Doctrine of Stare Decisis
AUGUST 26, 2024
By Kishori Lal, Former Principal Commissioner CGST and author of "Interpretation of Indirect Tax Statutes"
"Justice requires treating like cases alike" Ronald Dworkin
Introduction
"Who ignores [stare decisis] must give reasons, and reasons that go beyond mere demonstration that the overruled opinion was wrong (otherwise the doctrine would be no doctrine at all)."1
Simply put, the rule binds courts to follow legal precedents set by previous decisions. The doctrine of stare decisis is a very valuable principle of precedent which cannot be departed from unless there are extraordinary or special reasons to do so.2 Stare decisis in Latin means 'to stand by things decided.' Stare decisis is a doctrine followed by all courts/tribunals.
In adjudicating any dispute, it is always essential to be sure about three factors, viz. (a) the facts of the case (b) the law applicable to those facts and (c) to apply the correct law applicable to those set of facts. It is here the precedent comes to play and it predominantly involves judicial precedents followed by statutes and thereafter by any number of immemorial customs in that order, according to Professor Dias in his celebrated work on Jurisprudence.3
Origin
The doctrine of stare decisis is the basis of common law. It originated in England and was used in the colonies as the basis of their judicial decisions. According to Dias4, the genesis of the rule may be sought in factors peculiar to English legal history, amongst which may be singled out the absence of a Code. The Normans forbore to impose an alien code on a half-conquered realm, but sought instead to win as much widespread confidence as possible in their administration of law, by the application of near uniform rules. The older the decision, the greater its authority and the more truly was it accepted as stating the correct law. As the gulf of time widened, says Dias, judges became increasingly reluctant to challenge old decisions.5
Meaning
The term judicial precedent has at least two meanings. One of which is the process where the Judge follows the decision of the previously decided cases and the other is called the original precedent that is a case which creates and applies a new rule.
According to Dias, a precedent is a previous instance or case which furnishes an example or rule for subsequent conduct and a pattern upon which subsequent conduct is based. Salmond in Theory of Judicial Precedent, Station 6 1900 states that the rule of precedent is a fundamentally important legal institution in common law countries: even a single judgement of the higher court speaks with a voice of authority and must be followed by the lower courts. This doctrine is also known as stare decisis.
The doctrine of stare decisis means that courts look to past decisions rendered in similar issues to guide their decisions. The past decisions are known as precedent. Precedent is a legal principle or rule that is created by a court decision. This decision becomes an example, or authority, for judges deciding similar issues later. Stare decisis is the doctrine that obligates courts to look to precedent when making their decisions.6
Relevance
Roscoe Pound observed "Law must be stable and yet it cannot stand still." Justice Holmes joined him by saying: "The truth is that the law is always approaching, and never reaching, consistency." Notwithstanding these observations it is worth to discuss the Rule of precedent/Stare decisis. Stare decisis- in English, the idea that today's court should stand by yesterday's decisions- is a foundation stone of the rule of law.
The doctrine of precedent ensures certainty, uniformity and fairness; meeting some of the essential ingredients of Rule of Law.7 "If any party to the proceedings or to the decision is permitted to reopen the issue which stood concluded by the earlier decision on a mere ground that subsequently legal position is altered, not only the sanctity of the order would be lost but it would result into opening a Pandora's box. Such is neither conceived nor can be permitted in the system of administration of justice. Once a decision has attained finality, it cannot be upset just on a mere ground that subsequently the higher forum has taken a different view".8
Binding Nature
Application of that doctrine, although not an inexorable command, is the preferred course because it promotes the even-handed, predictable, and consistent development of legal principles, fosters reliance on judicial decisions, and contributes to the actual and perceived integrity of the judicial process. It also reduces incentives for challenging settled precedents, saving parties and courts the expense of endless re-litigation.9
It is settled law that the Court should follow an earlier decision that has withstood the changes in time, irrespective of the rationale of the view taken.10 Corpus Juris Secundum11 however, 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 decision(s) which they are convinced is erroneous. The rule of stare decisis is not so imperative or inflexible as to preclude a departure there from 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."12
Decisions of co-ordinate bench or of superior bench are to be followed otherwise it will amount to judicial indiscipline, but when similar issue pending in appeal in Supreme Court, Tribunal to wait for Supreme Court decision.13 The Bombay High Court in a case went to the extent that Appellate Tribunal should not decide appeal when similar matter is pending in High Court.14
In the absence of any contrary view, decisions of non-jurisdictional High Court must be followed by the Tribunal.15 Judgement of a non-jurisdictional High Court has to be preferred over the judgement of the tribunal.16
Precedential value of a challenged decision
It is well settled that merely because a matter is pending before the higher forum, such pendency will not take away the precedential value of the appealed decision. The adjudicating authority ought to have followed the Tribunal decisions which were binding on the authority. By deciding the issue involved in the present proceedings in defiance of the binding decisions, the impugned order has been rendered invalid and without jurisdiction.17
A Constitution Bench of the Apex Court in Waman Rao v. Union of India (1981) 2 SCC 362, para 40 at p. 393 observed thus:
"40. It is also true to say that for the application of the rule of stare decisis it is not necessary that the earlier decision or decisions of longstanding should have considered and either accepted or rejected the particular argument which is advanced in the case on hand. Were it so, the previous decisions could more easily be treated as binding by applying the law of precedent and it will be unnecessary to take resort to the principle of stare decisis. It is, therefore, sufficient for invoking the rule of stare decisis that a certain decision was arrived at on a question which arose or was argued, no matter on what reason the decision rests or what is the basis of the decision. In other words, for the purpose of applying the rule of stare decisis, it is unnecessary to enquire or determine as to what was the rationale of the earlier decision which is said to operate as stare decisis."
