The principle of constructive res judicata emerges from Explanation IV when read with Explanation III both of which explain the concept of “matter directly and substantially in issue”.
Explanation III clarifies that a matter is directly and substantially in issue, when it is alleged by one party and denied or admitted (expressly or impliedly) by the other.
Explanation IV provides that where any matter which might and ought to have been made a ground of defence or attack in the former suit, even if it was not actually set up as a ground of attack or defence, shall be deemed and regarded as having been constructively in issue directly and substantially in the earlier suit.
Therefore even though a particular ground of defence or attack was not actually taken the earlier suit, it was capable of being taken in the earlier suit, it becomes a bar in regard to the said issue being taken in the second suit in the view of the principle of constructive res judicata.
Constructive res judicata deals with ground of attack and defence which ought to have been raised, but nor raised, whereas Order II of the Code relates to relief which ought to have been claimed on the same cause of action but not claimed.
In Direct Recurit Class II Engineeering Officers’ Association V/s State of Maharashtra, a Constitutional Bench of the Apex Court reiterated the principle of Constructive Res judicata after referring to observations in Forward Construction Co. V/s Prabhat Mandal, that- “an adjudication is conclusive and final not only as to the actual matter determined but as to every other matter which the party might and ought to have litigated and have had decided as incidental to or essentially connected with subject matter of the litigation an every matter coming into the legitimate purview of an original action but in respect of the matter of claim and defence.”
Thereafter, in Ramchandra Vrs. Vithu Mahure, Honourable Supreme Court has explained the doctrine of constructive res judicata as applicable in Indian law. A sub-set of the doctrine of res judicata, emanating from Section 11 of the Code of Civil Procedure, the doctrine of constructive res judicata sets to naught any claims being raised in a subsequent proceeding where in an earlier proceeding such claim should/ought to have been raised and decided. A rule of prudence, thus, the doctrine seeks to bar determination and enforcement of claims which have not been raised at an appropriate juncture in judicial proceedings.