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Issues:
- Interpretation of the principle of res judicata in the context of a collusive decree obtained against a Gram Panchayat. - Whether an independent suit is necessary to establish collusion in an earlier decree against a Gram Panchayat. Analysis: Interpretation of Res Judicata: The case involved an appeal by a Gram Panchayat against a High Court judgment that upheld an earlier decree obtained by the respondents in collusion with the then Sarpanch. The Full Bench of the Punjab & Haryana High Court held that statutory authorities could not ignore an earlier decree against the Panchayat on grounds of collusion unless the Panchayat had filed an independent suit to set aside the decree or sought a declaration of collusion. The Supreme Court disagreed with this interpretation, citing Section 44 of the Indian Evidence Act, which allows parties to show that a judgment obtained by fraud or collusion is not binding. The Court highlighted that no independent suit is necessary to raise collusion as a defense in a subsequent proceeding. Necessity of Independent Suit for Establishing Collusion: The Gram Panchayat argued that the earlier decree obtained against them was collusive, evident from the quick concession by the Sarpanch and the subsequent decree within 24 days of filing the suit. The Panchayat contended that the Full Bench's requirement of filing an independent suit to establish collusion was incorrect. The Supreme Court agreed, referencing various High Court decisions that supported the view that no separate suit is necessary to challenge a collusive decree. The Court also referred to English law, stating that no active proceedings for rescission of the earlier judgment are required to establish collusion. Impact on Title and Public Interest: The Supreme Court emphasized that the earlier suit for injunction did not address the question of title, making the decree non-binding on title-related matters. Additionally, the Court highlighted the importance of protecting public institutions from jeopardy caused by individuals who fail to defend public interests faithfully. The judgment emphasized the duty of those representing public bodies to act in the best interest of the community and public property. Conclusion: The Supreme Court overruled the Full Bench decision and set aside the High Court judgment, remitting the writ petition for further consideration in accordance with the law. The appeal by the Gram Panchayat was allowed, with no order as to costs. The judgment clarified that no independent suit is necessary to challenge a collusive decree in subsequent proceedings, and emphasized the importance of upholding public interest and protecting community property.
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