgiftguardianshipminorcivil procedureproperty lawpossession

Judgment

j

MAHBOOBSAHAB A
v.
SYED ISMAIL AND ORS.

MARCH 23, 1995

(K. RAMASWAMY AND B.L. HANSARIA, JJ .) B

Cqde of Civil Procedure, 1908-Section 11-:Res judicata-Conditions
for applying the doctrine in the case of co-defendants-Fraud or collusion-Ef-
fect of.
c
Mahomedan Law-Gift-Essential conditions for validity of
Mahomedan Law-Guardianship-Mother cannot act as guardian of a
minor.

The respondents filed a suit for possession against their father M
and the appellant claiming that their father had illegally sold the suit land D
in favour of the appellant in collusion with the Patwari, while they were
minors. The respondents claimed that their father had gifted the suit land
jointly in their favour and in the favour of their mother by executing a
registered gift deed and their mother in tum had orally gifted her share
to one of the respondents and therefore their father had no authority to E
alienate the suit land. The appellants resisted the suit pleading that the
suit lands were sold to him for consideration and in discharge of debts.

In another suit filed by another person claiming to be possessory
mortgagee of the suit land and impugning a decree in favour of another
creditor of the father of the present respondents, it was held that the father F
of the respondents had gifted the land jointly to the respondents and their
mother. The respondent and their father, who were co-defendants in the
said suit, had filed a joint written statement admitting the claim of the
plaintiff in the said suit. The respondents urged that this would act as a
res judicata against the appellant as he was claiming title to the suit G
property through their father.

The trial court rejected the plea of res judicata but decreed the suit
on merit.

The point of res judicata was not urged before the first appellate H
975
/
97Ci SUPREME COURT REPORTS (1995] 2 S.C.R.

A court, It held that - (i) the name of the father of the respondents continued
to appear as owner in the revenue records. till it was mutated in favour of {
the appellant; (ii) the gift deed executed by the father was not proved (iii)
the oral gift made by the mother was false as neither the acceptance of the
gift nor delivery of possession was proved (iv) the mother cannot act as a
.B guardian of the property when father was alive. The first appellate court
allowed the appeal holding that the alleged gifts were only a ·device to
defraud 'creditors.
(
In second appeal, the High Court reversed the order of the first
appellate court only on the ground of res judicata without disturbing the
,---
c finding of facts. Hence, the present appeal.

Allowing the appeal, this court

HELD : 1. The trial court negatived the plea of res judicata as a
preliminary issue. Though it was open to sustain the trial court decree on
D
the basis of doc~ine of res judicata, it was not argued before the.appellate
court on this basis. Thereby the findings of the trial court on res judicata
became final. [981-GJ
---"-
2.1 The doctrine of res judicata must be applied to co- defendants
' E with great care and caution. The reason is that fraud is an extrinsic
collateral act which vitiates most solemn proceedings of courts of justice.
If a party obtains a decree from the court by practicing fraud or collusion,
he cannot ·be aliowed to say that the -.iatter is res judicata and cannot be
re· opened. There can also be no question of res judicata in a case where
F signs of fraud or collusion are transparently pregnant or apparent from
the facts on record. As found by the appellate court, M was playing fraud ~-,_
upoR his creditors by creating false oral gifts or spurious claim of
mortgages with a view to defraud them. (982-G-H, 983-B] _)__

2.2 For application of the doctrine of res judicata between co-defen-
G dants, four conditions must be satisfied, namely (i) there must be a conflict
of interest between the defendants concerned: (2) it must be necessary to -~~
decide the conflict in order to give the reliefs which the plaintiff claims;
(3) the question between the defendants must have been finally decided,
and (4) the co-defendants were necessary or proper parties in the former
H suit. [982-A)
--.I
M. SAHAB v. S. ISMAIL [K. RAMASWAMY, J.] 977

S.M. Sadat Ali Khan v. Mirza Wiquar Ali, AIR (1943) PC 115; A
Shashibusha11 Prasad Mishra v. Babuji Rai & Ors., [1969] 2 SCR 971 and
lftiklzar Ahmed & 01:1". v. Syed Mel1arba11 Ali, [1974] 2 SCC 151, relied on.

