SCI (2024.11.05) in Property Owners Association & Ors. Vs. State of Maharashtra & Ors. [2024 INSC 835, Civil Appeal No. 1012 of 2002], held that;
A simple test that has been invoked by this Court to determine whether a particular proposition of law is to be treated as the ratio decidendi of a case is the “inversion test” formulated by Professor Eugene Wambaugh.113 The test mandates that to determine whether a particular proposition of law is part of the ratio decidendi of the case, the proposition is to be inversed. This means that either that proposition is hypothetically removed from the judgement or it is assumed that the proposition was decided in reverse. After such removal or reversal, if the decision of the Court on that issue before it would remain the same then the observations cannot be regarded as the ratio decidendi of the case.114
Excerpts of the order;
d. The single-line observation in Mafatlal is obiter dicta
# 109. Another point of contention between the parties has been the precedential value of the single-line observation of a nine-judge bench of this Court in Mafatlal that the phrase ‘material resources of the community’ under Article 39(b) includes privately owned property. As noted above, the underlying seven judge referral order notes that the attention of this Court was drawn to this observation in Mafatlal. It was in this context that the seven-judge bench order expressed doubts about the view and referred the question to this bench of nine
judges.
# 110. The counsel for the appellants contend that the observations in Mafatlal on this point constitute obiter dicta and do not bind this bench of coequal strength. On the other hand, the counsel for the respondents have advanced the view that the issue arose directly in the case and the observations are binding on this bench.
# 111. Not every observation in a judgement of this Court is binding as precedent. Only the ratio decidendi or the propositions of law that were necessary to decide on the issues between the parties are binding.109 Observations by the judge, even determinative statements of law, which are not part of her reasoning on a question or issue before the court, are termed obiter dicta. Such observations do not bind the Court. More simply, a case is only an authority for what it actually decides.110
# 112. A Constitution Bench of this Court (speaking through Chief Justice Khare) in Islamic Academy of Education v. State of Karnataka111 pithily observed:
“2. […] The ratio decidendi of a judgment has to be found out only on reading the entire judgment. In fact, the ratio of the judgment is what is set out in the judgment itself. The answer to the question would necessarily have to be read in the context of what is set out in the judgment and not in isolation. In case of any doubt as regards any observations, reasons and principles, the other part of the judgment has to be looked into. By reading a line here and there from the judgment, one cannot find out thentire ratio decidendi of the judgment. […]”
# 113. In Secunderabad Club v. CIT,112 this Court, speaking through one of us (Justice BV Nagarathna), had occasion to delineate how to cull out the ratio decidendi of a judgement and identify the principles which have precedential value. This Court observed:
“14. […] According to the well-settled theory of precedents, every decision contains three basic ingredients :
(i) findings of material facts, direct and inferential. An inferential finding of fact 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 (i) and (ii) above. For the purposes of the parties themselves and their privies, ingredient (iii) is the material element in the decision, for, it determines finally their rights and liabilities in relation to the subject-matter of the action. It is the judgment that estops the parties from reopening the dispute. However, for the purpose of the doctrine of precedent, ingredient (ii) is the vital element in the decision. This is the ratio decidendi. It is not everything said by a judge when 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.” (emphasis supplied)
# 114. Further, a simple test that has been invoked by this Court to determine whether a particular proposition of law is to be treated as the ratio decidendi of a case is the “inversion test” formulated by Professor Eugene Wambaugh.113 The test mandates that to determine whether a particular proposition of law is part of the ratio decidendi of the case, the proposition is to be inversed. This means that either that proposition is hypothetically removed from the judgement or it is assumed that the proposition was decided in reverse. After such removal or reversal, if the decision of the Court on that issue before it would remain the same then the observations cannot be regarded as the ratio decidendi of the case.114
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109 HALSBURY, 2nd Edn, Vol 19, para 556.
110 Secundrabad Club v. CIT, 2023 SCC OnLine SC 1004 [13]; 2023 INSC 736.
111 (2003) 6 SCC 697 [2]; 2003 INSC 391.
112 2023 SCC OnLine SC 1004; 2023 INSC 736.
113 State of Gujarat v. Utility Users' Welfare Assn., (2018) 6 SCC 21 [113-114]; 2018 INSC 329.
114 Eugene Wambaugh, The Study of Cases (Boston: Little, Brown & Co., 1892)
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