"41. The second reason why we do not want to resort to the principle of stare decisis while determining the validity of Article 31-A is that neither in Sankari Prasad 1952 SCR 89, 95: AIR 1951 SC 458, nor in Sajjan Singh (1965) 1 SCR 933: AIR 1965 SC 845, nor in Golak Nath I.C. Golak Nath v. State of Punjab, (1967) 2 SCR 762 : AIR 1967 SC 1643, and evidently not in Kesavananda Bharati (1973) 4 SCC 225, AIR 1973 SCC 1461 : 1973 Supp SCC 1, was the question as regards the validity as such of Article 31-A, raised or decided."
Thus, if the question in the case at hand was not raised or decided in the earlier decision then principle of stare decisis will not apply but it is not necessary that the particular argument which is advanced in the case on hand should have considered in the earlier decision and either accepted or rejected.
Ratio Decidendi
It is not everything said by a Judge while giving a 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.23
It is part of the duty of the subsequent Judge to identify the ratio of the previous similar judgement which may bind the Court as a precedent. As Waldron24 puts it, he has to bring it to the light of the day, show it to the world, and apply it to the similar case in front of him.
Decision is binding not because of its conclusion but with regard to its ratio and the principle laid down therein.25 A precedent or authority is a principle or rule established in a legal case that a court or other judicial body may apply when deciding subsequent cases with similar issues or facts.
A decision is 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 flows from the various observations made in the judgment. The enunciation of the reason or principle on which a question before a Court has been decided is alone binding as a precedent.26 A case is a precedent and binding for what it explicitly decides and no more. The words used by Judges in their judgments are not to be read as if they are words in Act of Parliament.
According to the well-settled theory of precedents, every decision contains three basic postulates:27
(i) findings of material facts, direct and inferential. An inferential finding of 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.
Obiter Dicta
Statements which are not part of the ratio decidendi are distinguished as obiter dicta and are not authoritative. It is axiomatic that when a direction or order is made by consent of the parties, the Court does not adjudicate upon the rights of the parties nor lay down any principle. Quotability as 'law' applies to the principle of a case, its ratio decidendi. The only thing in a Judge's decision binding as an authority upon a subsequent Judge is the principle upon which the case was decided.28
Relevancy of facts
Reliance on the decision without looking into the factual background of the case before it is clearly impermissible. A decision is a precedent on its own facts. Each case presents its own features. In Quinn v. Leathem (1901) AC 495 (H.L.), Earl of Halsbury LC observed 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 are found there are 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 found and a case is only an authority for what it actually decides.
The following words of Lord Denning in the matter of applying precedents have become locus classicus30:
Each case depends on its own facts and a close similarity between one case and another is not enough because even a single significant detail may alter the entire aspect, in deciding such cases, one should avoid the temptation to decide cases (as said by Cordozo) by matching the colour of one case against the colour of another. To decide therefore, on which side of the line a case falls, the broad resemblance to another case is not at all decisive.--- Precedent should be followed only so far as it marks the path of justice, but you must cut the dead wood and trim off the side branches else you will find yourself lost in thickets and branches. My plea is to keep the path to justice clear of obstructions which could impede it.
Courts should not place reliance on decisions without discussing as to how the factual situation fits in with the fact situation of the decision on which reliance is placed. Observations of Courts are neither to be read as Euclid's theorems nor as provisions of the statute and that too taken out of their context. These observations must be read in the context in which they appear to have been stated. Judgments of Courts are not to be construed as statutes. To interpret words, phrases and provisions of a statute, it may become necessary for judges to embark into lengthy discussions but the discussion is meant to explain and not to define. Judges interpret statutes, they do not interpret judgments. They interpret words of statutes; their words are not to be interpreted as statutes.31
In London Graving Dock Co. Ltd. V. Horton (1951 AC 737 at p.761, Lord Mac Dermot observed:
The matter cannot, of course, be settled merely by treating the ipsissima vertra of Willes, J as though they were part of an Act of Parliament and applying the rules of interpretation appropriate thereto. This is not to detract from the great weight to be given to the language actually used by that most distinguished judge.