2.3 Though the appellant claimed title to the property through the
parents of the respondents, there was neither conflict of interest nor was
it necessary to decide about the validity of the gift said to have been B
executed by M. The dispute therein was whether the possessory mortgagee
was bound by the decree and the creditor could proceed against the father
and the said property is liable to sale for realisation of his decree debt. In
that context the relevancy or validity of the gift is immaterial. [983-G-H]
c
3. Though gift by a Mohammaden is not required to be in writing
and consequently need not be registered under the Registration Act, for a
gift to be complete, there should be a declaration of the gift by the donor,
acceptance of the gift, express or implied, by or on behalf of the donee and
delivery of possession of the property, the subject matter of the gift by the
donor to the donee. The donee should take delivery of the possession of D
the property eitheL" actually or constructively. On proof of these essential
conditions, the gift becomes complete and valid. In case of immovable
-\..__ property in the possession of the donor, he should completely divest
himself physically of the subject of the gift. (980-D-E]
E
Mahomedan law by Mui/a, 19th Ed., referred to••

4. In Mahammaden Law mother cannot act nor be appointed as
guardian of the property of the minor. She equally cannot act as guardian
for the minor himself. (980-G] ·
F
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 513 of
1979.

From the Judgment and Order dated 2.1.79 of the Karnataka High
Court in R.S.A. No. 161 of 1975.
G
Devendra Singh for the Appellant.

S.S. Javali and P.R. Ramasesh for the Respondents.

The following Judgment of the Court was delivered by H
978 SUPREME COURT REPORTS (1995) 2 S.C.R.

A K. RAMASWAMY, J. Syed Ismail and Ibrahim, sons of Maqdoom,
Panchamale filed O.S. No. 28 of 1965, impleading their parents and appel- {
lant/purchaser, for possession of the suit lands and for mesne profits from
the appellant. The averments made in support thereof are that their father
had executed a gift deed bequeathing 15 acres 38 gunthas out of 31 acres
B ·36 gunthas in Survey No. 781 of Aland village, jointly in their favour and
their mother Smt. Chandi, third defendant, who in her turn, orally gifted
over her share to Syed Ismail in April, 1958 at the time of '1.is marriage.
Being minors, their father-second defendant, while cultivating the lands on
their behalf, had colluded with the Patwari and executed sale deed Ex•D-1
in favour of the appellant. On their becoming aware of the same, they filed
C the suit since their father had no right, title and interest therein to alienate
the lands. The sales, therefore, in favour of the appellant were invalid,
inoperative and do not bind them. The appellant pleaded that Maqdoom
had entered into an agreement of sale under Ex.D-22 on April 12, 1961 to
sell 12 acres of land for valuable consideration and had executed the sale
D deed, Ex.D-1 dated May 12, 1961, to discharge antecedent debts. Similarly
an agreement of sale of 4 acres of land for 2,500 was executed and the
appellant had obtained permission from the Assistant Commissioner on
August 4, 1964 for sale thereof. When he and Smt. Chandi refused to
execute the sale deed, he filed OS No. 4/1 of 1966 for specific performance
which was decreed on contest and the sale deed Ex.D-3 was executed and
E · registered by the court. Their parents had not given any gifts which were
set up only to defraud the appellant. It was brought out at the trial that in
OS No. 3/1/1951 filed by one Ismail on the foot of a possessory mortgage,
the executability of another decree obtained by another creditor, was
impugned, wherein by judgment and decree dated September 24, 1951, the
F Court held that Maqdoom had jointly gifted the lands to the respondents
and their mother by a registered gift deed.

The aforesaid finding was pleaded to operate as res judicata against
the appellant. As a preliminary issue, the trial court held that the decree
in OS No. 3/1/1951 does not operate as res judicata but decree.d the suit
G on merit. In R.A. No. 211/1970, the Additional Civil Judge, Gulbarga
reversed the decree and dismissed the suit holding that Maqdoom as an
owner had alienated. the property. His name continued to be the owner in
revenue records till it was mutated in the name of the appellants after his
purchase. Neither the original nor certified copy of the gift deed alleged
H to have been executed by Maqdoom was filed. A letter of the Sub-Registrar
)
M. SAHAB v. S. ISMAIL [K. RAMASWAMY, J.] 979
to show its loss filed in the appeal cannot be used as evidence of execution A
of the gift over. The mother cannot act as a property guardian when the
father is alive. The oral gift by the mother to the respondents was false as
neither acceptance of the gift nor delivery of possession of the lands either
by the father or the mother was proved. It was not proved that the father
or any one had acted as guardian when Smt. Chandi gifted her undivided
B
share to the first respondent nor is there any proof of taking possession
from the wife under the oral gift deed. The alleged gifts, therefore, were
not proved, nor were they valid in law. Maqdoom, was a chronic debtor
and to defraud the creditors, he set up false plea of gifts in favour of his
children and wife or spurious mortgages in favour of third party. Before
the appellate court, the decree in OS No. 3/1/1951 was not pressed into C
service as res judicata to sustain the decree of the trial court.

