Law Established in an Overruled Decision may Remain as Good Law If it has Not Been Actually Overruled.

Also Read:

• Ratio Decidendi (alone) Forms a Precedent; Not the Final Order or Conclusion
• Judicial Precedent and Res Judicata – a Couplet
• Res Judicata and Judicial Precedent
• No Res Judicata on Finding on Title in an Injunction Suit
• Res Judicata and Appeal: No Res Judicata on Adverse Findings, in a Favourable Decree
• No Res Judicata on Finding on Title in an Injunction Suit
• Res Judicata and Constructive Res Judicata
• Res Judicata: Should Substantially the ‘Same Issue’ Must Have Been ‘Adjudicated’ in the Former Suit
• No Res Judicata on Adverse Findings, in a Favourable Decree

Jojy George Koduvath

Introduction

A decision is an authority for what it actually decides, not every observation contained in it. This principle helps determine which proposition of an earlier decision has been displaced and which propositions were not affected. But, an earlier judgment cannot be relied upon to revive a proposition that is inconsistent with the later judgment that impliedly (for it did not expressly mention the earlier decision) overruled.

Two Types of Propositions in Overruled Decisions

1. An overruled decision may contain two types of propositions:

• – First, overruled propositions. It loses its binding precedential force to the extent of the overruling.
• – Second, propositions not overruled: The independent propositions laid down in the earlier judgment (other than the particular overruled propositions) will continue to be good law
• – A Note of Caution: To determine whether a proposition remains as the independent binding proposition, the overruled judgment is to be examined after analysing its original reasoning and determining the precise extent of the overruling. In certain cases the particular observation as to the ‘overruling may be an “obiter” having no binding force.

2. Supreme Court authorities

• .(a) Prakash Amichand Shah v. State of Gujarat, (1986)
• (b) A.R. Antulay v. R.S. Nayak, (1988) 2 SCC 602 —
• (c) Union of India v. Dhanwanti Devi, (1996) 6 SCC 44 —

End Notes:

What is binding is ‘Ratio and the Principle’; not, Conclusion

Ratio decidendi literally means “reason for deciding”.

In B. Shama Rao v. Union Territory of Pondicherry, AIR 1967 SC 1480, it was observed that a decision is binding not because of its (final) conclusion but with regard to its ratio and the principle laid down therein.  (Referred to in: Secunderabad Club v. CIT, 2023 SCC OnLine SC 1004, 2023-457 ITR 263 (SC).

Ratio decidendi, Precedents, Obiter Dicta, etc.

Ratio decidendi
               •➧ Ratio decidendi alone is the Binding Precedent.
               •➧ Ratio decidendi is statements of principles of law.
               •➧ Ratio decidendi is the vital element in the decision.
               •➧ Ratio decidendi literally means “reason for deciding”.
               •➧ Ratio decidendi is the essence, and not every observation.
               •➧ Ratio Decidendi is declaration of the law in a speaking order.
              •➧ Ratio Decidendi is the Legal Principles Guiding the Decision.
               •➧ Ratio decidendi alone binds under Article 141 of the Constitution. 
              •➧ What is binding is discernable Ratio and the Principle; not, Conclusion.
              •➧ A case is only an authority for what it decides, and not from what logically follows from it.
             •➧ It is important to Read and analyse Entire Judgment, and the ratio decidendi is to be isolated.
              •➧ Words in a Judgment are Not to be Interpreted as a Statute; Words in it are Not to be Taken Literally.
              •➧ The abstract ratio decidendi (ascertained on a consideration of the judgment)  alone has the force of law.
             •➧ For, the Legal Principles Guiding the Decision constitute ‘Ratio Decidendi’, it is always necessary to see what were the facts.

Precedents
              •➧ A Case is only an Authority for what it Actually Decides.
              •➧ Decision Applicable Only to Facts Cannot be a Binding Precedent.
              •➧ Binding Precedent Helps in Promoting Certainty and Consistency.
              •➧ A decision is available as a precedent only if it decides a question of law.
              •➧ An order made merely to dispose of the case cannot have the value or effect of a binding precedent.
              •➧ No Binding Precedent if a decision is without taking into account the statutory provision or if it is wrong in law.
              •➧The precedential value is attached only to orders which are preceded by a detailed judgment.

