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CA Abhishek Kacholiya

Abhishek Kacholiya1. Introduction:

In a civilised society all disputes between two parties always have been settled either by way of their mutual arrangements or by way of court of law of the land. For the smooth administration of the democratic country it is very much necessary to have a strong and good judicial system and this system should get proper support from Constitution of that Country. In India our constitution gives such power to our judicial system by way of Chapter – IV, by which Indian Supreme Court gets powers and duties.

2. Binding force of Supreme Court decisions:

In Chapter – IV. – The Union Judiciary article 141 describes binding force of law declared by Supreme Court that; “the law declared by the Supreme Court shall be binding on all courts within the territory of India.” It means only the law declared by the Supreme Court which was necessary for the determination of the case would be binding in nature not the opinion of the court on the question which was not necessary to decide the case. To understand this situation let me explain word Ratio Decidendi and Obiter Dicta:

Ratio Decidendi means “the reason” or “the rationale for the decision”. The ratio decidendi is “the point in a case which determines the judgment” or “the principle on which the case establishes”. The process of determining the ratio decidendi is a correct thoughtful analysis of what the court actually decided essentially, based on the legal points about which the parties in the case actually fought.

All decisions are, in the common law system, decisions on the law as applied to the facts of the case, therefore, ratio decidendi is one of the most powerful tool, with a proper understanding of the ratio of a precedent, one can force a lower court to come to a decision which that court may otherwise be unwilling to make, considering the facts of the case.

Obiter Dicta means “other things that are said”, that is, a statement in a judgment that is “said in passing” All other statements about the law in the text of a court opinion or all pronouncements that do not form a part of the court’s rulings on the issues actually decided in that particular case are obiter dicta, and are not rules for which that particular case stands.

The distinction between the ratio decidendi and obiter dictum has been very beautifully explained by Chagla C.J. in the case of Mohandas Issardas v. A. N. Sattanathan, (at page 1160) in the following words (at page 115 of AIR 1955 Bom):

“……an obiter dictum is an expression of opinion on a point which is not necessary for the decision of a case. This very definition draws a clear distinction between a point which is necessary for the determination of a case and point which is not necessary for the determination of the case. But in both cases points must arise for the determination of the Tribunal. Two questions may arise before a court for its determination. The court may determine both although only one of them may be necessary for the ultimate decision of the case. The question which was necessary for the determination of the case would be the ‘ratio decidendi’; the opinion of the Tribunal on the question which was not necessary to decide the case would be only an ‘obiter dictum’.”

So it would be incorrect to say that every opinion of the Supreme Court would be binding on the High Courts in India. The only opinion which would be binding would be an opinion expressed on a question that arose for the determination of the Supreme Court.

3. Position regarding contrary decision by Supreme Court itself:

In case of divergence between the decisions of Supreme Court, decision of the larger bench should be followed and in case of conflict between decisions of bench of equal strength, the later decision should be followed provided the earlier decision is considered.

4. Revision of own decision: 

A question may arise that doctrine of Stare Decisis or Ratio Decidendi may deter the Supreme Court to overrule or review its decision. In this regard it may be said that except some specific situation the Supreme Court may reconsider its decision. A larger bench of Supreme Court may reconsider and overrule a decision of a smaller bench if it is clearly erroneous not otherwise. As held in Pradip Chandra Parija & Ors. Vs. Pramod Chandra Patnaik & Ors. (2002) 254 ITR 099 (SC) if a bench feels that a decision of larger bench is erroneous it may refer the matter to larger bench but cannot refer matter directly to Constitution Bench, except matter provided in the Article 145(3) of Constitution of India.

5. Binding force of High Court Decisions: 

Like Article 141 there is no such provision available in Constitution of India which deals about the binding force of the decisions pronounced by the High Courts. But on the basis of several case laws it is settled law of the land that the High Courts have binding force in the state in which it operates and not in the territory outside of the state. It means decisions of the High Court are binding on the subordinate courts, tribunals and other authorities of the jurisdiction in which the High Court runs. High Court of other state may take same view or consider decision of another High Court but are not duty bound to follow it.

Conclusion drawn in the case of CIT vs. Thana Electricity Supply Ltd 206 ITR 727 (Bom.) that the decisions of other High Courts are not binding on this court also gets full support from the scheme of income-tax itself. It may be referred in this connection to section 260 of the Income Tax Act, 1961 which, so far as relevant, reads as follows:

“260(1) The High Court or the Supreme Court upon hearing any such case shall decide the questions of law raised therein, and shall deliver its judgment thereon containing the grounds on who such decision is founded, and a copy of the judgment shall be sent under the seal of the court and the signature of the Registrar to the Appellate Tribunal which shall pass such order as are necessary to dispose of the case conformably to such judgment.”

