In a significant ruling dated July 23, 2024, the Supreme Court of India clarified that the doctrine of merger does not apply when a High Court order is obtained by fraud, even if the same order is later upheld by the Supreme Court.
The case was heard by a three-judge bench comprising Justices Surya Kant, Dipankar Datta, and Ujjal Bhuyan, involving a dispute where a party, Reddy, allegedly secured a favourable 2021 High Court order by suppressing material facts. This High Court decision was later approved by the Supreme Court in 2022.
The appellant, Vishnu, who was not a party to the earlier proceedings, challenged the 2022 Supreme Court judgment. He argued that the original High Court judgment was obtained through fraud, and thus the Supreme Court's order was vitiated and could not attain finality.
The main legal question before the Court was:
Can an appeal be filed before the Supreme Court against a High Court order that was upheld by the Supreme Court earlier, if the High Court’s judgment was obtained by fraud? Or must one seek a review of the Supreme Court’s earlier judgment?
In response, Reddy’s counsel argued that a civil appeal was not maintainable. According to them, once the Supreme Court upheld the High Court’s decision, the doctrine of merger applied, and hence, no appeal against the High Court order would be valid.
Rejecting this argument, the judgment authored by Justice Dipankar Datta clarified:
“Since the High Court's decision was tainted by fraud and not rendered on merits, its subsequent affirmation by the Supreme Court in 2022 did not result in a true merger.”
The Court held that because the earlier judgment was based on fraud, it cannot enjoy the legal sanctity of a final order. Thus, a regular civil appeal against the High Court’s order remains maintainable.
The Court further listed five specific situations where the doctrine of merger would not apply:
(i) If the appellant’s right to appeal arises from rare or special circumstances.
(ii) If the appeal raises an issue of seminal public importance, which was not raised earlier, and serves the public interest.
(iii) If refusal to interfere would violate the principle actus curiae neminem gravabit (the act of the court shall prejudice no one).
(iv) If the earlier appellate decision was vitiated by fraud, as in this case.
(v) If public interest would be severely jeopardized due to irretrievable consequences from allowing the fraudulently obtained order to stand.
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Based on the above findings, the Supreme Court set aside both the 2021 High Court order and its own 2022 decision in the case titled Reddy Veerana. It restored the matter for fresh adjudication before the High Court, with all necessary parties, including Vishnu and Sudhakar, to be impleaded.
“Fraud vitiates the most solemn proceedings of the Court. It cannot be allowed to override justice.” — Supreme Court
Cause Title:
VISHNU VARDHAN @ VISHNU PRADHAN VS. THE STATE OF UTTAR PRADESH & ORS. (& Connected Cases)