In Home Office v. Dorset Yacht Co. (1970 (2) All ER 294) Lord Reid said, Lord Atkin's speech. is not to be treated as if it was a statute definition. It will require qualification in new circumstances.
Megarry, J in Shepherd Homes Ltd v Sandham (No.2) [1971] 1 W.L.R. 1062 observed:
One must not, of course, construe even a reserved judgment of Russell L.J. as if it were an Act of Parliament.
And, in Herrington v. British Railways Board (1972 (2) WLR 537) Lord Morris said:
There is always peril in treating the words of a speech or judgment as though they are words in a legislative enactment, and it is to be remembered that judicial utterances made in the setting of the facts of a particular case.
Circumstantial flexibility, one additional or different fact may make a world of difference between conclusions in two cases. Disposal of cases by blindly placing reliance on a decision is not proper. 36
Per Incuriam
A decision should be treated as given per incuriam when it is given in ignorance of the terms of a statute or of a rule having the force of a statute.37 "A decision is given per incuriam when the court has acted in ignorance of a previous decision of its own or of a Court of a co-ordinate jurisdiction which covered the case before it, or when it has acted in ignorance of a decision of the House of Lords. In the former case it must decide which decision to follow, and in the latter it is bound by the decision of the House of Lords."38
Sub Silentio
Professor P.J. Fitzgerald, editor of the Salmond on Jurisprudence, 12th edn. explains the concept of sub silentio at p. 153 in these words:
"A decision passes sub silentio, in the technical sense that has come to be attached to that phrase, when the particular point of law involved in the decision is not perceived by the court or present to its mind. The Court may consciously decide in favour of one party because of point A, which it considers and pronounces upon. It may be shown, however, that logically the court should not have decided in favour of the particular party unless it also decided point B in his favour; but point B was not argued or considered by the court. In such circumstances, although point B was logically involved in the facts and although the case had a specific outcome, the decision is not an authority on point B. Point B is said to pass sub silentio."
Summary
The following principles can be culled out from the myriad case laws39,
(a) A Single Judge is bound by the decision of a Division Bench and if he does not agree with it, he shall refer the matter to a larger Bench
(b) A fortiori, he is bound by the Judgment of a Full Bench and if he does not agree with its ratio, he shall place the papers before the Chief Justice to constitute a larger Bench for considering the question
(c) A Division Bench is bound by the decision of another Division Bench and if it wants to differ it shall refer the matter to the Full Bench
(d) A fortiori a Division Bench is bound by the decision of a Full Bench and if it wants to differ it shall place the papers before the Chief Justice to constitute a larger Bench for considering the question.
(e) The decision of a Full Bench is binding on the court including a subsequent Full Bench until it is overruled by a higher Court or a larger Bench,
(f) A decision of a Full Bench can be reconsidered only by a larger Bench specially constituted by the Chief Justice for deciding the question,
(g) Even the obiter dictum of a Full Bench is entitled to great weight,
(h) The binding effect of a prior decision does not depend upon whether a particular argument was considered therein or not, provided that the point with reference to which an argument was subsequently advanced was actually decided
(i) The decision of the Supreme Court is binding on the High Court and the latter cannot ignore it on the ground that some relevant provisions of law were not brought to the notice of the Supreme Court or some aspects of the matter in question were not considered by the Supreme Court.
(j) The leader decisions, which refer to the issues in dispute, record rival submissions and contain the reasons for coming to the conclusions/decisions, throw up "ratios" are to be followed.
