Source: Delhi High Court  

Why in News? 

A bench of Justice Devendra Kumar Upadhyaya and Justice Tushar Rao Gedela held that constructive res judicata shall be applicable to writ proceedings as well.  

• The Delhi High Court held this in the case of SC Gupta v. Union of India and Anr. (2025). 

What was the Background of SC Gupta v. Union of India and Anr.(2025) Case?   

• The Central Board of Excise and Customs issued revised guidelines on 31st July 2015, for granting rewards to informers and Government Servants in cases of seizure or infringement of customs duties. 
• The guidelines state that rewards are ex-gratia payments that cannot be claimed as a matter of right and should not be granted as a routine. 
• The petitioner provided intelligence to the authorities on 29th January 2001, concerning evasion of central excise duty. 
• The authorities issued a show cause notice to the defaulting company on April 8, 2003, demanding Rs. 23.89 crores in unpaid duties. 
• On 10th February 2020, a settlement was reached under the "Sabka Vishwas Scheme," reducing the liability to Rs. 11.94 crores (50% of the original demand). 
• The petitioner made a representation on 18th May 2023, demanding 20% of the realized tax (Rs. 2.33 crores) as a reward. 
• The authorities granted the petitioner a reward of Rs. 25 lakhs (2% of the claimed reward), which the petitioner found unsatisfactory. 
• The petitioner raised a grievance with the Centralized Public Grievance Redress and Monitoring System (CPGRAMS), which closed the case on 23rd July 2024. 
• The petitioner filed a writ petition (W.P.(C) No. 14658/2024) challenging the CPGRAMS order, but it was dismissed by a Single Judge on 29th October 2024. 
• The petitioner then filed an intra-court appeal (LPA 1219/2024), which was also dismissed by a Division Bench on 17th December 2024. 
• The current petition challenges the constitutional validity of Clause 3.3.1 of the Guidelines, which gives discretionary power to authorities for determining rewards.

What were the Court’s Observations?

• The only issue to be determined here was whether the prayer made in the present petition is barred by the principle of constructive res judicata. 
• The Court observed that an explanation is provided in Section 141 of Civil Procedure Code, 1908 (CPC) which provides that the expression “proceedings” occurring in Section 141 includes proceedings under Order IX but does not include any proceeding under Article 226 of the Constitution of India, 1950 (COI). 
• The Court held in the present case that if it is held that constructive res judicata shall not apply to writ proceedings it would be against the public policy as finality of decisions is an important facet of it. 
• The court determined that the principle of Constructive Res Judicata applies to this case, as the petitioner could have challenged Clause 3.3 of the Guidelines in the earlier litigation but failed to do so. 
• The court held that permitting such a challenge now would lead to endless litigation between the parties, contrary to the public policy purpose of the Constructive Res Judicata doctrine which aims to prevent multiplicity of litigation. 
• Based on these reasons, the court concluded that the prayer made in the present writ petition is barred by the principle of Constructive Res Judicata and therefore the petition is not maintainable. 

What is Constructive Res Judicata? 

• The principle of Constructive Res Judicata is an extension of the principle of Res Judicata.  
• The origin of this principle in law can be found in the provisions contained in Order II Rule 2 read with Section 11 of the CPC. 
• Section 11 of the CPC contains the principle of Res Judicata, according to which, a subsequent suit in respect of a claim between the same parties is barred if an earlier suit has been tried involving the same issue which have been directly and substantially in issue and between the same parties.  
• Explanation IV appended to Section 11 of the CPC provides that any matter which might or ought to have been made 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.  
• The Hon’ble Supreme Court in the case of M. Nagabhushana v. State of Karnataka, (2011) held that principle of Constructive Res Judicata as explained in the Explanation IV of Section 11 of CPC is applicable to Writ Petitions.