A. Hariprasad, J.

This second appeal raises the following substantial questions of law:

"(i) When the renewal clause in a lease deed expressly incorporates the renewal clause also as one of the terms of renewal, does the term of the lease expire with one renewal or only on expiry of two consecutive terms?

(ii) Whether the terms of Ext. A1 lease deed have been correctly interpreted by the lower courts in limiting the term of renewal to twenty years alone?

(iii) Whether a finding not required for the determination of the lis will operate as res judicata in a subsequent suit?"

2. Relevant facts, shortly stated, are thus: Defendants 1 to 3 in a suit for recovery of vacant possession of the plaint schedule property and also for realisation of money are the appellants. Plaintiff is the contesting respondent. For the sake of convenience, the parties are referred to as the plaintiff and defendants.

3. Property described in the plaint schedule belonged to deceased Panakkad Abdul Khader. He had created the commercial lease in question in favour of the first defendant firm represented by its then managing partner, deceased Balakrishnan. Ext. A1 document, styled as an indenture of lease, is dated 29.12.1971. The purpose of lease was for erecting/installing and maintaining a petrol/high speed diesel pump, storage tank, service and lubricating station, etc. Original term fixed in Ext. A1 was 20 years commencing from 01.01.1972. Rent agreed to between the parties was Rs. 400/- per month for the first ten years and at the rate of Rs. 450/- per month for the remaining ten years. After granting the lease, the first defendant firm erected a petrol pump with all accessories in the plaint schedule land. Even now the business is continuing. The managing partner of the firm later died and the firm is at present represented by the contesting defendants. Panakkad Abdul Khader also died. His legal heirs effected a partition of larger properties belonged to him, including the property in dispute, as per a partition deed dated 11.05.1982. Item No. 2 in that partition deed is described in the plaint schedule. It was allotted to the share of one Ahamed with absolute right of disposition. After the death of Ahamed, all his legal heirs, except one son by name Mohammed Sajin, assigned their rights over the plaint schedule property to the plaintiff as per a registered document dated 12.12.2000. Subsequently, Mohammed Sajin also released his share in the property in favour of the plaintiff by another registered document dated 17.12.2000. Thus, the plaintiff became absolute owner of the plaint schedule property.

4. Aforementioned Ahamed had filed a suit, viz., O.S. No. 49 of 1996, against the first defendant for recovery of possession of the plaint schedule property and for damages for use and occupation. Pending the suit, he died. His legal heirs were impleaded in the proceedings. While so, the disputes between the plaintiffs and defendants therein were settled out of court. Thus the suit was compromised. Ext. A2 is the certified copy of the judgment and decree in O.S. No. 49 of 1996, which contains the compromise petition also. As per the terms of compromise, the first defendant agreed to pay rent at the rate of Rs. 2,000/- per month. Other contentions available to the parties were left open in the compromise.

5. The plaintiff after obtaining ownership over the plaint schedule property, informed the first defendant of the change of ownership and thereupon, the firm attorned to the plaintiff. Rent upto and inclusive of 31.03.2004 was paid. Then the plaintiff instituted O.S. No. 1 of 2005 against the defendants before the Munsiff's Court, Kannur for recovery of possession and arrears of rent. The defendants appeared and contested the suit. The defendants inter alia contended that the lease created as per Ext. A1 is a permanent lease and it could not be terminated. The trial court decreed the suit in part allowing the plaintiff to recover certain amounts toward