Res judicata does not apply where remand results in no adjudication on the merits.

The appellant was appointed as a daily-wage employee in the Revenue Department of the Municipal Corporation, Katni, on 26 June 1995 and allegedly worked continuously until his termination on 2 August 1999. He claimed to have completed more than 240 days of service and alleged that his termination, along with that of 272 other employees, was effected without compliance with the applicable labour law requirements, including Section 25F of the Industrial Disputes Act, 1947.

The appellant initially approached the High Court and pursued further proceedings, including an LPA and another writ petition. In an earlier proceeding, the matter was remanded to the Commissioner, Municipal Corporation, Katni, for consideration; however, the Commissioner did not adjudicate the claim. The appellant thereafter approached the Labour Court, which directed his reinstatement but denied back wages.

The Municipal Corporation challenged the Labour Court’s decision before the writ Court. By order dated 16 January 2024 in Misc. Petition Nos. 5852 of 2022 and 6047 of 2023, one petition was allowed and the appellant’s petition was dismissed, principally on the basis of res judicata. The appellant consequently filed the present writ appeals.

Whether the principle of res judicata under Section 11 of the Code of Civil Procedure, 1908, applied when the earlier proceedings had merely resulted in a remand to the Commissioner and the claim had not been finally adjudicated?

Whether the writ Court erred in interfering with the Labour Court’s order and in dismissing the appellant’s challenge on the basis of res judicata?

The Court applied Section 11 of the Code of Civil Procedure, 1908, under which res judicata operates only where an issue has been directly and substantially in issue and has been heard and finally decided by a competent court. A remand order without a subsequent final adjudication does not conclusively determine the dispute and cannot ordinarily attract res judicata.

The appellant’s underlying claim also involved the alleged non-compliance with Section 25F of the Industrial Disputes Act, 1947, concerning retrenchment of a workman who had completed the requisite period of continuous service; however, the appellate decision principally turned on the inapplicability of res judicata.

The Court found that the earlier proceedings had not finally determined the appellant’s entitlement. The matter had been remanded to the Commissioner for consideration, but the Commissioner failed to adjudicate it; therefore, the previous proceedings remained inconclusive.

Since there had been no final decision on the substantial issue in dispute, the essential requirement for applying Section 11 CPC was absent. The writ Court consequently erred in treating the earlier proceedings as creating a bar of res judicata and in deciding the controversy on that basis. The Court also noted the prolonged litigation and the fact that similarly situated employees had obtained relief, including reinstatement or regularisation, in subsequent proceedings.

Both writ appeals were allowed. The order dated 16 January 2024 in Misc. Petition Nos. 5852 of 2022 and 6047 of 2023 was set aside, and the petitions were restored to the file of the writ Court for fresh consideration. The parties were directed to appear before the writ Court, which was requested to decide the matters expeditiously in view of the litigation having continued for more than 26 years.