Judgment an authority for what it decides: The law revisited

This particular post is in the context of a doubt raised by one of our readers on our appraisal of an earlier post. We got the idea from that discussion and therefore are running this post about the binding nature and the ambit of this binding nature. 

The law of precedent is based upon what the common law describes as the ratio decidendi of a judgment. This is to say that it is the reason for which a particular judgment has been delivered which forms the fulcrum for being followed in a subsequent decision. Thus the law requires the judge to chisel out the "the reason or the rationale for the decision" and this reason alone has to be followed. What remains in a judgment is called as obiter dictum i.e. any observations which may have been made by the Court in passing a judgment but does not constitute the reason for passing the said judgment.

On this common law principles, the law has evolved that a judgment is an authority (i.e. requiring it to be followed) for what it decides and not what can be logically deduced. It is on this principle that the judges maintain a parity by deciding the fulcrum reasoning in a judgment so as to consider the same as precedent and follow it in the subsequent judgment. 

As far as the law in India is concerned, the same position applies. The Supreme Court in Union of India v. Dhanwanti Devi (1996) 6 SCC 44 explained this position law in the following terms;

Before adverting to and considering whither solatium interest would be payable under the Act, at the outset, we will dispose of the objection raised by Shri Vaidyanathan that Hari Kishan Khosla’s case is not a binding precedent nor does it operate as ratio decidendi to be followed as a precedent and per se per incuriam. It is not everything said by a Judge who giving judgment that constitutes a precedent. The only thing in a Judge’s decision binding a party is the principle upon which the case is decided and for this reason it is important to analyse a decision and isolate from it the ratio decidendi. According to the well settled theory of precedents, every decision contain three basic postulates - 

[i] findings of material facts, is the inference which the Judge draws from the direct, or perceptible facts;  

[ii] statements of the principles of law applicable to the legal problems disclosed by the facts; and 

[iii] judgment based on the combined effect of the above. A decision is only an authority for what it actually decides. 

What is of the essence in decision is its ratio and not every observation found therein not what logically follows from the various observations made in the judgment. Every judgment must be read as applicable to the particular facts proved, since the generality of the expressions which may be found there is not intended to be exposition of the whole law, but governed and qualified by the particular facts of the case in which such expressions are to be found. It would, therefore, be not profitable to extract a sentence here and there from the judgment and to build upon it because the essence of the decision is its ratio and not every observation found therein. The enunciation of the reason or principle on which a question before a court has been decided is alone binding between the parties to it, but it, is the abstract ratio decidendi, ascertained on a consideration of the judgment in relation to the subject matter of the decision, which alone has the force of law and which, when it is clear what it was, is binding. It is only the principle laid down in the judgment that is binding law under Article 141 of the Constitution. A deliberate judicial decision arrived at after hearing an argument on a question which arises in the case or is put in issue may constitute a precedent, no matter for what reason, and the precedent by long recognition may mature into rule of stare decisis. It is the rule deductible from the application of law to the facts and circumstances of the case which constitutes its ratio decidendi.

Therefore, in order to understand and appreciate the binding force of a decision is always necessary to see what were the facts in the case in which the decision was given and what was the point which had to be decided. No judgment can be read as if it is a statute. A word or a clause or a sentence in the judgment cannot be regarded as a full exposition of law. Law cannot afford to be static and therefore, Judges are to employ an intelligent in the use of precedents. xxx

The above enunciation of law holds good generally and particularly. However the position is slightly modified as far as the judgment of the Supreme Court of India are concerned in the wake of Article 141 of the Constitution. This provision declares that the law declared by the Supreme Court is binding on all courts and authorities in India. Thus increasing the scope of the binding nature of its decisions, it has been construed that not just the ratio but even the obiter of a Supreme Court judgment is binding on the High Court and all authorities of India.

The Bombay High Court in Popcorn Entertainment Corporation v. The City Industrial Development Corporation examined this position of law to declare that even the obiter of the Supreme Court would be binding on the High Courts. The High Court, to reach this conclusion, made a survey of the various earlier decisions to note as under;

91. There are numerous judgments of the Supreme Court on both sides of watershed those prescribing that even the obiter dicta of the Supreme Court is binding on other courts and those proscribing the enforcement of obiter dicta (see Raval and Co. v. K.G.Rama Chandran, AIR 1974 SC 818, ADM, Jabalpur v. Shivkant Shukla, AIR 1976 SC 1207, Sreenivasa General Traders v. State of AP, AIR 1983 SC 1246, Amar Nath Om Prakash v. State of Punjab, AIR 1985 SC 218, ONGC v. Western Co. of North America, AIR 1987 SC 674, MCD v. Gurnam Kaur, AIR 1989 SC 38, Sanjay Dutt v. State through CBI, Bombay, (1994) 5 SCC 402, Director of Settlements, AP v. M.R.Appa Rao, AIR 2002 SC 1598, Nathi Devi v. Radha Devi Gupta, (2005) 2 SCC 271, State of Haryana v. Ranbir, AIR 2006 Sc 1796 and Oriental Insurance Co. Ltd. v. Meena Varial, (2007) 5 SCC 428).

