JUDGMENT B. P. JEEVAN REDDY, J.:— These appeals are preferred against the judgment of the Karnataka High Court answering the question referred to it, at the instance of the revenue, in favour of the revenue and against the assessee. The question referred under Section 256 of the Income-tax Act, 1961, read as follows: "Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the sum of Rs. 1,79,742/- could not be disallowed under Section 40(c) of the Income-tax Act, 1961." (The above question related to Assessment Year 1974-75. The question referred for A. Y. 1975-76 was identical except in the matter of amount). Since the facts in all the appeals are identical it would be sufficient to notice the facts in C.A. Nos. 6092 and 6092A/90 (Prakash Beedies (P) Ltd. v. Commr. of Income Tax, Karnataka, Bangalore). 2. Prior to 15-7-1972, a partnership firm called K. M. Anand Prabhu & Sons, Mangalore, consisting of three partners K. M. Vishnudas Prabhu, K. M. Ramdas Prabhu and K. M. Shankar Prabhu was engaged inter alia in the business of manufacturing and sale of beedies under the brand name Mangalore Prakash Beedies. On May 20, 1972 a private limited company called Parkash Beedies Limited (the assessee-appellant herein), was incorporated with its registered office at Mangalore. One of its objects was to take over the business of the aforesaid firm. Under an agreement dated July 15, 1972 between the firm and the company, the firm sold its rights and assets to the company on the terms and conditions set out therein. Clause 4(a) of the agreement, which alone is material for the purposes of these appeals reads: "(a) For the use of the trade name the Company shall pay royalty to the Vendor at the rate of 10ps. for every thousand beedies sold by the Company by using the trade name of the Vendor. The royalty shall be worked out at the end of each quarter ending on March, June, September and December, on the sales made during each quarter. The royalty fixed hereby shall not be varied for a period of one year and may be reviewed and/or revised there afterwards from time to time". 3. The assessee was making payments to the firm every year on account of royalty in terms of said clause. 4. The royalty fixed hereby shall not be varied for a period of one year and may be reviewed and/or revised there afterwards from time to time". 3. The assessee was making payments to the firm every year on account of royalty in terms of said clause. 4. The three partners aforesaid of the firm were also the directors of the assessee-company. 5. For the assessment years 1974-75 and 1975-76, the assessee claimed deduction of the amount paid by it to the firm on account of royalty in terms of clause 4(a) of the agreement. The amounts paid during the accounting years relevant to the said assessment years were Rs. 3,16,526/- and Rupees 3,95,742/- respectively. The I. T. O. allowed the deductions as claimed. 6. In exercise of the powers conferred on him by Section 263, the Commissioner of Income-tax initiated (suo motu) proceedings for revising the said assessments in so far as the aforesaid deductions were concerned. After hearing the assessee, he passed orders on September 16, 1976 whereunder he disallowed payments to the firm over and above the ceiling prescribed in Section 40(c). The assessee preferred appeals to the Tribunal against the orders of the I.T.O. The appeals were allowed and the orders of the I.T.O. restored. On reference, the High Court answered the question in the negative i.e., in favour of the revenue and against the assessee, on the following reasoning: the three directors of the assessee-company were also the partners in the firm to which royalty payments were made. In law, a firm has no separate legal existence; it is not a juristic person or a distinct legal entity. It is merely a collection or association of the individuals for carrying on a business. Merely because the firm is an assessable entity under the Income tax Act it does not follow that it is a juristic or legal entity. It must, therefore, be held that the payments made to the firm are in reality payments made to the directors. Such payments clearly attract and fall within the mischief of Section 40(c). The Commissioner was right in saying so and the opinion of the Tribunal to the contrary is unsustainable in law. 7. In these appeals, S/Shri Harish N. Salve and Rohinton Nariman assailed the correctness of the view taken by the High Court. Such payments clearly attract and fall within the mischief of Section 40(c). The Commissioner was right in saying so and the opinion of the Tribunal to the contrary is unsustainable in law. 7. In these appeals, S/Shri Harish N. Salve and Rohinton Nariman assailed the correctness of the view taken by the High Court. They submitted firstly that the payments were made not to the directors of the assessee but to a firm which was a separate entity. A payment to a firm is not ipso facto a payment to the partners, directly or indirectly. In a firm there may be other partners besides the directors of the assessee-company. It may also happen that the firm has no income to distribute because of the losses incurred by it which are set-off against the income so received. The High Court was in error in holding that a payment to a firm is a payment to the partners. Assuming that a partnership firm is not a separate juristic entity distinct from its partners, even so the payments were made to the said three persons not in their capacity as directors (qua directors) but in consideration of a valuable right parted by them in favour of the assesseecompany. Such payments do not and cannot fall within the mischief of Section 40(c). Section 40(c) was never intended to take in such payments. A company may take on lease the house of its director for its legitimate business purposes and pay rent which is reasonable having regard to the market conditions, or it may pay even less than the market rate of rent. Whether the rent paid by the company to its director in such a case falls within Section 40(c), ask the counsel. Another illustration given by the counsel is where a director supplies raw material to the assesseecompany for a price which is the appropriate market price. Would such payment also fall under Section 40(c), they ask. The Budget speech of the Finance Minister in the Parliament, while introducing the said provision, is relied upon in support of their contention. It is also argued that the words "remuneration, benefit or amenity" occurring in Section 40(c) must be read having regard to the context in which they occur applying the principle NOSCITOR A SOCIIS (recognition of associated words). The Budget speech of the Finance Minister in the Parliament, while introducing the said provision, is relied upon in support of their contention. It is also argued that the words "remuneration, benefit or amenity" occurring in Section 40(c) must be read having regard to the context in which they occur applying the principle NOSCITOR A SOCIIS (recognition of associated words). If so read, the payments in question can never fall within the ambit of the said words. 8. Shri Ahuja, the learned counsel for the Revenue justified the reasoning and approach of the High Court having regard to the clear language employed in clause (c). 