‘Fraud is an exception to doctrine of merger’: Supreme Court recalls its own judgment obtained by fraud

Supreme Court: In a civil appeal seeking to set aside the impugned order dated 28-10-2021, whereby ‘R’ was made the sole owner of the subject property, the three Judge Bench of Surya Kant, Dipankar Datta* and Ujjal Bhuyan, JJ., stated that the doctrine of merger might not automatically apply to every set of related civil appeals made from the same order, and laid down certain exceptions to the doctrine. Further, the Court stated that fraud was an exception to the doctrine of merger, and since fraud vitiated the entire proceedings, the Court set aside the impugned order. Consequently, the Court recalled its judgment in Reddy Veerana v. State of U.P., (2022) 14 SCC 252 (‘Reddy Veerana case’), which too was obtained by fraud.

Background

The present case concerns rival claims in respect of ownership of a land situated in Gautam Budh Nagar, Uttar Pradesh, which was acquired by NOIDA in 2005 and now forms a part of Sector 18, NOIDA. The land was jointly purchased in 1997 by ‘R’, one ‘S’ and the appellant (‘the trio’). Relying on their joint ownership, the trio initiated various legal proceedings seeking multiple relief from time to time, before and after the acquisition of the land by NOIDA.

The appellant alleged that ‘R’ made several attempts to assert his exclusive ownership in proceedings where the appellant and ‘S’ were not joined as parties. He further alleged that in one such proceeding, ‘R’ succeeded and the High Court, by the impugned order dated 28-10-2021, declared him the sole owner. Aggrieved by ‘R’s’ conduct, the appellant has sought relief from this Court by presenting the civil appeal.

When the impugned order was challenged before the Court in separate appeals, vide Reddy Veerana case (supra), the civil appeal filed by NOIDA was dismissed and the civil appeal filed by Reddy was allowed in part. Thus, it was contended by the R’s counsel that this decision has upheld the impugned order.

Analysis, Law, and Decision

I. Has ‘R’ played fraud on the Courts?

The Court observed that the trio stood as a united front. They consistently projected themselves as co-owners of the property in multiple judicial proceedings. Thereafter, the Court noted that contrary to the consistent earlier stance, ‘R’, in a complete volte-face, asserted his sole ownership of the property in multiple judicial proceedings. Finally, in January 2019, ‘R’ once again laid exclusive claim to the subject land asserting himself as the sole owner before the High Court and vide impugned order, his claim was allowed.

The Court stated that considering ‘R’ consistent stance in earlier proceedings that the property was jointly owned and his failure to implead the other parties in the writ petition was appalling, if not more. The Court opined that it was a calculated attempt by ‘R’ to wrongfully appropriate the entire property keeping the other two in the dark. ‘R’ tailored a situation to suit his convenience by not impleading the appellant as a party with the sole intention of obtaining an order in respect of not only the quantum of compensation but also a declaration as to his entitlement.

Thus, the Court held that the judicial orders procured by ‘R’ by subverting the judicial process through fraud and concealment of material facts cannot be permitted to stand. The Court held that given the deception involved, the impugned order and the decision of this Court in Reddy Veerana case (supra), procured by ‘R’ was tainted by fraud and, thus, lacked legal sanctity and validity.

II. Maintainability

The Court stated that the principle of “fraud unravels everything” was not confined only to examining judgments rendered by the courts below but could include the judgments of this Court as well, if at all the justice of the case before us so demands. The Court observed that the ‘R’s’ senior counsel had argued that the present civil appeal was not maintainable, as it challenges a Supreme Court order, into which the impugned order was merged. It was contended that no appeal lies before the Supreme Court against its own order.

Since arguments were advanced on the aspect of doctrine of merger, the Court stated that the law on the doctrine of merger come with exceptions. It does not apply universally or without limit. The extent of merger is determined by the subject matter of the appeal. The merger could only operate on issues which were the subject-matter of the appellate court’s judgment and order. Further, the Court stated that what gets merged is the operative part of the original judgment and order, not its entirety, unless the appellate court adopts, reiterates the reasoning, or expressly approves the reasoning contained in the first-instance court’s judgment and order.

The Court stated that the doctrine of merger might not automatically apply to every set of related civil appeals made from the same order, if it is convincingly demonstrated that:

1. right of appeal should not be foreclosed because of the very rare or special circumstance(s) projected before the court; or
2. the appeal raises an issue of seminal public importance, not raised in earlier round of litigation; or
3. 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
4. the earlier appellate decision is vitiated because of fraud practiced on this Court by a party in whose favour the ruling had been made, as in the present case; or

5. public interest would be put to extreme jeopardy, if interference is declined solely based on the doctrine of merger.

Thus, having found that the fraud was an exception to the doctrine of merger and that the impugned order and the decision of this Court in Reddy Veerana case (supra) was vitiated by fraud, the argument regarding the non-maintainability of the present proceedings based on the merger doctrine was of no significance.

III. Forum Shopping

It was contended that the appellant has engaged in forum shopping on the fact that he instituted Civil Suit on 7-8-2020 before the trial court claiming that the compromise decree dated 17-11-2006, between the appellant’s power of attorney holder and ‘R’ was null and void. Therefore, it was contended that the present proceedings were instituted to bypass the jurisdiction of the trial court.

However, the Court rejected the contention and stated that when the High Court had already ruled in a proceeding that directly affected the appellant’s right and when such decision, on appeal, was replaced by the decision of the higher court in Reddy Veerana case (supra), The appellant was left with no other option but to approach this Court by way of these proceedings.

Since fraud initiated the entire proceedings, the Court set aside the impugned order. Consequently, the Court recalled its judgment in Reddy Veerana case (supra), which too was obtained by fraud. The Court remanded the Reddy Veeranna v. State of Uttar Pradesh, 2021 SCC OnLine All 1027, in its entirety to the High Court, with direction to implead the appellant and ‘S’ as additional respondents.

[Vishnu Vardhan v. State of U.P., 2025 SCC OnLine SC 1501, decided on 23-7-2025]

*Judgment authored by- Justice Dipankar Datta

Advocates who appeared in this case :

For the Appellant: Sanskruti Samal, Adv.; Vipin Nair, AOR; M.b.ramya, Adv.; Aditya Narendranath, Adv.; Niranjan Reddy, Sr. Adv.; Nikhil Goel, Sr. Adv.; Aniruddha Deshmukh, AO.

For the Respondents: Sanskruti Samal, Adv.; Vipin Nair, AOR; M.B. Ramya, Adv.; Aditya Narendranath, Adv.; Shashank Shekhar Singh, AOR; Abhinav Singh, Adv.; Tushar Mehta, Solicitor General; Sameer Jain, Adv; Suvigya Awasthy, Adv.