The High Court without disturbing any of the findings of facts
recorded by the appellate court, reversed the judgment solely on the
finding that the decree in OS No. 3/1/1951 operates as res judicata, as the D
parents and the respondents are co-defendants in that suit. Having been
divested of his title, Maqdoom had no right to alienate the properties of
the minors in favour of the appellant. Accordingly the High Court reversed
the decree of the appella!e court and confirmed that of the trial court in
Second Appeal No. 161of1973, dated January 2, 1979.
E

The question, therefore, is whether the High Court was right in its
conclusion that the decree in OS No. 3/1/1951 operates as res judicata and
whether reversal of appellate decree without disturbing the findings of fact
on merits is legal. Having given our anxious consideration to the respective F
contentions of both the counsel we think that the High Court was ·wholly
wrong in its approach. Neither the mother nor the father was examined as
a witness to prove the gifts said to have been given in favour of their minor
sons Ismail and Ibrahim, respondents Nos. 1 & 2. Syed Ismail too was not
examined as a witness. Ibrahim in his evidence had admitted the execution
of the sale deed by his father and he acted as an attesting witness to the G
sale transaction under Ex.D- 1. He also admitted that his father mortgaged
the property under Ex.P-3. In the objection petition the gift was not set up.
The appellate court, as a final court of fact, found that alleged registered
gift deed said to have been jointly given by Maqdoom and his wife jointly
to his minor sons was not filed either in this suit or in OS No. 3/1/1951. H
\
980 SUPREME COURT REPORTS [1995) 2 S.C.R.

A Under s.147 of the Principles of Mahomedan Law by Mulla, 19th
Ed., Edited by Chief Justice M. Hidayatullah, envisages that writing is not
essential . to the validity of a gift either of movable or of immovable
property. Section 148 requires that it is essential, to the validity of a gift,
that the donor should divest himself completely of all o-wnership and
B dominion over the subject of the gift. Under s.149, three essentials to the
validity of the gift should be, (i) a declaration of gift by the donor, (ii)
acceptance of the gift, e~'Press or implied, by or on behalf of the donee,
and (iii) delivery of possession of the subject of the gift by the donor to
the donee as mentioned in s.150. If these conditions are complied with,
the gift is complete. Seciion 150 specifically mentions that for a valid gift
C there should be delivery of possession of the subject of the gift and taking
of possession of the gift by the donee, actually or constructively. Then only
the gift is complete. Section L'i2 envisages that where donor is in posses-
sion, a gift of immovable property of which the donor is in actual possession
is not complete unless the donor physically departs from the premises with
D all his· goods and chattels, and the donee formally enters into possession. .
It would, thus, be clear that though gift by a Mohammaden is not required
to be in writing and consequently need not be registered under the
Registration Act; for a gift to be complete, there should be a declaration
of the gift by the donor; acceptance of the gift, expressed or implied, by or
on behalf of the donee, and delivery of possession of the property, the
E subject-matter of the gift by the donor to the donee. The donee should take
delivery of the possession of that property either actually or constructively.
On proof of these essential conditions, the gift becomes complete and valid.
In case of immovable property in the possession of the donor, he should
completely divest himself physically of the subject of the gift. No evidence
F has been adduced to establish declaration of the gift, acceptance of the gift
by or on behalf of the minor or delivery of possession or taking possession
""" or who had accepted the gift actually or constructively. Admittedly he was
' in possession and enjoyment of the property till it was sold to the appellant.
Equally, i~ Mohammad.an Law mother cannot act nor be appointed as
property guardian of the. minor. She equally cannot act as legal guardian.
G
Section 348 defines "minor" to mean "a person who has not com-
pleted the age of eighteen years". Section 349 provides that "all application
for the appointment of a guardian of the person or property or both of a
minor are to be made under the.Guardians and Wards Act, 1890". Section
H 359 enumerates the persons entitled, in the order mentioned therein, to be
)
M. SAHAB v. S. ISMAIL [K RAMASWAMY, J.) 981