9. The genuineness or validity of the agreement between the assessee-company and the firm is not disputed. The factum of payments made on account of royalty in terms of clause 4(a) of the said agreement is also not disputed. It is also not disputed that in the beedi trade, brand name carries significant business value. It is necessary to keep this factual context in mind while examining the question at issue. Section 40(c) read as follows during the re1evant assessment years: "40. Notwithstanding anything to the contrary in sections 30 to 39, the following amounts shall not be deducted in computing the income chargeable under the head "Profits and gains of business or profession", (a) ....... (b) .......... Section 40(c) read as follows during the re1evant assessment years: "40. Notwithstanding anything to the contrary in sections 30 to 39, the following amounts shall not be deducted in computing the income chargeable under the head "Profits and gains of business or profession", (a) ....... (b) .......... (c) in the case of Any company (i) any expenditure which results directly or indirectly in the provision of any remuneration or benefit or amenity to a director or to a person who has a substantial interest in the company or to a relative of the director or of such person, as the case may be, (ii) any expenditure or allowance in respect of any assets of the company used by any person referred to in sub-clause (i) either wholly or partly for his own purposes or benefit, if in the opinion of the Income-tax Officer any such expenditure or allowance as is mentioned in sub-clauses (i) and (ii) is excessive or unreasonable having regard to the legitimate business needs of the company and the benefit derived by or accruing to it therefrom, so, however, that the deduction in respect of the aggregate of such expenditure and allowance in respect of any one person referred to in sub-clause (i) shall, in no case, exceed- (A) where such expenditure or allowance relates to a period exceeding eleven months comprised in the previous year, the amount of seventy-two thousand rupees; (B) where such expenditure or allowance relates to a period not exceeding eleven months comprised in the previous year, an amount calculated at the rate of six thousand rupees for each month or part thereof comprised in that period: Provided that in a case where such person is also an employee of the company for any period comprised in the previous year, expenditure of the nature referred to in clauses (i), (ii), (iii) and (iv) of the second proviso to clause (a) of sub-section (5) of section 40A shall not be taken into account for the purposes of sub-clause (A) or sub-clause (B), as the case may be; (iii) * * * * * * Explanation.- The provisions of this clause shall apply notwithstanding that any amount not to be allowed under this clause is included in the total income of any person referred to in sub-clause (i);" 10. The Budget speech of the Finance Minister, in so far as it mentions the reasons for introduction of clause (c) of Section 40, reads as follows: "I am firmly of the view that the fiscal instrument must be deployed to discourage payment of high salaries and remunerations which go ill with the norms of egalitarian society. I accordingly propose to impose a ceiling on the remuneration of company employees which would be deductible in the computation of taxable profits. The ceiling is being set at Rs. 5,000 per month. Together with the existing ceiling of Rs. 1,000 per month in the case of perquisites, the allowable overall ceiling on remunertion and perquisites, for purposes of taxation, will be at Rs. 6,000 per month ........." 11. The object behind the provision undoubtedly was "to discourage and disallow payment of high salaries and remunerations which go ill with the norms of egalitarian society". The provision was, of course, not confined to the directors. It took in relatives of directors, persons having substantial interest in the company and their relatives. The clause vested in the I.T.O. the power to determine whether any such expenditure or allowances as is mentioned in the said clause was excessive or unreasonable having regard to the legitimate business needs of the company and the benefit derived by or accruing to it therefrom. In addition to it, a ceiling was also prescribed beyond which such expenditure or allowance could not go in any event. 12. At this juncture, it would be appropriate to notice the provision contained in sub-section (2) of S. 40-A. Clause (a) of subsection (2) provides that where the assessee incurs any expenditure in respect of which payment has been made or is to be made to any person referred to in clause (b) of the sub-section, and the Income-tax Officer is of the opinion that such expenditure is excessive or unreasonable having regard to the fair market value of the goods, services or facilities for which the payment is made or the legitimate needs of the business or profession of the assessee or the benefit derived by or accruing to him therefrom, so much of the expenditure as is so considered by him to be excessive or unreasonable shall not be allowed as a deduction. Clause (b) mentions the categories of persons to whom the provision in clause (a) applies. Clause (b) mentions the categories of persons to whom the provision in clause (a) applies. It includes directors of the company and their relatives among others. Clause (b) also takes in any payment to any company, firm, association of persons or Hindu undivided family of which a director, partner or member, as the case may be, has substantial interest in the business or profession of the assessee. In short, the net is cast very wide to ensure that excessive or unreasonable payments are not made to the persons in control of the affairs of the assessee in the name of paying for the goods, services and facilities rendered, supplied or extended by them, as the case may be. 13. That the payments made by the assessee-company to the firm on account of royalty in terms of clause (4) (a) of the agreement fall within the meaning of the expression expenditure in sub-clause (i) of clause (c) is not disputed. The observations in C. I. T., Bombay v. M/s. Indian Engineering and Commercial Corporation Private Limited (Civil Appeal Nos. 1583 and 1584 (NT) of 1977 decided on 13-4-1993 by us - reported in 1993 (2) J.T. 683 ) do not say otherwise. That case arose under Section 40(A)(5). The payments in question were made to the directors by way of commission on sales. The question was whether the said payments fell within sub-clause (ii) of clause (a) of subsection (5) of Section 40(A). It was held that they did not. While holding so it was observed that "it is difficult to say that payment of a certain cash amount by way of commission on sales, directly to an employee, can be said to fall within the words where the assessee incurs any expenditure which results directly or indirectly." The said observations were made in response to the Revenues argument that the said payment constituted perquisites within the meaning of sub-clause (ii) of clause (a) of Section 40(A)(5). The observations are clearly confined to the said sub-clause and have no relevance to any other provision in the Act. The observations cannot be read dissociated from their context. Coming back to the provisions of Section 40(c) and the facts of the case before us, the only question is whether the royalty payments to the firm fell within clause (c). The observations are clearly confined to the said sub-clause and have no relevance to any other provision in the Act. The observations cannot be read dissociated from their context. Coming back to the provisions of Section 40(c) and the facts of the case before us, the only question is whether the royalty payments to the firm fell within clause (c). We assume for the purpose of this argument that in this case, payments to firm were payments to partners. Even so, we think that the said payments did not fall within clause (c). The payments were made in consideration of a valuable right parted by the firm/partners/directors of the assessee-company in favour of the assessee. So long as the agreement whereunder the said payments were made is not held to be a mere device or a mere screen, the said payments cannot be treated as payments made to the directors as directors (qua directors). The payments were made by way of consideration for allowing the assessee to use a valuable right belonging to them viz., the brand name. Such a payment may be liable to be scrutinised under subsection (2) of Section 40(A), but it certainly did not fall within the four corners of Section 40(c). 