In Brief
Canara Bank assigned a trademark to borrower N.G. Subbaraya Setty but later cancelled the deed citing the Banking Regulation Act. Two suits arose: one by Setty for recovery of dues, dismissed in part; another for further sums. The High Court applied res judicata to the first judgment. The Supreme Court held that res judicata cannot apply to an erroneous judgment that sanctions illegality. An unregistered trademark assignment cannot be evidence under the Trade Marks Act, and trademark trading violates the Banking Regulation Act's business restrictions. Therefore, the earlier judgment validating the prohibited deed was not binding, and the second suit was dismissed.
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