A plain reading of this section clearly goes to show that what the High Court is required to do under this section is to decide the question of law raised in the case before it and to deliver its judgment thereon containing the grounds on which such decision if founded. This court, therefore, has to give its own decision and also the reasons therefore. While doing so, undoubtedly, the court is free to follow the decision of any High Court in its judgment. The Legislature itself was fully aware of the fact that in the process of deciding the questions of law under section 260 of the Act, there may be a conflict of opinion of different High Courts in respect of a particular question of law and in that view of the matter, under section 257 of the Act, has empowered the Tribunal to make a reference directly to the Supreme Court if it finds it expedient to do so on account of a conflict in the decisions of the High Court. Section 257 reads as follows :

“257. If, on an application made under section 256, the Appellate Tribunal is of the opinion that, account of a conflict in the decisions of High Courts in respect of any particular question of law, it is expedient that a reference should be made direct to the Supreme Court, the Appellate Tribunal may draw up a statement of the case and refer it through its President direct to the Supreme Court.”

A conjoint reading of the above provisions of the Income-tax Act clearly goes to show that the Act itself contemplates independent decisions of various High Courts on the question of law referred to them. It has visualised the possibility of conflict of opinion between different High Courts on the same question of law and has also made specific provision to take care of such a situation in suitable cases. In fact, in the light of the clear language of section 260 of the Act, every High Court is required to give its own opinion on a particular question of law. It should not follow, as a matter of course, only with a view to achieve uniformly in the matter of interpretation, the decision of another High Court, if such decision is contrary to its own opinion. Because, such action will be contrary to the clear mandate of section 260 of the Act. It will amount to abdication of its duty by the High Court to give “its decision” on the point of law referred to it. We are, therefore, of the clear opinion that decision of none High Court is not binding on another High Court.

The above view is also supported by Supreme Court in case of Valliama Champaka Pillai v. Sivathanu Pillai.

6. Position regarding contrary decision by High Court is as follows:

It is a well accepted legal position that a single judge of a High Court is ordinarily bound to accept as correct judgments of courts of co-ordinate jurisdiction and of the Division Benches and of the Full Benches of his court and of the Supreme Court.

Equally well settled is the position that when a Division Bench of the High Court gives a decision on a question of law, it should generally be followed by a co-ordinate Bench in the subsequent case wants the earlier decision to be reconsidered, it should refer the question at issue to a larger Bench.

7. Conclusion:

As per the above discussion it is clearly says that law declared by the Supreme Court is binding on all courts within the territory of India as per the provisions of Article 141 of the Constitution of India. And decision of High Court is binding on the subordinate court and tribunals of the territory of the state only. Decision of one High Court does not have binding force on another High Court but that can be considered.

Sources referred:

a)     Wikipedia for the definition of word Ratio Decidendi and Obiter Dicta

b)      Kanga & Palkhivala’s The Law and Practice of Income Tax

(Author is a Manager Taxation with KGK Group of Companies )


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  1. vswami says:

    To Share Own Thoughts >
    The write-up seems to fairly summarise the concept of “precedent” from a theoretical point of view.
    Frankly speaking, the related exercise, especially by an advising or counselling lawyer, involves three essential steps to be followed, in that order:
    Ø Ascertain fully and get a good grasp/ grip of all the RELEVANT “facts and circumstances” of the case on hand;
    Ø Look up, study, and understand what the law says on any point/issue arising in the given case;
    Ø And, only if it is a case in which either the correct position in law is not clear or ascertainable, or there is found to be scope for two contrary views being taken, then alone, for help, go to case law; that is, in which the facts and circumstances are ‘on all fours’.
    But, going by the fact of life/ the field experience, by and large, the real problem is faced, because of the concerned people, mainly the advising or representing counsel, more often than not, failing to try and understand the very concept, in its profound sense; further, in failing to, unwittingly or otherwise, devoutly bear in mind the implications of the concept, before urging courts to follow case law he chooses to cite in support of a given case.
    A SC case, which instantly comes to mind is in re. Podar Cement Ltd. – in a write-up on which the subject concept has been briefly discussed, is @ https://taxguru.in/income-tax/law-and-vs-case-law-on-flats-a-critical-study.html
    Another instance is the Ruling of SC reported @SC on Car Parking. That is a case in which the verdict of the SC has come to be largely , by so misconstrued as to be taken as a ‘precedent’ of common relevance to all related ‘car parking issues’. For knowing more about the controversies in circulation, one may look up the write-ups in the print media and some of the websites in public domain, accessible through ‘Google’ search.

  2. Vineet says:

    Good attempt but its a very sketchy article. The law of binding precedence has evolved over a period of time by a plethora of court decisions which the author has overlooked. In Godavaridevi Saraf 113 ITR 589, Bombay High Court held that a decision of High Court on an issue of All India Legislation like Income Tax Act is to be followed by tribunal situated in another state unless a competent court in that state decides otherwise. Both decisions in Godavaridevi Saraf and Thana Electricity have been examined by ITAT Pune in Aurangabad Holiday Resort 118 ITD 1 and held to be operative in different areas and have equal force. Similarly Supreme Court in Kamakshi Finance Corporation AIR 1992 SC 711 held that decisions of Tribunal have a binding force on authorities subordinate.

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July 2024