14. In T.T. (Pvt.) Ltd. v. I.T.O., Bangalore, 121 ITR 551, a Bench of Karnataka High Court comprising D. M. Chandrashekhar, C. J. and E. S. Venkataramiah, J. has taken a view which accords with the one taken by us. Speaking for the Bench, E. S. Venkataramiah, J. (as he then was) observed (at pp. 1056 and 1057 of Tax LR): "A close reading of the above provision shows that S. 40(c) refers to an expenditure incurred by making periodical payments to a person mentioned in that clause apparently for any personal service that may be rendered by him. It cannot have any reference to payments made by the assessee for all kinds of "services or facilities" referred to in S. 40A (2)(a). It is argued that the proviso thereto suggests that any expenditure incurred for any kind of service which is referred to in the main part of S. 40A (2)(a) and the expenditure referred to in S. 40(c) belong to the same category. This contention is not correct. The expression "services" in S. 40A (2)(a) is an expression of wider import............. It is argued that the proviso thereto suggests that any expenditure incurred for any kind of service which is referred to in the main part of S. 40A (2)(a) and the expenditure referred to in S. 40(c) belong to the same category. This contention is not correct. The expression "services" in S. 40A (2)(a) is an expression of wider import............. If the remuneration, benefit or amenity referred to in S. 40(c) is treated as the same as what is paid in return for "the goods, services or facilities" then irrespective of the fair market value of the goods, services and facilities provided by a person who may be a director or a person who has a substantial interest in the company or a relative of the director or of such person, as the case may be, only a maximum of Rs. 72,000 can be allowed to be deducted in computing the income of the company in any one year. We do not think that Parliament ever intended that such a result should follow. The goods, services and facilities referred to in S. 40A(2) (a) are those which have a market value and which are commercial in character. Many of the services and facilities referred to above are those which are now-a-days provided by independent organisations." 15. The said decision has been followed by the Punjab and Haryana High Court in Commr. of Income-tax, Patiala v. Avon Cycles (P) Ltd., (1980) 126 ITR 448 . The Calcutta High Court has also taken a similar view in India Jute Co. Ltd. v. Commr. of Income-tax, (1989) 178 ITR 649 . 16. Mr. Ahuja, learned counsel for the Revenue submitted that the argument of the assessee that only the payments made to directors as directors fall within clause (c) and not the other payments, becomes inapt when the payments are made to the relatives of the directors or to persons holding substantial interest in the assessee-company or their relatives. 16. Mr. Ahuja, learned counsel for the Revenue submitted that the argument of the assessee that only the payments made to directors as directors fall within clause (c) and not the other payments, becomes inapt when the payments are made to the relatives of the directors or to persons holding substantial interest in the assessee-company or their relatives. The ceiling prescribed in clause (c) cannot also be applied to such persons - says the counsel, The answer perhaps lies in the clause itself - in the power vested in the I.T.O. to determine whether any expenditure or allowance is excessive or unreasonable having regard to the legitimate business needs of the company and the benefit derived by the assessee or accruing therefrom: Any payment to a relative of a director or other persons mentioned in clause (c) will necessarily be examined applying the above test and if it is found that they are unwarranted, unreasonable or excessive, they may be disallowed. Since such a situation does not arise herein, we need not pursue the argument further. 17. For the above reasons, we are of the opinion that the judgment under appeal Cannot be sustained. It must be held that the payments in question did not fall within section 40(c). Accordingly, the appeals are allowed, the judgment of the High Court is set aside and the question referred to the High Court is answered in the affirmative, i.e., in favour of the assessee and against the revenue. No costs. Appeal allowed. For citation: AIR 1993 SC 1751 (From : Bombay) Decided on 7-4-1993. A. M. AHMADI AND S. MOHAN, JJ. Shri Inacio Martins, Deceased through LRs., Appellants Versus Narayan Hari Naik and others, Respondents. Civil Appeal No. 1695 of 1993 (arising out of S.L.P. (Civil) No. 16242 of 1991) Decided on 7-4-1993. (A) Civil P.C. (5 of 1908), S.11, O.2, R.2(3) - Applicability - Earlier suit for injunction dismissed on technical ground - Subsequent suit for declaration of title and recovery of possession not barred by res judicata - Not barred under O.2, R.2(3) since causes of actions in both suits were distinct. Decision of Bombay High Court, Reversed. Former suit filed by plaintiff for declaration that he was lessee and for injunction restraining defendants from interfering with his possession of suit property. Decision of Bombay High Court, Reversed. Former suit filed by plaintiff for declaration that he was lessee and for injunction restraining defendants from interfering with his possession of suit property. Dismissal of that suit on technical ground that plaintiff was no more in possession of suit property and a suit for mere declaration cannot lie. Subsequent suit for declaration of plaintiff as tenant and for recovery of possession. Not barred by principles of res judicata since question of status of plaintiff as lessee was not decided in earlier suit. Subsequent suit also not barred by O.2, R. 2(3) since causes of action were different i.e. earlier suit was based on apprehension that defendants were likely to forcibly dispossess plaintiff while cause of action in subsequent suit was that plaintiff was illegally and forcibly dispossessed and claimed restoration of possession. Decision of Bombay High Court, Reversed. (Paras 4, 5) (B) Goa, Daman and Diu Agricultural Tenancy Act (7 of 1964) , S.58(2), S.7 (as amended by Act 17 of 1976) - Ouster of Civil Courts Jurisdiction - Suit for declaration that plaintiff is lessee and for recovery of possession of land filed in Civil Court - Amendment Act 17 of 1976 coming into force during pendency of civil suit - Act silent as to what procedure to be adopted in such situation - Proper course would be to refer question whether person in actual possession of land is tenant of competent Revenue authority. (Para 9) JUDGMENT AHMADI, J.:—Special leave granted. 