15. It is trite that law favours finality to binding judicial decisions pronounced by Courts that are competent to deal with the subject matter. Public interest is against individuals being vexed twice over with the same kind of litigation. The binding character of judgments pronounced by the Courts of competent jurisdiction has always been treated as an essential part of the rule of law which is the basis of the administration of justice in this country. We may gainfully refer to the decision of Constitution Bench of this Court in the Daryao v. State of U.P. AIR 1961 SC 1457 where the Court succinctly summed up the law in the following words:

“It is in the interest of the public at large that a finality should attach to the binding decisions pronounced by Courts of competent jurisdiction, and it is also in the public interest that individuals should not be vexed twice over with the same kind of litigation.(***) The binding character of judgments pronounced by courts of competent jurisdiction is itself an essential part of the rule of law, and the rule of law obviously is the basis of the administration of justice on which the Constitution lays so much emphasis.”

16. That even erroneous decisions can operate as res-judicata is also fairly well settled by a long line of decisions rendered by this Court. In Mohanlal Goenka v. Benoy Kishna Mukherjee AIR 1953 SC 65, this Court observed:

“There is ample authority for the proposition that even an erroneous decision on a question of law operates as ‘res judicata’ between the parties to it. The correctness or otherwise of a judicial decision has no bearing upon the question whether or not it operates as ‘res judicata’.”

17. Similarly in State of West Bengal v. Hemant Kumar Bhattacharjee AIR 1966 SC 1061, this Court reiterated the above principles in the following words :

“A wrong decision by a court having jurisdiction is as much binding between the parties as a right one and may be superseded only by appeals to higher tribunals or other procedure like review which the law provides.”

18. The recent decision of this Court in Kalinga Mining Corporation v. Union of India (2013) 5 SCC 252 is a timely reminder of the very same principle. The following passage in this regard is apposite:

“In our opinion, if the parties are allowed to reagitate issues which have been decided by a court of competent jurisdiction on a subsequent change in the law then all earlier litigation relevant thereto would always remain in a state of flux. In such circumstances, every time either a statute or a provision thereof is declared ultra vires, it would have the result of reopening of the decided matters within the period of limitation following the date of such decision.”

19. In Mathura Prasad v. Dossibai (1970) 1 SCC 613, this Court held that for the application of the rule of res-judicata, the Court is not concerned with the correctness or otherwise of the earlier judgement. The matter in issue if one purely of fact decided in the earlier proceedings by a competent Court must in any subsequent litigation between the same parties be recorded as finally decided and cannot be re-opened. That is true even in regard to mixed questions of law and fact determined in the earlier proceeding between the same parties which cannot be revised or reopened in a subsequent proceeding between the same parties. Having said that we must add that the only exception to the doctrine of res-judicata is “fraud” that vitiates the decision and renders it a nullity. This Court has in more than one decision held that fraud renders any judgment, decree or orders a nullity and non-est in the eyes of law. In A.V. Papayya Sastry v. Government of A.P., (2007) 4 SCC 221, fraud was defined by this Court in the following words:

“Fraud may be defined as an act of deliberate deception with the design of securing some unfair or undeserved benefit by taking undue advantage of another. In fraud one gains at the loss and cost of another. Even most solemn proceedings stand vitiated if they are actuated by fraud. Fraud is thus an extrinsic collateral act which vitiates all judicial acts, whether in rem or in personam. The principle of “finality of litigation” cannot be stretched to the extent of an absurdity that it can be utilised as an engine of oppression by dishonest and fraudulent litigants.”

20. To the same effect is the decision in Raju Ramsingh Vasave v. Mahesh Deorao Bhivapurkar and Ors., (2008) 9 SCC 54, where this Court held:

“If a fraud has been committed on the court, no benefits therefrom can be claimed on the basis of thereof or otherwise.”