Supreme Court’s \’res judicata\’ only applies to fundamental determinations, not incidental or collateral findings.

The Supreme Court Holds Only Fundamental Determinations Hit by Res Judicata

The Supreme Court has recently clarified that only fundamental determinations made by the Court are affected by the principle of res judicata in subsequent proceedings. This means that if the Court makes any non-essential or collateral observations that are not vital to the final decision, they would not be bound by res judicata.

Test to Distinguish Between Fundamental and Collateral Determinations

A Bench comprising of Justice Surya Kant and Justice JK Maheshwari in the case of 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 ascertain whether the determination in question is so crucial to the decision that without it, the decision cannot stand independently.

Brief Facts

The principle of res judicata states that if an issue has been previously decided by the court between the same parties, they cannot approach the court again for adjudication of the same issue. In this case, the Bench was adjudicating an appeal against the order of the High Court, where an intra-court appeal by the State of Telangana and its revenue authorities was allowed by reversing the decision of a Single Judge. The Appellants argued that the second Show Cause Notice (SCN) issued to them was barred by the principle of res judicata since it was based on the same subject matter as the first SCN.

Supreme Court Verdict

The Bench clarified that only determinations that are fundamental would be affected by res judicata. If the Court makes any observations that are not foundational to the final decision, they would not be bound by res judicata in subsequent proceedings. The Court stated:

“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.”

The Court also provided a test to distinguish between a fundamental determination and a collateral determination for the purpose of res judicata. The test is to determine whether the concerned determination is so vital to the decision that without it, the decision itself cannot stand independently.

The appeal in this case has been dismissed.

Case Details:

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.)

Click Here To Read/Download Judgment