2. The appellants are the legal representatives of the deceased plaintiff Inacio Martins who died pendente lite. He had on October 26, 1968 instituted a Suit No. 157 of 1968 for a declaration and an injunction to restrain the defendants from dispossessing him from the property known as Palmar Oiteral do Predio Aivao comprising seven lots of coconut grove situated at Caranzalem belonging to defendant No. 2. The said suit was dismissed on March 28, 1974 on the ground that the plaintiff was no more in possession of the suit property and, therefore, a suit for a mere declaration simpliciter could not lie. The said suit was dismissed on March 28, 1974 on the ground that the plaintiff was no more in possession of the suit property and, therefore, a suit for a mere declaration simpliciter could not lie. On the dismissal of the said suit the original plaintiff filed another Suit No. 114/74 on May 6,1974 for restoration of possession on the ground that he was the lawful tenant of the said property and since he had not been dispossessed in accordance with law the defendants who were mere trespassers were liable to be evicted. The plaintiffs case in the plaint was that he was the lessee in respect of seven lots on an annual rent of Rs. 3600/- payable in advance in three instalments; that he had paid the rent up to the end of December, 1967 and the first instalment of 1968 but the owner, defendant No. 2, in collusion with defendant No. 1 executed a deed of lease in favour of the latter effective from January 1, 1968 on the strength whereof defendant No. 1 claimed to have assumed possession of the property sometime in the second week of June, 1968 without his tenancy having been lawfully terminated. The plaintiff, therefore, contended that defendant No. 1 was a trespasser in the property and was liable to be evicted therefrom. He, therefore, sought possession of the property in respect of which he claimed to be a lessee. 2A. The defendants, besides contending that the suit was barred on the principle of res Judicata and/or constructive res judicata as found in O. 2, R. 2(3) of the Code of Civil Procedure, averred that on the expiry of the lease at the end of December, 1967 the lease stood terminated by efflux of time and defendant No. 2 was, therefore, entitled to let out the property to defendant No. 1 and hence the latter was in lawful possession of the said property. The plaintiffs allegation that he was forcibly dispossessed was denied. The defendants, therefore, contended that the suit was not maintainable and deserved to be dismissed. 3. The trial Court upheld the plaintiffs contention that the property was dismissed to him and he was the lawful tenant thereof till his possession came to be disturbed sometime in June, 1968. The trial Court also found that the plaintiff had paid a sum of Rs. 3. The trial Court upheld the plaintiffs contention that the property was dismissed to him and he was the lawful tenant thereof till his possession came to be disturbed sometime in June, 1968. The trial Court also found that the plaintiff had paid a sum of Rs. 1200/- to defendant No. 2 through his employee Dattu Kenkro by way of advance rent for the year commencing from Jan. 1, 1968. The trial Court, therefore, held that the plaintiff was wrongly dispossessed by defendant No. 1 in collusion with defendant No. 2 and decreed the suit for eviction on September 25, 1985. Against the said decree both the defendants preferred an Appeal No. 82/85. The First Appellate Court concurred with the findings recorded by the trial Court and dismissed the appeal or. March 25, 1986. Feeling aggrieved by the order of dismissal of the appeal, the defendants preferred separate Second Appeals Nos. 27/88 and 31/88 which came to be allowed on April 5, 1991. Interfering with the concurrent findings recorded by the two courts below the High Court came to the conclusion that the courts below had applied the wrong test and had based their findings on the question of tenancy and dispossession on mere conjectures. It, therefore, held that the findings were perverse and it was open to the High Court in Second Appeal to interfere with the said findings. It also held that the suit was barred by res judicata as well as Order 2, Rule 2(3) of the Code of Civil Procedure. Lastly it noticed that during the pendency of the suit the Goa, Daman & Diu Agricultural Tenancy Act, 1964 (hereinafter called the Act) was amended by Act 17 of 1976 dated October 14, 1976 known as the Fifth Amendment which was brought into effect from April 20, 1976 by which the definition of agriculture was changed and the expressions garden and garden produce were defined by the insertion of sub-sections (7A) and (7B) to Section 2 which rendered the Civil Court without jurisdiction. The High Court, therefore, held that the decree passed by the Civil Court was unsustainable. On these findings the High Court allowed the appeals and reversed the decree of the trial Court with no order as to costs. It is against this order of the High Court that the present appeal by special leave is preferred. 4. The High Court, therefore, held that the decree passed by the Civil Court was unsustainable. On these findings the High Court allowed the appeals and reversed the decree of the trial Court with no order as to costs. It is against this order of the High Court that the present appeal by special leave is preferred. 4. Before we deal with the impact of the Act as amended by Act 17 of 1976 we may first deal with the two technical grounds on which the High Court has dismissed the suit. The first ground on which the High Court dismissed the suit is that the suit was barred by the principle of res judicata in view of the dismissal of the former Suit No. 157/68, That suit was for a declaration that the plaintiff was a lessee and for an injunction to restrain the defendants from interfering with his possession of the suit property. The foundation for that suit was that the plaintiff who claimed to be a lessee in respect of the demised property apprehended his forcible dispossession therefrom. With a view to preventing any such action on the part of the defendants he instituted the suit for an injunction to restrain them from so doing. That suit, however, came to be dismissed as the trial Court came to the conclusion that the plaintiff was no more in possession of the property in respect of which he claimed to be a lessee. It was only thereafter that the plaintiff filed the suit for restoration of his possession. In the subsequent suit the plaintiff contended that he had been forcibly dispossessed sometime in the second week of June, 1968 contrary to law even though his tenancy was subsisting and he had paid the first instalment of rent for the year 1968. He, therefore, contended that the lease stated to have been created in favour of defendant No. 1 by defendant No. 2 was a sham and bogus document set up with a view to supporting their illegal action in dispossessing him. The High Court, in the backdrop of these facts, came to the conclusion that the subject matter of the second suit was directly and substantially in issue in the previous suit between the same parties and hence regardless of the relief claimed the second suit was clearly barred by res judicata. The High Court, in the backdrop of these facts, came to the conclusion that the subject matter of the second suit was directly and substantially in issue in the previous suit between the same parties and hence regardless of the relief claimed the second suit was clearly barred by res judicata. This finding of the High Court is difficult to sustain. Section 11 of the Code of Civil Procedure provides that no court shall try any suit or issue in which the matter directly and substantially in issue in a former suit between the same parties, or between parties under whom they or any of them claim, litigating under the same title, in a court competent to try such subsequent suit or the suit in which such issue has been subsequently raised, and has been heard and finally decided by such court. It is not the finding of the High Court that in the previous suit the question regarding the tenancy of the plaintiff was determined against the plaintiff. As the record stands the only ground on which the previous suit was dismissed was the technical ground that a suit for a mere declaration cannot lie without claiming possession once it is found that the plaintiff had lost possession. Injunction could not be granted to the plaintiff against dispossession as he had already been dispossessed. The court came to the conclusion that a mere declaration of his status as a tenant could not be granted unless the consequential relief for possession was prayed. It was for this technical reason that the suit was dismissed. It