Introduction –
The Doctrine of Merger is a common law doctrine established on the code of preservation of decorum and propriety in the functioning of Courts and Tribunals and defending the sanctity of the justice delivery system. The expression “to merge” means to sink or disappear in something else, to become absorbed or extinguished; to be combined or be swallowed up. Merger in law may be defined as the absorption of a thing of lesser importance by a greater, whereby the lesser ceases to exist, involving a loss of identity and individuality of inferior one. According to the Black Law Dictionary “Merger” means “The fusion or absorption of one thing or right into another; generally spoken of a case where one of the subjects is of less dignity or importance than the other. Here the less important ceases to have an independent existence”. The underlying logic being that there cannot be more than one decree or operative order governing the same subject-matter at a given point of time. The doctrine is not recognized statutorily but is a statement of judicial propriety and seeks to instill discipline in the functioning of subordinate adjudicating authorities, whether judicial, quasi-judicial or administrative. Though the definition is simple and is based on unimpeachable logic and practicality, the doctrine is still been the subject of intense debate and discussion in judicial circles. This being the case, the purpose of this article is to scrutinize and dissect its critical ramifications.
Scope of applicability of the doctrine –
The applicability of the doctrine of merger entails the existence of a decision of a subordinate court/forum against which a right of appeal/revision before a superior forum/authority exists which has been exercised and which has either modified, reversed or affirmed the decision of the subordinate authority. The consequence of such an act would be that decision of the subordinate authority shall merge with that of the superior forum which only shall sustain, be operative and capable of being enforced. The essence of the doctrine of merger is that it is only the decisions of the appellate, revisional or higher authority that subsist and the order under challenge ceases to have an independent existence.
Merger happens only in respect of matters that are under contest and covered by the higher forum and not in respect of every matter contained in the impugned order. Thus, the scope of this merger is crucial: it only applies to the specific issues that were actively contested and ruled upon by the higher forum. If the subject matter reviewed by the higher authority differs from the lower one, or if the higher authority undertakes a fresh (de novo) examination of certain issues, then the principle of merger will not apply to those particular matters.
But the doctrine of merger is not a principle of inflexible and general application. In the case of State of Madras v. Madurai Mills Co. Ltd. [1967] 19 STC 144 the Hon’ble Supreme Court commented with caution with respect to the application of the doctrine and inserted caveats thereto:-
“But the doctrine of merger is not a doctrine of rigid and universal application and it cannot be said that whenever there are two orders, one by the inferior tribunal and the other by a superior tribunal passed in an appeal or revision, there is a fusion or merger of two orders irrespective of the subject-matter of the appellate or revisional order and the scope of the appeal or revision contemplated by the particular statute. In our opinion, the application of the doctrine depends on the nature of the appellate or revisional order in each case and the scope of the statutory provisions conferring the appellate or revisional jurisdiction.”
In the case of S. Shanmugavel Nadar v. State of Tamil Nadu [2003] 263 ITR 658 (SC), the Apex Court held that what merges is the operative part i.e. the mandatedecree issued by the court which may have been expressed in positive or negative form. The Hon’ble Court remarked
“………..Though loosely an expression “merger of judgement, order or decision of a Court or forum into the judgement, order or decision of a superior forum” is often employed, as a general rule, the judgment or order having been dealt with by a superior forum and having resulted in confirmation, reversal or modification, what merges is the operative part, i.e., the mandate or decree issued by the Court which may have been expressed in positive or negative form. For example, take a case where the subordinate forum passes an order and the same, having been dealt with by a superior forum, is confirmed for reasons different from the one assigned by the subordinate forum, what would merge in the order of the superior forum is the operative part of the order and not the reasoning of the subordinate forum, otherwise there would be an apparent contradiction. However, in certain cases, the reasons for the decision can also be said to have merged in the order of the superior Court if the superior Court has, while formulating its own judgment or order, either adopted or reiterated the reasoning, or recorded an express approval of the reasoning, incorporated in the judgment or order of the subordinate forum.”
Scope of applicability to revisional proceedings —
This doctrine was initially limited to appellate decrees because an appeal in effect is only a continuation of the suit, but in course of time this was extended to other proceedings like revisions and also to quasi-judicial and administrative proceedings.