guardian of the property of a minor, namely, (1) the father; (2) the executor A
) appointed by the father's will; (3) the paternal grand father; and (4) the
executor appointed by the will of the paternal grand father. Section 362
limits the power of the legal guardian to alienate immovable property
except in the circumstances en.umerated therein. Similarly, the court guar-
dian has no power to mortgage or charge or transfer by sale, gift, exchange
B
or otherwise and part with possession of immovable property of the ward
or to lease that property except with the previous permission of the court
and subject to the conditions mentioned in s.363. Admittedly, no property
guardian was appointed to act on behalf of the minors. No evidence that
r
the father acted as legal guardian. So also there is no proof of acceptance
of the oral gifts said to have been made by the mother to Ismail, the eldest C
son, of her undivided share. There is no proof as well that possession was
·delivered under the oral gift and accepted on behalf of the minor and taken
possession.

Her 1/3rd undivided share was not subject matter of OS No. 3/1/1951. D
The Additional Civil Judge, therefore, was right in his findings that the gifts
have not been proved. They were not complete. Admittedly, the father
continued to be in possession and enjoyment of the lands as owner as
evidenced by the revenue records until it was mutated in the name of the
appellants to the extent of 16 acres purchased by him as per the aforesaid
sale deeds Ex.D-1 and Ex.D-3. Ibrahim has attested Ex.D-1 when his father E
conveyed the lands as an owner. Though the sale was against his interest,
he had not objected to the sale. He, thereby, is estopped by conduct and
record to assail Ex.D-1 sale or to claim any interest in the lands.

Under these circumstances the question emerges whether the High F
Court was right in reversing the appellate decree on the doctrine of res
judicata. At this juncture it may be relevant to mention that the trial court
negatived the plea of res judicata as a preliminary issue. Though it was open
to sustain the trial court decree on the basis of the doctrine of res judicata,
it was not argued before the appellate court on its basis. Thereby the G
findings of the trial court that the decree in OS No. 3/1/1951 does not
operate as a res judicata became final. The question then is whether the
doctrine of res judicata stands attracted to the facts in this case. It is true
that under s.11 C.P .C. when the matter has been directly or substantially
in issue in a former suit between the same parties or between parties under
whom they or any .of them claimed litigating under the same title, the H
\_
982 SUPREME COURT REPORTS [1995] 2 S.C.R.

A decree in the former suit would be res judicata between the plaintiff and
the defendant or as between the co-plaintiff or co-defendants four condi- {
tions must be satisfied, namely, that (1) there must be a conflict of interest
between the defendants concerned; (2) it must be necessary to decide the
conflict in order to give the reliefs which the plaintiff claims; (3) the
B question between the defendants must have been finally decided; and (4)
the co-defendants were necessary or proper parties in the former suit. This
is the settled law as held in S.M. Sadat Ali Khan v. Mirza Wiquar Ali, AIR
(1943) PC 115, Shashibushan Prasad Mishra v. Babuji Rai & Ors., [1969) 2
SCR 971; and Iftikhar Ahmed & Ors. v. Syed Meharban Ali, [1974) 2 SCC
(
151. Take for instance 'that if in a suit by 'A' against 'B & C', the matter is
)
C directly and substantially in issue between B & C, and an adjudication upon
that matter was necessary to determine the suit to grant relief to 'A'; the
adjudication would operate as res judicata in a subsequent suit between B
& C in which either of them is plaintiff and the other defendant. In other
words, if a plaintiff cannot get at his right without trying and deciding a
D case between co-defendants, the court will try and decide the case, and the
co-defendants will be bound by the decree. But if the relief given to the
plaintiff does not require or involve a decision of any case between co-
defendants, the co-defendants will not be bound as between each other.