Obiter Dicta
              •➧ Obiter dictum is the passing expression or opinion in a judgement.
              •➧ The obiter dicta of the Supreme Court are taken with considerable weight.
              •➧ In India, obiter dictum of a High Court may have to be followed by the lower courts in its jurisdiction.

Stare decisis
              •➧ Stare decisis is a legal doctrine that requires courts to follow precedents

Stare Decisis

The Latin term, Stare decisis, means – “to stand by that which is decided.” It is accepted as a legal doctrine that requires courts to follow precedents, the previous decisions. The doctrine of stare decisis is based on public policy. The basis of Article 141 of the Constitution is the doctrine of stare decisis.

In Raj Narain Pandey v. Sant Prasad Tewari (1973 (2) SCR 835 , H.R. Khanna, J. observed as under:

• “In the matter of the interpretation of a local statute, the view taken by the High Court over a number of years should normally be adhered to and not disturbed. A different view would not only introduce and element of uncertainty and confusion, it would also have the effect of unsettling transactions which might have been entered into on the faith of those decisions. The doctrine of stare decisis can be aptly invoked in such a situation. As observed by Lord Evershed M.R. in the case of Brownsea Haven Properties v. Poole Corpn., there is well established authority for the view that a decision of long standing on the basis of which many persons will in the course of time have arranged their affairs should not lightly be disturbed by a superior court not strictly bound itself by the decision.” (quoted in: Mishri Lal v. Dhirendra Nath, AIR 1999 SC 2286, 1999-4 SCC 11)

The principles of `Stare Decisis’ is explained in Halsbury’s Laws of England as under:

• “Apart from any question as to the Courts being of co-ordinate jurisdiction, a decision which has been followed for a long period of time, and has been acted upon by persons in the formation of contracts or in the disposition of their property, or in the general conduct of affairs, or in legal procedure or in other ways, will generally be followed by courts of higher authority than the court establishing the rule, even though the court before whom the matter arises afterwards might not have given the same decision had the question come before it originally. But the supreme appellate Court will not shrink from overruling a decision, or series of decisions, which establish a doctrine plainly outside the statute and outside the common law, when no title and no contract will be shaken, no persons can complain, and no general course of dealing be altered by the remedy of a mistake”. (quoted in: Mishri Lal v. Dhirendra Nath, AIR 1999 SC 2286, 1999-4 SCC 11)

This doctrine is described in Corpus Juris Secundum as under:

• “Under the stare decisis rule, a principle of law which has become settled by a series of decisions generally is binding on the courts and should be followed in similar cases. This rule is based on expediency and public policy, and, although generally it should be strictly adhered to by the courts, it is not universally applicable.” (quoted in: Mishri Lal v. Dhirendra Nath, AIR 1999 SC 2286, 1999-4 SCC 11)

In Mishri Lal v. Dhirendra Nath, after quoting Halsbury’s Laws of England and Corpus Juris Secundum it is pointed out as under:

• “Be it noted however that Corpus Juris Secundum, adds a rider that “previous decisions should not be followed to the extent that grievous wrong may result; and, accordingly, the courts ordinarily will not adhere to a rule or principle established by previous decisions which they are convinced is erroneous. The rule of stare decisis is not so imperative or inflexible as to preclude a departure therefrom in any case, but its application must be determined in each case by the discretion of the court, and previous decisions should not be followed to the extent that error may be perpetuated and grievous wrong may result.”

No Binding Precedent if relevant statutory provision was Not considered; It Must be ‘Ratio Decidendi’ also

In Confederation of Real Estate Developers of India (CREDAI) v. Vanashakti, (2026) 5 SCC 201, it is held by our Apex Court as under:

• “29.2. This Court held that it is not everything said by a judge while giving judgment that constitute a precedent. The only thing in a judge’s decision binding a party is the principle upon which the case is decided. It is for this reason that it is important to analyse a decision and isolate from it the ratio decidendi. According to the theory of precedents, every decision contains three basic postulates:
  • (i) findings of material facts, direct and inferential;
  • (ii) statement 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.”

