'Not Everything Said In A Judgment Constitutes A Precedent' : Supreme Court Explains Distinction Between Obiter Dicta & Ratio Decidendi

In an order passed recently, the Supreme Court briefly explained the distinction between obiter dicta and ratio decidendi in a judgment.

"It is not everything said by a Judge when giving judgment that constitutes a precedent. The only thing in a Judge's decision binding as a legal precedent 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 obiter dicta.", the bench of Justices Sanjiv Khanna and M M Sundresh said.

The bench made these observations while dismissing a special leave petition in an arbitration matter. The court noted that in Vidya Drolia & Ors. vs. Durga Trading Corporation, it did not examine and decide the issue of effect of unstamped or under-stamped underlying contract on the arbitration agreement.

In this regard, the bench made the following observations after referring to two judgments viz. State of Gujarat  vs. Utility Users’ Welfare Association and Jayant Verma vs. Union of India.

1. “The inversion test” to identify what is ratio decidendi in a judgment. To test whether a particular proposition of law is to be treated as the ratio decidendi of the case, the proposition is to be inversed, i.e. to remove from the text of the judgment as if it did not exist. If the conclusion of the case would still have been the same even without examining the proposition, then it cannot be regarded as the ratio decidendi of the case.
2. It is not the findings of material facts, direct and inferential, but the statements of the principles of law applicable to the legal problems disclosed by the facts, which is the vital element in the decision and operates as a precedent. Even the conclusion does not operate as a precedent, albeit operates as res judicata. Thus, it is not everything said by a Judge when giving judgment that constitutes a precedent. The only thing in a Judge's decision binding as a legal precedent 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 obiter dicta.

Case details

Career Institute Educational Society vs Om Shree Thakurji Educational Society | 2023 LiveLaw (SC) 380 | SLP(C) 7455-7456/2023 | 24 April 2023 | Justices Sanjiv Khanna and M M Sundresh

Headnotes

Precedent - Distinction between obiter dicta and ratio decidendi - “The inversion test” to identify what is ratio decidendi in a judgment - To test whether a particular proposition of law is to be treated as the ratio decidendi of the case, the proposition is to be inversed, i.e. to remove from the text of the judgment as if it did not exist. If the conclusion of the case would still have been the same even without examining the proposition, then it cannot be regarded as the ratio decidendi of the case - It is not the findings of material facts, direct and inferential, but the statements of the principles of law applicable to the legal problems disclosed by the facts, which is the vital element in the decision and operates as a precedent. Even the conclusion does not operate as a precedent, albeit operates as res judicata. Thus, it is not everything said by a Judge when giving judgment that constitutes a precedent. The only thing in a Judge's decision binding as a legal precedent 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 obiter dicta - Referred to State of Gujarat & Ors. vs. Utility Users’ Welfare Association & Ors. (2018) 6 SCC 21 and Jayant Verma & Ors. vs. Union of India (2018) 4 SCC 743.

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