'Fraud Unravels Everything': Supreme Court Recalls Its Own Order Obtained By Fraud Back In 2022

In a significant ruling, the Supreme Court today (July 23) held that any judgment or order obtained by fraud is a nullity and can be challenged even in collateral proceedings, without necessarily being assailed in appeal, revision, or writ proceedings.A bench comprising Justices Surya Kant, Dipankar Datta, and Ujjal Bhuyan applied this principle to set aside its own 2022 judgment delivered in Reddy Veerana v. State of U.P., (2022) , observing that the decision had been fraudulently obtained and was therefore void. “...it is important to note that the principle of “fraud unravels everything” is not confined only to examining judgments rendered by the courts below but could include the unravelling of judgments of this Court as well, if at all the justice of the case before us so demands. In the former moiety of this judgment, we have discussed that Reddy has with impunity indulged in playing fraud on the courts and, therefore, his challenge to the jurisdiction of this Court must fail”, the court observed. The Court rejected the contention that no appeal can lie against its own final judgment or order. Instead, it relied on the precedent set in A.V. Papayya Sastry v. Govt. of A.P., (2007), where it was held that: “a judgment, decree or order obtained by playing fraud on the court, tribunal or authority is a nullity and non est in the eye of the law. Such a judgment, decree or order—by the first court or by the final court—has to be treated as nullity by every court, superior or inferior. It can be challenged in any court, at any time, in appeal, revision, writ or even in collateral proceedings.” The case originated from a 1997 joint land purchase by three individuals, namely Vishnu Vardhan, Reddy Veerana, and T. Sudhakar. However, in the aftermath of NOIDA's 2005 acquisition of the land, Vishnu alleged that co-owner Reddy fraudulently maneuvered through judicial processes to declare himself the sole rightful owner, thereby excluding Vishnu and Sudhakar from the compensation disbursed. Through his fraudulent actions, Reddy materially suppressed facts and misrepresented before the High Court, which affected the merits of the case, to obtain a favourable order from the High Court in 2021, which was subsequently upheld by the Supreme Court in 2022. The impugned rulings passed in Reddy's favour were without arraying the Appellant-Vishnu. Reddy contended that, owing to the application of the doctrine of merger, whereby the High Court's order merges into the Supreme Court's ruling, no civil appeal could be maintained against the Supreme Court's own judgment. He argued that once the matter was finally adjudicated, no appeal could lie against the Supreme Court's order, especially since the Court does not possess or exercise any power akin to a Letters Patent Appeal (LPA) to entertain a challenge to its own decision. Rejecting Reddy's argument, the judgment authored by Justice Datta observed that the Court's 2022 ruling was a nullity as it was obtained by fraud and can be open to challenge by filing an appeal against the High Court's order. The Court said that fraud is an exception to the doctrine of merger. It rejected Reddy's argument, emphasizing that even a third party or a stranger like Vishnu to the litigation can challenge the ruling obtained by fraud upon presenting a prima facie case that he was affected by the outcome.The Court said that Reddy's submission regarding the doctrine of merger was legally sound to the extent that, once the Supreme Court affirms a High Court's order, the latter merges into the former, making the Supreme Court's order binding and enforceable. However, the Court clarified that applying this doctrine rigidly would unfairly prejudice a person who was not made a party before the High Court. If such an order is later affirmed by the Supreme Court, the affected individual loses the opportunity to seek review before the High Court, leaving only the option of filing a curative petition before the Supreme Court, a remedy significantly narrower in scope than a regular appeal. “Now, if the order of the high court prejudicially affects a third party or even has the effect of binding such party but such party was deliberately not included in the array of respondents and, in fact, it is proved that he was unaware of the proceedings before the high court or this Court, the remedy of such affected party to appeal against the order of the high court with the permission of this Court as and when he derives knowledge of the same would not be available if the contention sought to be raised on behalf of Reddy, based on the merger doctrine, is accepted. The affected party would, thus, be disabled from applying for a review before the High Court per Kunhayammed (supra), its order having merged in this Court's order. No doubt, remedy by way of review followed by a curative petition is made available before this Court by the SC Rules, 2013 but the same are not as wide as the remedy of appeal.”,...

'Fraud Unravels Everything': Supreme Court Recalls Its Own Order Obtained By Fraud Back In 2022

Yash Mittal

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