It is pointed out further in this decision as under:

• “29.3.  … A precedent by long recognition may mature into a 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.
• 32. A five-Judge Constitution Bench of this Court in Dr. Shah Faesal Vs. Union of India , (2020) 4 SCC 1, was examining the challenge to two constitution orders issued by the President of India under Article 370 of the Constitution of India. It is not necessary to delve into the factual controversy of that case but confine to the principle of ratio decidendi and per incuriam as deliberated therein. The Bench highlighted the importance of a binding decision and noted that usually courts do not overrule the established precedents unless there is a social, constitutional or economic change mandating such a development. Doctrines of precedents and stare decisis are the core values of our legal system. They form the tools which further the goal of certainty, stability and continuity in our legal system. Arguably, judges owe a duty to the concept of certainty of law. Therefore, they often justify their holdings by relying upon the established tenets of law. The doctrine of binding precedent is of utmost importance in the administration of our judicial system.”

In Union of India v. Maniklal Banerjee, AIR 2006 SC 2844, the Apex Court has held as under:

• “It is now well-settled that if a decision has been rendered without taking into account the statutory provision, the same cannot be considered to be a binding precedent. This Court, in Pritam Singh, while exercising its discretionary jurisdiction, might have refused to interfere with the decision. The same, therefore, did not constitute any binding precedent.” (Referred to in: Hameeda Begum v. Champa Bai Jain (Arun Misra, J.), ILR 2009 MP 2328; 2009-3 MPLJ 472)

The Supreme Court in Jayant Verma v. Union of India, (2018) 4 SCC 743, quoted the dissenting judgement of A.P. Sen, J. in Dalbir Singh v. State of Punjab, (1979) 3 SCC 745, with approval :

• “54. This question is answered by referring to authoritative works and judgments of this Court. In Precedent in English Law by Cross and Harris (4th edn.), ‘ratio decidendi’ is described as follows: “The ratio decidendi of a case is any rule of law expressly or impliedly treated by the judge as a necessary step in reaching his conclusion, having regard to the line of reasoning adopted by him, or a necessary part of his direction to the jury.”

In State of Orissa v. Sudhansu Sekhar Misra, AIR 1968 SC 647, wherein after relying on British authorities it was held:

• “13….A decision is only an authority for what it actually decides. What is of the essence in a decision is its ratio and not every observation found therein, nor what logically follows from the various observations made in it. On this topic, this is what Earl of Halsbury L.C. said in Quinn v. Leathem [[1901] AC 495]:
• “Now before discussing the case of Allen v. Flood, [1898] AC 1 and what was decided therein, there are two observations of a general character which I wish to make, and one is to repeat what I have very often said before, 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 and qualified by the particular facts of the case in which such expressions are to be found. The other is that a case is only an authority for what it actually decides. I entirely deny that it can be quoted for a proposition that may seem to follow logically from it. Such a mode of reasoning assumes that the law is necessarily a logical code, whereas every lawyer must acknowledge that the law is not always logical at all. It is not a profitable task to extract a sentence here and there from a judgment and to build upon it.”

The Supreme Court, in Krishena Kumar v. Union of India, 1990 (4) SCC 207, said as under::

• “19. The doctrine of precedent, that is being bound by a previous decision, is limited to the decision itself and as to what is necessarily involved in it. It does not mean that this Court is bound by the various reasons given in support of it, especially when they contain “propositions wider than the case itself required”. This was what Lord Selborne said in Caledonian Railway Co. v. Walker’s Trustees [(1882) 7 App Cas 259 : 46 LT 826 (HL)] and Lord Halsbury in Quinn v. Leathem [1901 AC 495, 502 : 17 TLR 749 (HL)]. Sir Frederick Pollock has also said :
• “Judicial authority belongs not to the exact words used in this or that judgment, nor even to all the reasons given, but only to the principles accepted and applied as necessary grounds of the decision.”