'issues', 'framing of issues' and 'settlement of issues' in CPC.

A person never fight unless their is a 'issue'.  In other sense  you won't punch a man without reason unless he has done something that disturbed the stability/equilibrium either mentally or physically and apprehend in some way that, for which reason you have to take the step of punching that man. Similarly in civil suit their is always an issue between the parties and it is upon the court as well as the litigants to distinguish what the issues arising between the parties. The Civil Court rest the finality of which it decides upon the issues and do by adjudicating  properly.

An Issue is a disputed question between the parties on which they take the adjudication of the Court. O.14 of CPC 'Settlement of Issues and Determination of Suit on Issues of Law or on Issues agreed upon' under which Rule 1. states the Framing of Issues, in which issues arises when a material proposition of fact or law is affirmed by the one part and denied by other. In this instant definition a material proposition means fact or matter in dispute arising from the Plaint. Similarly different material proposition arises from the Written statement, Set-off or Counter-claim produced by the defendant.

These material proposition dispute a fact or a law as parties in the suit comes up in the court. Material proposition are those propositions of law or fact which a plaintiff must allege in order to show a right to sue and a defendant must allege in order to constitute his defense.

In Ganga Vinayagar Temple v. Meenakshi Ammal [2009 (12) SCALE 215] a issue is a disputed question upon which the parties are at variance and it is the duty of the Court to ascertain that, vide, Rule 1(5), Order 14 od the Code. Therefore, issues are those disputed question on which the parties are desirous of obtaining the decision of the Court.

Framing of Issues and Settlement of Issue:
It is the duty of the Court to frame issues as under clause (2) of O.14 R.1, Each material proposition of law or fact which a plaintiff must allege in order to show a right to sue or a defendant must allege in order to constitute his defense and in clause (3) each material proposition affirmed by one party and denied by the other shall be the subject of a distinct issue. Also in clause (5) which specifically says the Court shall, after reading the plaint and the written statements and hearing the parties or their pleader ascertain material propositions of fact or of law the parties are at variance. Which means issues comes out of three things :
1. Plaintiff allegations and from plaint
2. Defendants defence and form written statement
3. Hearing the parties and their pleaders.
And each of  the allegation and defence shall be a distinct issues. For example in a suit for specific performance of contract, it is alleged by plaintiff that the agreement was made in the jurisdiction of the Civil Court and the defendant in his defence that, certain jurisdiction cannot be maintain because the agreement was signed in other courts jurisdiction, in this situation the Court will make a issue regarding jurisdiction of Whether such dispute comes under his jurisdiction ?

There are two types of Issues as per clause (3) issues of fact and issues of law.

Regarding this, a leading judgement of Supreme Court on what should be in the mind of Civil Court in framing of issues in Sardul Singh v. Pritam Singh [AIR 1999 SC 1704] laid down following reasons why an issue is important in a civil suit :

1. It is the issues framed and not the pleadings that guide the parties in the matter of leading evidence.
2. The Court cannot refuse to decide  the point on which an issue has been framed and evidence led by the part is, even if the point involved is not mentioned in the pleadings. Issues are to be determined taking into consideration the changed circumstances.
3. The Court should not frame an issue which does not arise in the pleadings.
4. The issues must be confined to the material questions of fact or law (facta probanda) and not on subordinate facts or evidence by which material questions of fact or law are proved or disproved (facta probantia).
5. One issue should cover only one fact or law in dispute between the parties.
6. If the case goes in appeal, it must be dealt with by the Appellate Court on the issues settled for trial. 

Court to pronounce judgement on all Issues [O.14 R.2]
The court shall pronounce judgment on all issues even disposal of preliminary issues. Now, Preliminary issues are issues which at the option of the Court to be decide first, these issues are related to :-

1. the jurisdiction of the Court.
2. a bar to the suit created by any law for the time being in force.

The court may postpone the settlement of other issues until after preliminary issues has been determined and deal with the suit in accordance with the decision on that issues.