is, therefore, difficult to comprehend how the High Court came to the conclusion that the subject matter of the second suit was directly and substantially in issue in the previous suit. It would have been a different matter if in the previous suit the court had decided the question of status as lessee against the plaintiff, in which case, perhaps, it could be argued that the second suit based on the factum of tenancy was not maintainable. It is only when the subject matter of any suit is directly and substantially in issue in the previous suit that the subsequent suit would be barred by res judicata if the competent court trying it had decided the issue regarding tenancy against the plaintiff. It is only when the subject matter of any suit is directly and substantially in issue in the previous suit that the subsequent suit would be barred by res judicata if the competent court trying it had decided the issue regarding tenancy against the plaintiff. The High Court has concluded against the plaintiff on this point in paragraph 31 which reads as under: "Thus it is compelling to acknowledge that the subject matter of the second suit was directly and substantially in issue in the previous suit between the same parties. The facts of the case clearly reveal that the res invoked in both the suits is the same. The lite is also the same. Hence the relief by itself is neither material nor relevant for the direct adjudication of the real issue. The relief is only a consequence. Therefore the second suit is to be deemed as barred by res judicata ......." With respect it is difficult to accept this line of reasoning. As stated earlier, the first suit was dismissed on a technical ground that the suit for a mere declaration without seeking consequential relief of possession could not lie. In that suit the issue regarding the status of the plaintiff as a lessee was not settled once for all and hence that issue could not be stated to be barred by res judicata in the subsequent suit brought by the lessee for possession of the demised property. We are, therefore, of the opinion that the High Court was wrong in holding that the second suit was barred by res judicata. 5. The next contention which found favour with the High Court was based on the language of Order 2, Rule 2(3) of the Code of Civil Procedure. The submission regarding constructive res judicata was also based on this very provision. Now Order 2 concerns the framing of a suit. Rule 2 thereof requires that the plaintiff shall include the whole of his claim in the framing of the suit. Sub-rule (1) of Rule 2, inter alia, provides that every suit shall include the whole of the claim which the plaintiff is entitled to make in respect of the cause of action. If he relinquishes any claim to bring the suit within the jurisdiction of any court he will not be entitled to claim that relief in any subsequent suit. Sub-rule (1) of Rule 2, inter alia, provides that every suit shall include the whole of the claim which the plaintiff is entitled to make in respect of the cause of action. If he relinquishes any claim to bring the suit within the jurisdiction of any court he will not be entitled to claim that relief in any subsequent suit. However, sub-rule (3) of Rule 2 provides that a person entitled to more than one relief in respect of the same cause of action may sue for all or any of such reliefs; but if he omits, except with the leave of the court, to sue for all such reliefs he shall not afterwards sue for any relief so omitted. It is well known that Order 2, Rule 2, C.P.C. is based on the salutary principle that a defendant or defendants should not be twice vexed for the same cause by splitting the claim and the reliefs. To preclude the plaintiff from so doing it is provided that if he omits any part of the claim or fails to claim a remedy available to him in respect of that cause of action he will thereafter be precluded from so doing in any subsequent litigation that he may commence if he has not obtained the prior permission of the court. But the Rule does not preclude a second suit based on a distinct cause of action. It may not be out of place to clarify that the doctrine of res judicata differs from the rule embodied in Order 2, Rule 2, in that, the former places emphasis on the plaintiffs duty to exhaust all available grounds in support of his claim while the latter requires the plaintiff to claim all reliefs emanating from the same cause of action. The High Court is, therefore, clearly wrong in its view that the relief claimed is neither relevant nor material. Now, in the fact-situation of the present case, as we have pointed out earlier, the first suit was for an injunction and not for possession of the demised property. The first suit was dismissed on the technical ground that since the plaintiff was not in de facto possession no Injunction could be granted and a suit for a mere declaration of status without seeking the consequential relief for possession could not lie. The first suit was dismissed on the technical ground that since the plaintiff was not in de facto possession no Injunction could be granted and a suit for a mere declaration of status without seeking the consequential relief for possession could not lie. Once it was found that the plaintiff was not in actual physical possession of the demised property, the suit had become infructuous. The cause of action for the former suit was not based on the allegation that the possession of the plaintiff was forcibly taken sometime in the second week of June, 1968. The allegation in the former suit was that the plaintiff was a lessee and his possession was threatened and, therefore, he sought the courts assistance to protect his possession by a prohibitory injunction. When in the course of that suit it was found that the plaintiff had in fact been dispossessed, there was no question of granting an injunction and the only relief which the court could have granted was in regard to the declaration sought which the court held could not be granted in view of the provisions of Specific Relief Act. Therefore, the cause of action for the former suit was based on an apprehension that the defendants were likely to forcibly dispossess the plaintiff. The cause of action for that suit was not on the premise that he had in fact been illegally and forcibly dispossessed and needed the courts assistance to be restored to possession. Therefore, the. subsequent suit was based on a distinct cause of action not found in the former suit and hence we do not think that the High Court was right in concluding that the suit was barred by Order 2, Rule 2(3) of the Code of Civil Procedure. It may be that the subject matter of the suit was the very same property but the cause of action was distinct and so also the relief claimed in the subsequent suit was not identical to the relief claimed in the previous suit. The High Court was, therefore, wrong in thinking that the difference in the reliefs claimed. in the two suits was immaterial and irrelevant. In the previous suit the relief for possession was not claimed whereas in the second suit the relief was for restoration of possession. That makes all the difference. The High Court was, therefore, wrong in thinking that the difference in the reliefs claimed. in the two suits was immaterial and irrelevant. In the previous suit the relief for possession was not claimed whereas in the second suit the relief was for restoration of possession. That makes all the difference. We are, therefore, of the opinion that the High Court was completely wrong in the view that it took based on the language of Order 2, Rule 2(3) of the Civil Procedure Code. 6. The Act was enacted on 16th October, 1964 to provide for the regulation of the terms of tenancy with respect to agricultural lands in the Union territory of Goa, Daman & Diu