(k) The Supreme Court decisions are binding on all High Courts, tribunals, and other authorities, but the Supreme Court is not bound by its own decisions.40
(l) The law declared by the highest court in the State is binding on authorities or Tribunals under its superintendence.41
___________________________
1 Hubbard v. United States, 115 S. Ct. 1754, 1765 (1995) (Scalia, J., concurring in part & concurring in the judgment)
2 Manganese Ore (India) Ltd. v. CST (1976) 4 SCC 124: 1976 SCC (Tax) 447, para 6 = 2003-TIOL-111-SC-CT, Quoted in Indian Council for Enviro-Legal Action v. Union of India, (2011) 8 SCC 161: (2011) 4 SCC (Civ) 87: 2011 SCC OnLine SC 961, para 105
3 R.W.M Dias: Jurisprudence (5th edition. 1985) at p.126
4 R.W.M. Dias: Jurisprudence (ibid) p. 166
5 Waman Rao v. Union of India, (1981) 2 SCC 362, Para 36
6 "How to Comprehend precedents" By Mohan Parasaran in his address to newly appointed Judges to High Courts organised by National Judicial Academy at Bhopal on 20-11-2015
7 Bombay High Court in HDFC Bank Ltd. v Dy. Commissioner of Income Tax 2(3) Mumbai, 2016-TIOL-408-HC-MUM-IT, para 7
8 The Commercial Tax Officer Bengaluru Vs IFB Industries Ltd Bengaluru; 2016-TIOL-543-HC-KAR-CT, para 5
9 U.S. Supreme Court in Kimble v. Marvel Entm't, LLC - 135 S. Ct. 2401 (2015)
10 Medley Pharmaceuticals Ltd. v. CCE, (2011) 2 SCC 601 Para 43 at page 617 = 2011-TIOL-09-SC-CX
11 'Corpus Juris Secundum' (Meaning, "Second Body of the Law") is an encyclopedia of U.S. law containing an alphabetical arrangement of legal topics as developed by U.S. federal and state cases. It provides a clear statement of each area of law including areas of the law and provides footnoted citations to case law and other primary sources of law.
12 Maktul v. Manbhari, AIR 1958 SC 918: 1959 SCR 1099; para 9
13 Shree Baidyanath Ayurved Bhawan Pvt. Ltd. Vs Collr. of C. Ex. 1991 (51) E.L.T. 502 (Tribunal)(LB) = 2002-TIOL-461-SC-CX-LB
14 Titanor Components Ltd. Vs Commissioner of Income Tax; 2009 (238) E.L.T. 596 (Bom.) paras 11, 12 = 2009-TIOL-280-HC-MUM-IT
15 ACIT v. Dish TV India Ltd. (2018) 194 TTJ 897 / 169 DTR
16 Nanubahi D. Desai v. ACIT (2014) 149 ITD 16 (SB)(Ahd)(ITAT) = 2014-TIOL-244-ITAT-AHM-SB; Minda Sai Ltd. v. ITO (Delhi); LAWS(IT)-2015-1-201 (ITAT) = 2015-TIOL-95-ITAT-DEL
17 TV Sundram Iyengar and Sons Pvt Ltd Vs Commissioner of CGST and Central Excise, Madurai, 2021-TIOL-1025-HC-MAD-ST, Para 18
23 Oriental Insurance Co. Ltd vs Smt. Raj Kumari & Ors; AIR 2008 SC 403, 2007 (12) SCC 768, Para 11
24 Waldron, Jeremy, "Thoughtfulness and the Rule of Law" (2011). 263
25 B. Shama Rao vs. Union Territory of Pondicherry, AIR 1967 SC 1480
26 See: State of Orissa v. Sudhansu Sekhar Misra and Ors. (AIR 1968 SC 647) and Union of India and others v Dhanwanti Devi and Ors (1996 (6) SCC 44
27 In Oriental Insurance Co. Ltd vs Smt. Raj Kumari & Ors; AIR 2008 SC 403, 2007 (12) SCC 768, Para 11
28 Municipal Corpn. of Delhi v. Gurnam Kaur; (1989) 1 SCC 101 in para 11
30 Extracted in Oriental Insurance Co. Ltd vs Smt. Raj Kumari & Ors; AIR 2008 SC 403, 2007 (12) SCC 768, Para 15
31 Bharat Petroleum Corporation Ltd. vs N.R. Vairamani AIR 2004 SC 4778, 2004, 2004 (8) SCC 579
36 Oriental Insurance Co. Ltd vs Smt. Raj Kumari & Ors; AIR 2008 SC 403, 2007 (12) SCC 768, Para 14
37 Municipal Corpn. of Delhi v. Gurnam Kaur; (1989) 1 SCC 101 in para 11
38 Halsbury's Laws of England, 3rd Edn., Vol. 22, para 1687, pp. 799-800
39 In Philip Jeyasingh vs The Joint Registrar of Co-operative Societies, (1992) 2 MLJ 309(FB), (1992) 1 LW 216, Para 19
40 The Bengal Immunity Co. Ltd. v. State of Bihar (1955) 6 STC 446 = 2002-TIOL-2584-SC-CT-CB
41 East India Commercial Co. Ltd. v. Collector of Customs, AIR 1962 SC 1893 = 2002-TIOL-2760-SC-CUS-LB
[The views expressed are strictly personal.]
(DISCLAIMER : The views expressed are strictly of the author and Taxindiaonline.com doesn't necessarily subscribe to the same. Taxindiaonline.com Pvt. Ltd. is not responsible or liable for any loss or damage caused to anyone due to any interpretation, error, omission in the articles being hosted on the site) |