Only Fundamental Determinations Hit By 'Res Judicata', Not Incidental Or Collateral Findings : Supreme Court

The Supreme Court has held that only fundamental determinations of the Court are hit by res judicata in subsequent proceedings. If the Court makes any incidental, supplemental or non-essential observations, which are not fundamental but ‘collateral’ to the final determination, then those ‘collateral determinations’ would not be hit by res judicata.

The Bench comprising of Justice Surya Kant and Justice J.K. Maheshwari, while adjudicating an appeal filed in Yadaiah and Anr. v State of Telangana and Ors., has laid down a test to distinguish between ‘fundamental determination’ and ‘collateral determination’. The test is to see whether the concerned determination is so vital to the decision, that without it the decision cannot stand independently.

BRIEF FACTS

Res Judicata is a common law principle, which states that if an issue has been formerly decided by the court between the parties, then the same parties cannot re-approach the court for adjudication of the same issues.

The Bench was adjudicating an appeal against the order of High Court, where an intra-court appeal by State of Telengana and its revenue authorities was allowed by reversing the decision of Single Judge. A Show Cause Notice (“SCN”) was issued to the Appellants by the Collector and was held to be unsustainable afterwards by the District Revenue Officer. Thereafter, a second SCN was issued to Appellants. The Appellants argued that the second SCN was barred by principle of Res-Judicata since it was based on same subject matter as the first SCN.

SUPREME COURT VERDICT

While interpreting the principle of res judicata, the Bench noted that only determinations which are fundamental would attract application of res-judicata. Nonetheless, if the Court makes any observations which are not the foundation of the final determination, then those observations would not be hit by res judicata in subsequent proceedings. Essentially, a fundamental determination would be hit by res judicata in subsequent proceedings but not a collateral determination. It has been held as under:

“By now it’s a globally settled principle of common law jurisprudence that only determinations which are fundamental would result in the application of the doctrine of res judicata. Only those findings, without which the Court cannot adjudicate a dispute and also form the vital cog in the reasoning of a definite conclusion on an issue on merits, constitute res judicata between the same set of parties in subsequent proceedings. However, in the process of arriving at a final conclusion, if the Court makes any incidental, supplemental or non-essential observations which are not foundational to the final determination,the same would not tie down the hands of courts in future.”

Further, the Bench also laid down a test to distinguish between a ‘fundamental determination’ and ‘collateral determination’ for the purpose of res judicata. The test is to see whether the concerned determination is so vital to the decision that without it the decision cannot stand independently.

“The effective test to distinguish between a fundamental or collateral determination is hinged on the inquiry of whether the concerned determination was so vital to the decision that without which the decision itself cannot stand independently. Any determination, despite being deliberate or formal, cannot give rise to application of the doctrine of res judicata if they are not fundamental in nature.”

The appeal has been dismissed.

Case Title: Yadaiah and Anr. v State of Telangana and others

Citation: 2023 LiveLaw (SC) 590

Counsel for Appellants: Mr. Jaideep Gupta (Sr. Adv.)

Counsel for Respondents: Mr. Huzefa Ahmadi (Sr. Adv.)

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