and for matters connected therewith. The definition of the various terms employed in the statute have been set out in Section 2 thereof The expression agriculture is defined in sub-sec. (1A) to include horticulture and raising of food crops, grass or garden produce, but not allied pursuits, meaning thereby rearing or maintaining plough bulls, breeding of livestock, dairy farming, poultry farming, grazing on grounds reserved for the purpose and such other pursuits connected with agriculture as may be prescribed. Subsections (7A) and (7B) which came to be incorporated by the Fifth Amendment read as under: "7A. Garden means land used primarily for growing coconut trees, are canut trees, cashewnut trees or mango trees; 7B. garden produce means any produce from a garden." It will be seen from the aforesaid definitions that land used primarily for growing coconut trees falls within the expression garden and any produce therefrom would be covered by the expression garden produce. Since garden produce is included within the definition of agriculture in sub-section (1 A) of Section 2 it is clear that land used primarily for growing coconut could be described as agriculture land. Sub-section (11)(i) defines land inter alia to mean land which is used for agriculture or which is capable of being so used but is left fallow. Section 2(23) defines a tenant to mean a person who on or after the date of commencement of this Act holds lands on lease and cultivates it personally and includes a person who is deemed to be a tenant under this Act. Section 2(23) defines a tenant to mean a person who on or after the date of commencement of this Act holds lands on lease and cultivates it personally and includes a person who is deemed to be a tenant under this Act. Section 7 posits that if any question arises whether any person is a tenant or should be deemed to be a tenant under the Act, the Mamlatdar shall after holding an enquiry decide such question. Section 8(1) stipulates that no tenancy of any land shall be terminated and no person holding as tenant shall be liable to be evicted therefrom save as provided under the Act. Sub-section (2) Of Section 8 next provides that where any person as is referred to in Section 4 (deemed tenant) has been evicted from the land on or after 1stJuly, 1962 such person shall be entitled to recover immediate possession of the land in the manner prescribed by or under the Act unless the landlord proves that the termination of tenancy was in the manner authorised by Sec. 9. Even in cases of threatened wrong-ful possession Section 8A says that any tenant in possession of any land or dwelling house who apprehends that he may be dispossessed contrary to the provisions of this Act may apply in the prescribed manner to the Mamlatdar for an order safeguarding his right to possession. Section 9 lays down the modes of termination of tenancy which are (a) by the tenant surrendering his right to the landlord in the manner provided in Section 10; or (b) by the landlord terminating the tenancy on the grounds specified in Section 11; or (c) under any other specific provision of the Act. Section 18 lays down the procedure for taking possession. It says that a tenant entitled to possession of any land under any of the provisions of the Act may apply in writing for such possession to the Mamlatdar. It will be seen from the aforesaid provisions that the forum created for determination of the question whether a person is a tenant or a deemed tenant under the Act is the Mamlatdar. Even where a tenant apprehends that his possession is likely to be interfered with contrary to the provisions of the Act he can make an application in the prescribed manner to the Mamlatdar for safeguarding the same. Even where a tenant apprehends that his possession is likely to be interfered with contrary to the provisions of the Act he can make an application in the prescribed manner to the Mamlatdar for safeguarding the same. So also where a tenant is evicted illegally, Section 8(2) permits him to approach the Mamlatdar for recovery of possession. Unless the tenancy is terminated in the manner provided by Section 9, the law precludes the landowner from terminating the tenancy and obtaining possession of the land from the tenant. Section 58 bars the jurisdiction of courts. Sub-section (2) thereof provides that save as otherwise provided in the Act no court shall have jurisdiction to settle, decide or deal with any question which is by or under this Act required to be settled, decided or dealt with by the Mamlatdar and no order passed by him under the Act shall be questioned in any civil or criminal court. It will thus be seen that the Act sets up an independent machinery and invests the Mamlatdar with jurisdiction to decide questions such as (i) Whether any person is a tenant or should be deemed to be a tenant under the Act? (ii) Whether the possession of any tenant in regard to any land or dwelling house is threatened and if so, whether an order safeguarding the same is required? (iii) Whether the tenancy of any deemed tenant is legally terminated and if not, whether the tenant evicted from the land held by him as such is entitled to restoration of possession? The jurisdiction of the Civil Court is specifically barred by sub-section (2) of Section 58 from settling, deciding or dealing with any question which is by or under the Act required to be settled, decided and dealt with by the Mamlatdar. There can, therefore, be no doubt that after the Fifth Amendment became effective in regard to land used primarily for growing coconut trees and garden produce, the jurisdiction of the Civil Court was ousted by virtue of Section 58(2) of the Act. 7. The suit in question was instituted on May 6, 1974 i.e. before the Fifth Amendment was brought into force. Thus the amendment came into force during the pendency of the suit. The question, therefore, is what is the effect of the Fifth Amendment on pending litigation? No provision is made in the Act in that behalf. 7. The suit in question was instituted on May 6, 1974 i.e. before the Fifth Amendment was brought into force. Thus the amendment came into force during the pendency of the suit. The question, therefore, is what is the effect of the Fifth Amendment on pending litigation? No provision is made in the Act in that behalf. The High Court concluded that since there is nothing in the language of Sections 7 and 58 of the........... Act which is primarily a welfare legislation to indicate that it should not be applied retrospectively there is no question that its applicability should be necessarily prospective. Proceeding further the High Court takes the view that even after the Fifth Amendment came into force the plaintiff had not applied to the Mamlatdar for possession of the land within the period allowed by Section 18 of the Act and had, therefore, allowed the first defendant to become a deemed purchaser of the suit property on the strength of his tenancy. Since the Civil Court had lost jurisdiction to decide the suit, the High Court dismissed it. We may now proceed to examine whether this view taken by the High Court is correct. 