New Delhi, 03 July, 2023

The Supreme Court of India has clarified the scope of res judicata, a common law principle that prevents parties from re-litigating issues that have already been finally decided by the court. The apex court held that only fundamental determinations made in a judgment are covered by the doctrine of res judicata in subsequent proceedings, while collateral determinations would not be affected by it.

The two-judge bench comprising Justice Surya Kant and Justice J.K. Maheshwari arrived at this conclusion while adjudicating an appeal filed in the case of Yadaiah and Anr. v State of Telangana and Ors. The case concerned an appeal against a decision of the High Court, which allowed an intra-court appeal by the State of Telangana and its revenue authorities, overturning the judgment of a single judge.

The dispute arose when a Show Cause Notice (SCN) was issued to the appellants by the Collector, which was later deemed unsustainable by the District Revenue Officer. Subsequently, a second SCN was issued to the appellants, leading them to argue that the second notice was barred by the principle of res judicata as it was based on the same subject matter as the first SCN.

The Supreme Court bench, while interpreting the principle of res judicata, emphasized that only determinations that are fundamental in nature would attract the application of this doctrine. 

In contrast, any observations made by the court that are not the foundation of the final determination would not be subject to res judicata in future proceedings. The court clarified that a fundamental determination is one that is so crucial to the decision that without it, the decision cannot stand independently.

The bench opined, "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."

Furthermore, the court provided a test to distinguish between a 'fundamental determination' and a 'collateral determination' for the purpose of res judicata. The test hinges on whether the concerned determination is so vital to the decision that the decision itself cannot stand independently without it. The court stated, "Any determination, despite being deliberate or formal, cannot give rise to the application of the doctrine of res judicata if they are not fundamental in nature."

Consequently, the appeal in the case of Yadaiah and Anr. v State of Telangana and Ors. has been dismissed.

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

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

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

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