Where the above four conditions did not exist the decree does not
E .operate as res judicata. It must, therefore, be that all the persons who have
right, title and interest are made parties to the suit and that they· should
have knowledge that the right, title and interest would be in adjudication
and the finding or the decree therein would operate as a res judicata to
their right, title and interest in the subject-matter of the former suit. Even
F in their absence a decree could be passed and it may be used as an
evidence of the plaintiff's title either accepted or negatived therein. The
doctrine of res judicata would apply even though the party against whom
it is sought to be enforced, was not co-nominee made a party nor entered
appearance nor did he contest the question. The doctrine of res judicata ·
must, however, be applied to co-defendants with great care and caution.
G The reason is that fraud is an extrinsic collateral act, which vitiates the most
solemn proceedings of courts of justice. If a party obtains a decree from
the court by practicing fraud or collusion, he cannot be allowed to say that
the matter is res judicata and cannot be re-opened. There can also be no
questi6n of res judicata in a case where signs of fraud or collusion are
H transparently pregnant or apparent from the facts on record:
)
M. SAHAB v. S. ISMAIL [K. RAMASWAMY, J.] 983
Therefore, in applying the doctrine of res judicata between co-defen- A
dant or co-plaintiff, care must, of necessity, be taken by the courts to see
that there must in fact 'be a conflict of interest between the co-defendants
or co-plaintiffs concerned and it is necessary to decide the conflict in order
to give relief which the plaintiff in the suit claimed and the question must
have been directly and substantially in issue and was finally decided there-
B
in. As found by the appellate court, Maqdoom was playing fraud upon his
creditoi:s by creating false oral gifts or spurious claims of mortgagees with
a view to defraud them. Section 44 of the Evidence Act envisages that any

....
-,.- party to a suit or proceeding may show that any judgment, order or decree,
which is relevant under s.40, 41 or 42 has been obtained by fraud or
collusion. Under s.40, the existence of the judgment, order or decree which c
by law prevents any Court from taking cognizance of a suit or holding a
trial, is a relevant fact when the question is whether such court ought to
take cognizance of such suit or to hold such trial.

When the evidence on record establishes that the suit in OS No. D
3/1/1951 was collusive or fraudulent to defraud the creditors, it is a relevant
fact and the court would take cognizance thereof to find whether the trial
court is precluded to try the issue. The High Court had not adverted to
>-- nor bestowed its attention this aspect of the matter except mechanical
application of the principles laid by this Court in lftikhar Ahmed's case
(supra). The pleadings in OS No. 3/1/1951 were not produced in the courts E
below. The judgment, Annexure II, indicates that the respondents and their
another brother and the parents were impleaded as defendants 1to5. Sixth
defendant was the decree holder in another suit. It was claimed therein
that the defendants 1 to 4 were said to have executed possessory mortgage
in favour of one Ismail, the plaintiff therein. A joint written statement was F
filed by them admitting the claim of the plaintiff who had pleaded the gift
r.r-:: said to have been given by Maqdoom in favour of the three sons and his
I
wife. They have admitted the same. Thus it would be clear that there was
._.C no conflict of interest between the defendants in that suit. On the other
hand they had confessed to the claim .set up by the alleged possessory
mortgagee therein. Though the appellant claimed title to the property G
through the parents of the respondents, there was neither conflict of
y- interest nor was it necessary to decide about the validity of the gift said to
have been executed by Maqdoom. The dispute therein was whether the
possessory mortgagee was bound by the decree and the creditor could
proceed against the Maqdoom and the said property is liable to sale for H
\
984 SUPREME COURT REPORTS (1995] 2 S.C.R.

A realisation of his decree debt? In that context the relevancy or validity of
the gift is immaterial. It was admitted therein that they had executed
possessory mortgage in favour of Ibrahim, plaintiff therein. On· that basis, ·1i
the only question would have been whether he would be entitled to resist
the execution of the decree obtained against Maqdoom by the 6th defen-
dant therein? The oral gift or sale of 4 acres under Ex.D-3 was not the
B subject-matter of OS No. 3/1/1951. The High Court, therefore, committed
. gross palpable error of law in applying the doctrine of res judicata between
co-defendants relying upon the decree in OS No. 3/1/1951 dated September
24, 1951, even if it could be pressed into service in the second appeal.

C The appeal is accordingly allowed. The judgment and decree of the
High Court are set aside and that of the appellate court stands restored,
in consequence the suit of the respondents 1 & 2 stands dismissed with
costs throughout.

B.K.M. Appeal allowed.