In the case of Ramchandra Abhyankar v. Krishnaji Dattatreya Bapat [1969] 2 SCC 74] the Supreme Court held that doctrine of merger shall apply also to orders passed in revision. It clearly made the following remarks:-
“Now when the aid of the High Court is invoked on the revisional side it is done because it is a superior court and it can interfere for the purpose of rectifying the error of the court below. Section 115 of the CPC circumscribes the limits of that jurisdiction but the jurisdiction which is being exercised is a part of the general appellate jurisdiction of the High Court as a superior court. It is only one of the modes of exercising power conferred by the Statute; basically and fundamentally it is the appellate jurisdiction of the High Court which is being invoked and exercised in a wider and larger sense. We do not, therefore, consider that the principle of merger of orders of inferior Courts in those of superior Courts would be affected or would become inapplicable by making a distinction between a petition for revision and an appeal”.
Applicability of the Doctrine in taxing statutes:
The scope of the doctrine of merger, in the context of taxing statutes, can have application only in respect of matters considered and decided by the appellate authority, and not matters and/or issues over which there is no application of mind by the said appellate authority. Conversely, issues over which the appellate authority did not exercise its mind remain outside the purview of such merger. Were the doctrine of merger to be applied unreservedly, it would precipitate a scenario where the entirety of the assessing officer’s order, regardless of the specific grounds of appeal or the issues actually determined by the appellate authority, would be deemed to have merged with the appellate order. Such an interpretation, it is widely contended, would constitute a “travesty of justice.” It would run contrary to legislative intent by potentially nullifying the assessing officer’s findings on matters not even presented to, or reviewed by, the appellate body.
This could lead to a chaotic legal landscape, potentially divesting taxing authorities of their legitimate jurisdiction and powers to act upon those portions of an assessment order that were not the subject matter of the appeal and thus remain unaddressed by the appellate decision. An unrestricted application of merger would inadvertently shield un-reviewed aspects of an order, thereby impeding the effective administration of tax laws and potentially rendering un-reversed, yet un-reviewed, portions of a judgment as binding propositions of law on unexamined issues.
Courts have consistently favored a nuanced approach, ensuring that the finality of appellate decisions is balanced with the imperative for a comprehensive and accurate determination of tax liabilities, thereby allowing authorities to exercise their statutory powers, such as revisional jurisdiction, over matters not considered and decided in appeal. This ensures that the scope of the appeal dictates the extent of the merger, preserving the integrity of the assessment and appellate processes. Similarly, the part of the judgment of a High Court which is not overruled by the Supreme Court in its decision would continue to remain intact and binding on the Benches of the co-equal and lower strength of the High Court. The following pertinent observations of the High Court of Gujarat in the case of Shri Prithvi Cotton Mills Ltd. v. Broach Borough Municipality may be noticed:
“……………………… when a decision of one court is reversed in appeal by another court, then the decision of the Appellate Court gets substituted by the decision of the other court and the decision so reversed has no legal existence. We are unable to agree that any such principle is applicable for determining the binding nature of a decision of a court. The principle, undoubtedly, applies vis-a-vis decrees of the higher and lower courts. It may apply to the decisions of the same two courts on the identical questions. But, it is difficult to uphold the contention that any such principle is applicable in regard to a part of the judgment solemnly pronounced by a court, which has not been overruled and kept expressly open by the Appellate Court. The binding nature of the decisions arises from the fact that the point of law raised and considered therein has been decided by the court concerned and it is obvious that so long as that decision remains intact, it is binding on all courts and Tribunals which are subordinate or co-ordinate to the court recording the decision.”
Similarly, the Supreme Court in S. Shanmugavel Nadar v. State of Tamil Nadu, also held that where Order of a Division Bench of High Court has merged with the Order of the Supreme Court after confirmation by the Supreme Court, but on different reasoning, the reasoning contained in the judgment of Division Bench would continue to remain the decision of the High Court and would be a binding precedent on subsequent Benches of the co-ordinate or lower court.