8. From the above discussion it emerges that the Civil Court undoubtedly had jurisdiction under Section 9 of the Code of Civil Procedure to try and grant eviction till the Fifth Amendment became effective. After that amendment came into force, the provisions of the Act became applicable to the lands in question which were primarily used for growing coconut trees and receiving produce therefrom. By virtue of Section 7 any question whether a person is a tenant or a deemed tenant was required to be decided by the Mamlatdar and the jurisdiction of the Civil Court stood ousted by Section 58(2) of the Act. The question is whether this subsequent change in the law deprived the Civil Court of jurisdiction which it undoubtedly possessed on the date of the institution of the suit. The question is whether this subsequent change in the law deprived the Civil Court of jurisdiction which it undoubtedly possessed on the date of the institution of the suit. Three situations, therefore, develop in the context of the provisions of the Act as amended by the Fifth Amendment, namely, (i) the Civil Court retains jurisdiction or (ii) the Civil Court is precluded from deciding, even incidentally, questions falling within the ambit of Section 7 of the Act, or (iii) the Civil Courts jurisdiction is wholly ousted, Since the Act is silent as to the fate of pending litigation after the Fifth Amendment the situation arising on the amendment of the Act must be decided on first principles. If a suit is filed to recover possession of agricultural land from a trespasser and no dispute arises, the adjudication whereof is required to be done by the special machinery set up under the Act, the Civil Court will continue to have jurisdiction. If, however, the defendant raises a dispute which is required to be resolved by the special machinery under the Act, a question will arise what procedure the Civil Court should adopt. There may arise a situation where the entire dispute pending before the Civil Court can be adjudicated by the special machinery only and not the Civil Court, what procedure the Civil Court follow in such a situation? In the case of the first mentioned situation there is no difficulty as the Civil Court will continue to have jurisdiction to settle and decide the dispute and grant appropriate relief. The problem arises in the two other situations where the jurisdiction of the Civil Court is partly or wholly ousted. Take the case of suit where possession of agricultural land is sought on the plea that the defendant is a trespasser and the defendant contends that he is a tenant. The question of the defendants tenancy in respect of agricultural land would be within the exclusive jurisdiction of the Mamlatdar under Section 7 read with Section 58(2) of the Act. In such a situation what procedure should the Civil Court follow? Now take a case where the entire dispute falls within the exclusive jurisdiction of the special machinery under the Act and had the litigation commenced after the Fifth Amendment was brought into force it could not have been instituted in a Civil Court. In such a situation what procedure should the Civil Court follow? Now take a case where the entire dispute falls within the exclusive jurisdiction of the special machinery under the Act and had the litigation commenced after the Fifth Amendment was brought into force it could not have been instituted in a Civil Court. In that case what procedure should the Civil Court follow? These are the questions which arise for determination. 9. Before we answer those questions we must decide on the impact of the Fifth Amendment on pending litigation. The question whether the Fifth Amendment is prospective or retrospective really recedes in the background if we examine the question from the angle whether the Civil Court can decide any question falling within the jurisdiction of the special forum under the Act in a pending litigation in the absence of an express provision in that behalf If the question of tenancy in regard to agricultural land cannot be decided by the Civil Court under the Act and there is no express saving clause permitting the Civil Court to decide the same, it is obvious that any decision rendered by the Civil Court would be without jurisdiction. A similar situation did arise in the context of another statute. In Shah Bhojraj Kuverji Oil Mills and Ginning Factory v. Subhash Chandra Yograj Sinha, AIR 1961 SC 1596 , the facts were that the landlord had filed a suit for eviction on April 25, 1957 in the regular court, i.e., the Court of the Joint Civil Judge (Junior Division), Erandol, which admittedly had jurisdiction to pass a decree for possession of the demised premises. However, during the pendency of the suit, a notification was issued under Section 6 of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 (hereinafter called the Rent Act), applying Part II of the Act to areas where the property in question was situate. The tenants claimed protection of Section 12 in Part II of the Rent Act which deprived the landlord of the right of possession under certain circumstances. The question which arose for consideration was whether the tenants were entitled to the protection of Section 12 in pending cases and if yes, its effect. Since Section 12 of the Rent Act was held to be prospective, the question which arose for consideration was whether its protection could be extended to tenants in pending litigation. The question which arose for consideration was whether the tenants were entitled to the protection of Section 12 in pending cases and if yes, its effect. Since Section 12 of the Rent Act was held to be prospective, the question which arose for consideration was whether its protection could be extended to tenants in pending litigation. This Court pointed out that the point of time when sub-section (1) of Section 12 operates is when the court is called upon to pass a decree for eviction. Thug, said this Court, the language of the sub-section applies equally to suits pending when Part II comes into force and those to be filed subsequently. The contention of the landlord that the operation of Section 12(1) is limited to suits filed after the Rent Act comes into force in a particular area was not accepted. Applying the same principle to the facts of the present case, we have no hesitation in concluding that the provisions of the Fifth Amendment would apply to pending suits also. However, the Act does not preclude the institution of a suit by a tenant for restoration of possession from a trespasser. If the defendant who is sued as a trespasser raises a plea of tenancy, a question arises whether his plea of tenancy can be decided by the Civil Court as incidental to the grant of relief for possession or is the Civil Court precluded from deciding the same in view of Section 7 read with Section 58(2) of the Act. As pointed out earlier, Section 7 in terms states that if any question arises whether any person is a tenant or should be deemed to be a tenant under the Act, the Mamlatdar shall decide such question. The jurisdiction is, therefore, vested in the Mamlatdar under Section 7 of the Act and Section 58(2) specifically bars the jurisdiction of all other courts to settle, decide or deal with any question which is by or under the Act required to be settled, decided or dealt with by the Mamlatdar. Section 8(2) has limited operation where a person referred to in Section 4 has been evicted on or after 1st July, 1962. Section 8(2) has limited operation where a person referred to in Section 4 has been evicted on or after 1st July, 1962. In that case he would be entitled to recover immediate possession of the land in the manner prescribed by or under the Act unless it is shown that his tenancy was terminated in the manner authorised by Section 9. In the present case, the plaintiff came to court contending that even though his lease was not terminated as provided by Section 9 of the Act, defendant No. 1 had dispossessed him by an act of trespass. He, therefore, sought possession of the demised property from the trespasser, defendant No. 1. He impleaded the owner of the land as defendant No. 2 on the plea that she had colluded with defendant No. 1. Defendant No. 1 raised a contention in his written statement that he was lawfully inducted as a tenant on the lands in question by the owner, defendant No. 2. In other words, he disputed the plaintiffs contention that he was a trespasser and pleaded tenancy. If his plea was found to be well-founded, he would be entitled to retain possession