92. Generally, even an obiter dictum is expected to be obeyed and followed. Some times well considered obiter dicta of the Supreme Court is taken as precedent, but every passing expression of a judge cannot be treated as an authority [see Saiyada Mossarat v. Hindusthan Steel Ltd., Bhilai Steel Plant, (1989) 1 SCC 272]. 

93. Although, under the traditional doctrine of precedent, an obiter dictum has no binding force, it may nevertheless be held entitled to have great weight. General observations which are in the penumbral regions of the ratio have great weight when the point has been argued and deliberated on by the judges though not strictly required in the case. With the gradual erosion of the distinction between ratio and obiter the practice has gained ground for treating even the obiter dicta of the Supreme Court binding on the High Court. 

94. The Supreme Court while holding that obiter had only persuasive value observed in Srinivasa General Traders v. State of A.P., (1983) 4 SCC 354:AIR 1983 SC 1246 that every judgment must be read as applicable to the particular facts proved, or assumed to be proved, since the generality of the expressions which may be found there are not intended to be expositions of the whole law but governed or qualified by the particular facts of the case in which such expressions are to be found. In Prethipal Singh Bedi v. Union of India, (1982) 3 SCC 140:AIR 1982 SC 1413, the Supreme Court held that observations made on questions not specifically arising for decision, but discussed are entitled to respect by succeeding bench of the Supreme Court, though observations are obiter. 

95. The Calcutta High Court also had similarly ruled that even the obiter dicta of the Supreme Court are binding (see Aswini Kumar Roy v. Kshitish Chandra Sen Gupta, AIR 1971 Cal 252). In fact, the Calcutta High Court has even asserted that so long as the Supreme Court decision holds the filed it will not be open to the High Court to go against it on the footing that a particular aspect was not considered in the judgment. The Gujarat High Court also held that the obiter dicta of the Supreme Court are in the same category as ratio decidendi for the purposes of Article 141. The M.P. High Court has also taken the view that the obiter dicta of the Supreme Court are binding on all the courts (see Narbada Prasada v. Awadesh Narain, AIR 1973 MP 179). The Kerala High Court has held in State of Kerala v. Parameshwaran Pillai, 1974 Ker LT 617, that judicial propriety demands that even the obiter dictum of the Supreme Court should be accepted as binding.

96. Be that at it may, the Andhra Pradesh High in Bhagavati saran v. State of U.P., AIR 1961 SC 931 has moved to the other end of the spectrum by saying that a decision of the Supreme Court cannot be disregarded on the ground that no ratio decidendi is discernible. Thus, many of the High Courts are inclined to bring obiter dicta of the Supreme Court within the purview of Article 141. The Punjab High Court has also held that the obiter of the Supreme Court is binding if it lays down a point of law. It is fair summary to say that judicial dicta overwhelmingly support the binding nature of obiter dicta in the context of Article 141. The Supreme Court in Kausalya Devi Bogra v. Land Acquisition Officer, (1984) 2 SCC 324: AIR 1984 SC 892, has pointed out that the judicial decorum and discipline require that the directions of the Supreme Court should be taken as binding on subordinate courts. In case of Narinder Singh v. Surjit Singh, (1984) 2 SCC 402: AIR 1984 SC 1359, the Supreme Court has observed that when the decision of the Supreme Court in certain respect as was not to the liking of the judge of the High Court when his own decision was set aside by the Supreme Court and such a decision becomes the law of the land and it is the duty of everyone including the High Court to obey the order and not try to avoid it. 

97. As already stated hereinabove, so far as categorical and unequivocal observations made by the Apex Court revolving around the issues relating to non-observation of rule and regulations causing substantial loss to the CIDCO since no tenders were invited and interpretation of section 23 of the Contract Act are concerned, they operate as obiter binding on us as such we have to fall in line with the view expressed by the Apex Court.

Therefore it is quiet clear that while the traditional rule is undoubtedly that only the ratio of a decision is binding, the law has developed significantly and particularly in the context of the Article 141 of the Constitution to the effect that even a obiter dictum of a judgment of Supreme Court is binding on the High Court and all other authorities of the country. They cannot be disowned by the observation that they are not the ratio of the decision.