Exceptions to the Application of the Doctrine of Merger
The Supreme Court in the case of A.V. Papayya Sastry v. Government Of A.P. [2007] 4 SCC 221] had occasion to consider the various facets of the doctrine of merger and clearly held that “All orders passed by the courts/authorities below, therefore, merge in the judgment of this Court and after such judgment, it is not open to any party to the judgment to approach any court or authority to review, recall or reconsider the order.”
While passing the said order, the Supreme Court the Court also laid down an important exception to the doctrine of merger by observing that “The above principle, however, is subject to exception of fraud. Once it is established that the order was obtained by a successful party by practising or playing fraud, it is vitiated. Such order cannot be held legal, valid or in consonance with law. It is non-existent and non est and cannot be allowed to stand. This is the fundamental principle of law and needs no further elaboration. Therefore, it has been said that a judgment, decree or order obtained by fraud has to be treated as nullity, whether by the court of first instance or by the final court. And it has to be treated as non est by every Court, superior or inferior.”
Conclusion –
The entire discussion leads to an irresistible wrapping up that as per the doctrine of merger there cannot be more than one operative Order governing the same subject matter at a given point of time. Therefore, only that part of the judgment and/or Order passed by any Court and/or authority etc. which is not reversed by the superior Court and/or authority etc. would continue to remain intact and binding on the proposition of law laid down therein. The Hon’ble Supreme Court in a landmark judgement in the case of Kunhayammed v. State of Kerala [2000] 113 Taxman 470/245 ITR 360 (SC) has summarized the doctrine of merger as follows:-
i) Where an appeal or revision is provided against an order passed by a court, tribunal or any other authority before superior forum and such superior forum modifies, reverses or affirms the decision put in issue before it, the decision by the subordinate forum merges in the decision by the superior forum and it is the latter which subsists, remains operative and is capable of enforcement in the eye of law.
ii) The jurisdiction conferred by Article 136 of the Constitution is divisible into two stages. First stage is up to the disposal of prayer for special leave to file an appeal. The second stage commences if and when the leave to appeal is granted and special leave petition is converted into an appeal.
iii) Doctrine of merger is not a doctrine of universal or unlimite application. It will depend on the nature of jurisdiction exercised by the superior forum and the content or subject-matter of challenge laid or capable of being laid shall be determinative of the applicability of merger. The superior jurisdiction should be capable of reversing, modifying or affirming the order put in issue before it. Under Article 136 of the Constitution the Supreme Court may reverse, modify or affirm the judgment-decree or order appealed against while exercising its appellate jurisdiction and not while exercising the discretionary jurisdiction disposing of petition for special leave to appeal. The doctrine of merger can therefore be applied to the former and not to the latter.
iv) An order refusing special leave to appeal may be a nonspeaking order or a speaking one. In either case it does not attract the doctrine of merger. An order refusing special leave to appeal does not stand substituted in place of the order under challenge. All that it means is that the Court was not inclined to exercise its discretion so as to allow the appeal being filed.
v) If the order refusing leave to appeal is a speaking order, i.e. gives reasons for refusing the grant of leave, then the order has two implications. Firstly, the statement of law contained in the order is a declaration of law by the Supreme Court within the meaning of Article 141 of the Constitution.
Secondly, other than the declaration of law, whatever is stated in the order are the findings recorded by the Supreme Court which would bind the parties thereto and also the court, tribunal or authority in any proceedings subsequent thereto by way of judicial discipline, the Supreme Court being the apex court of the country. But, this does not amount to saying that the order of the court, tribunal or authority below has stood merged in the order of the Supreme Court rejecting special leave petition
or that the order of the Supreme Court is the only order binding as res judicata in subsequent proceedings between the parties.
(vi) Once leave to appeal has been granted and appellate jurisdiction of Supreme Court has been invoked the order passed in appeal would attract the doctrine of merger; the order may be of reversal, modification or merely affirmation.
(vii) On an appeal having been preferred or a petition seeking leave to appeal having been converted into an appeal before Supreme Court the jurisdiction of High Court to entertain a review petition is lost thereafter as provided by sub-rule (1) of Rule (1) of Order 47 of the C.P.C.
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The contents of this article are for information purposes only and do not constitute an advice or a legal opinion and are personal views of the author. It is based upon relevant law and/or facts available at that point of time and prepared with due accuracy & reliability.
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