but not otherwise. Therefore, the question which arose in the suit was whether defendant No. 1 proved that he was a tenant in respect of the land in question. This question could not be gone into by the Civil Court in view of the clear language of Section 7 read with Section 58(2) of the Act. What procedure should the court follow in such situations? It would not stand to reason to non-suit the plaintiff who had filed the suit in a competent court having jurisdiction to try the same merely because of the subsequent change in law. The proper course, therefore, would be one which was followed by the Bombay High Court in Bhimaji Shankar Kulkarni v. Dundappa Vithappa Udapudi, AIR 1966 SC 166 : (1966) 1 SCR 145 . That was a case arising under the provisions of the Bombay Tenancy and Agricultural Lands Act, 1948. The lands in question were agricultural lands. Section 29(2) of that law provided that no landlord shall obtain possession of any land or dwelling house held by a tenant except under an order of the Mamlatdar or an application made in that behalf in the prescribed form. The lands in question were agricultural lands. Section 29(2) of that law provided that no landlord shall obtain possession of any land or dwelling house held by a tenant except under an order of the Mamlatdar or an application made in that behalf in the prescribed form. Section 70(b) next provided that for the purposes of the Act, one of the duties and functions to be performed by the Mamlatdar is to decide whether a person is a tenant or a protected tenant or a permanent tenant. Section 85(1) laid down that no Civil Court shall have jurisdiction to settle, decide or deal with any question which is required to be settled, decided or dealt with by the Mamlatdar under the statute. The law was silent as to how a dispute of this nature raised in a suit filed for eviction on the footing that the defendant is a trespasser should be dealt with by the Civil Court. This question squarely arose for consideration by the Bombay High Court in Dhondi Tukaram v. Hari Dadu, AIR 1954 Bom 100 , wherein that court observed as under: "Therefore, we hold that in a suit filed against the defendant on the footing that he is a trespasser if he raises the plea that he is a tenant or a protected tenant, the Civil Court would have no jurisdiction to deal with that plea .....We would, however, like to add that in all such cases where the Civil Court cannot entertain the plea and accepts the objection that it has no jurisdiction to try it, it should not proceed to dismiss the suit straightway. We think that the proper procedure to adopt in such cases would be to direct the party who raises such a plea to obtain a decision from the Mamlatdar within a reasonable time. If the decision of the Mamlatdar is in favour of the party raising the plea, the suit for possession would have to be dismissed, because it would not be open to the Civil Court to give any relief to the landlord by way of possession of the agricultural land. If the decision of the Mamlatdar is in favour of the party raising the plea, the suit for possession would have to be dismissed, because it would not be open to the Civil Court to give any relief to the landlord by way of possession of the agricultural land. If, on the other hand, the Mamlatdar rejects the plea raised under the Tenancy Act, the Civil Court would be entitled to deal with the dispute on the footing that the defendant is a trespasser." Pursuant to the courts recommendation, the Bombay Legislature introduced Section 85A which provided that if in any suit instituted in a Civil Court issues which are required to be settled, decided and dealt with by any authority competent to settle, decide and deal with the same arises, the Civil Court shall stay the suit and refer such issues to such competent authority for determination under the statute. Unfortunately even under the Act with which we are concerned the legislature though aware of Section 85A has not chosen to make any provision for dealing with such situations. We are, therefore, of the opinion that it would be just and fair that the issue whether defendant No. 1 was a tenant in respect of the lands in question should be referred to the Mamlatdar for decision and after his decision is received by the Civil Court if the issue is held against defendant No. 1, the Civil Court may consider passing of a decree in eviction but if on the other hand he is held to be tenant, the Civil Court may be required to dismiss the suit. 10. One further situation which may arise under the provisions of the Act may be taken note of. The impact of the Fifth Amendment may give rise to a situation where the remedy lies entirely under the Act and may have to be taken in the manner prescribed by or under the Act. For example, where a person who is a deemed tenant under Section 4 of the Act if evicted from the land on or after 1st July, 1962 his remedy under Section 8(2) is to approach the authority under the Act for recovery of possession of the land of which he has been dispossessed. For example, where a person who is a deemed tenant under Section 4 of the Act if evicted from the land on or after 1st July, 1962 his remedy under Section 8(2) is to approach the authority under the Act for recovery of possession of the land of which he has been dispossessed. In such a situation the remedy may not be the one available in the case of a tenant other than a deemed tenant whose case is not governed by Section 8(2) of the Act. But in the case of a deemed tenant who has been evicted from the land on or after 1st July, 1962 since a remedy has been provided under the Act, the jurisdiction of the Civil Courts stands wholly barred by virtue of Section 58(2) of the Act. In such a situation the Civil Court would not be competent to pass any order for restoration of possession to the deemed tenant. His remedy would, therefore, to be entirely under the Act. This is just by way of an illustration. If such a situation arises what procedure should the court follow in a pending suit which was instituted in a competent court having jurisdiction at the date of its institution. It would seem unfair to non-suit the plaintiff altogether for no fault of his own. We think, in such a situation where the entire dispute falls outside the Civil Courts jurisdiction on account of the change in law the proper course would be to follow in spirit the procedure outlined in Order 7, Rules 10 and 10A of the Code of Civil Procedure. 11. Since the paper book in this appeal does not contain the original plaint and the written statement and counsel were unable to enlighten us on the actual nature of the pleadings we have tried to indicate the procedure to be followed by the Civil Court on illustrative fact-situations. In the circumstances, we are left with no alternative but to remit the matter to the trial Court with a direction to follow the course that may be found appropriate in the fact-situation arising out of the pleadings in this case and the nature of the questions required to be determined for grant or refusal of relief claimed in the suit. We would like to make it clear that the hypothetical situations may or may not apply to the fact-situation that may emanate the pleadings in this case and it would be for the trial Court to determine the course of action to be adopted in the light of the guidelines indicated hereinabove. 12. In view of the foregoing discussion, we allow this appeal, set aside the order of the High Court which in either case lacked jurisdiction to decide the question regarding tenancy on merits and remit the matter to the trial Court for further orders in the light of the observations hereinabove made. Having regard to the peculiar facts and circumstances of the case, we make no order as to costs. Appeal allowed. For Citation : (1993) 2 SCC 1751