Doctrine Of Merger Doesn’t Apply To Orders Obtained Through Fraud: Supreme Court

The Supreme Court on July 23, 2024 held that if a High Court judgment upheld by the Supreme Court was obtained by fraud, the aggrieved party can directly appeal the High Court's order. In such cases, the doctrine of merger does not apply, as fraudulent orders cannot attain finality through merger.

The Court ruled that any judgment or order obtained by fraud is considered a nullity and can be challenged in collateral proceedings, without needing to be directly appealed, revised, or questioned through a writ petition.

The ruling arose from a land dispute involving Vishnu Vardhan (appellant), Reddy Veerana (respondent), and T. Sudhakar (co-owner), who jointly purchased land in 1997. The land was acquired by NOIDA in 2005. Vishnu alleged that Reddy fraudulently misrepresented facts to claim sole ownership, excluding the others from rightful compensation. Based on this, the High Court ruled in Reddy’s favor in 2021, which was upheld by the Supreme Court in 2022. Vishnu, not a party to the earlier proceedings, challenged the rulings as fraudulently obtained and void from the beginning.

The bench comprising Justice Surya Kant, Justice Dipankar Datta, and Justice Ujjal Bhuyan held, “we feel no hesitation to hold that given the deception involved, the impugned order and the decision of this Court dated 5th May, 2022 in Reddy Veerana (supra) procured by Reddy are tainted by fraud and, thus, lack legal sanctity and validity.”

The Court also stated, “we are inclined to the view that the doctrine of merger may not have any application in all cases of cognate civil appeals being carried from the same order (obviously at the instance of a party different from the appellant who approached this Court first in point of time), if it is convincingly demonstrated that (i) his right of appeal should not be foreclosed because of the very rare or special circumstance(s) that is/are projected before the court; or (ii) his appeal raises an issue of seminal public importance, which was not available to be raised by the appellant who approached this Court in its appellate jurisdiction in the earlier round of litigation, and also that such issue in the greater public interest requires a resolution by this Court; or (iii) since an act of court ought to prejudice none, refusal to interfere by this Court would invariably result in offending the principle of actus curiae neminem gravabit; or (iv) the earlier appellate decision is vitiated because of fraud having been on this Court by a party in whose favour the ruling had been made, as in this case; or (v) that public interest would be put to extreme jeopardy by reason of irretrievable consequences ensuing, if interference which is otherwise found to be warranted in law were declined solely based on the doctrine of merger.”

The Supreme Court set aside both the 2021 High Court order and its own 2022 judgment in the Reddy Veerana case. It remanded the matter to the High Court for fresh adjudication, directing that all necessary parties, including Vishnu and Sudhakar, be impleaded in the proceedings.

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