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Res Judicata Shall Not Apply To Erroneous Decision

In Canara Bank vs NG Subbaraya Setty, the Supreme Court has observed that an issue of law which arises between the same parties in a subsequent suit or proceeding is not res judicata if, by an erroneous decision given on a statutory prohibition in the former suit or proceeding, the statutory prohibition is not given effect to.

Justice Rohinton Fali Nariman, who authored the judgment, has elaborately explained the concept of res judicata and its exceptions when it comes to issues of law.

Referring to various case laws on the subject, the bench summarized these principles:

Where an issue of law decided between the same parties in a former suit or proceeding relates to the jurisdiction of the Court, an erroneous decision in the former suit or proceeding is not res judicata in a subsequent suit or proceeding between the same parties, even where the issue raised in the second suit or proceeding is directly and substantially the same as that raised in the former suit or proceeding.

An issue of law which arises between the same parties in a subsequent suit or proceeding is not res judicata if, by an erroneous decision given on a statutory prohibition in the former suit or proceeding, the statutory prohibition is not given effect to, despite the fact that matter in issue between the parties may be the same as that directly and substantially in issue in the previous suit or proceeding.

When the issue of law in the second suit or proceeding is based on different facts from the matter directly and substantially in issue in the first suit or proceeding. Equally, where the law is altered by a competent authority since the earlier decision, the matter in issue in the subsequent suit or proceeding is not the same as in the previous suit or proceeding, because the law to be interpreted is different.

Article referred: http://www.livelaw.in/erroneous-decision-didnt-give-effect-statutory-prohibition-will-not-operate-res-judicata-sc-read-judgment/

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