How a High Court Decision Impacts All Authorities and Tribunals Across India: A Real-World Example

Dear All, Would like to share a recent judgment of the Bombay High Court.

Decision of Any High Court Binding on All Subordinate Authorities and Tribunals Throughout India Until a Contrary View is Taken by Another HC

In an old but useful judgment, the Bombay High Court in the case of CIT vs. Godavari Saraf held that until a contrary decision is given by any other competent High Court, which is binding on a Tribunal in the relevant State, it has to proceed on the footing that the law declared by the High Court, though of another State, is the final law of the land. This means that once a decision is given by any of the High Courts in the country and there is no contrary decision by any other High Court on the same issue, then such a decision of the High Court will be binding on all the administrative authorities and Tribunals throughout India.

I have personally seen some authorities at the department level arguing that a judgment of a High Court of another State is not binding on them. The following judgment makes it clear that when a view has been taken by a High Court of any State and there is no contrary view by any other High Court or Supreme Court on the same issue, then such an order of the High Court will be binding on all the subordinate authorities and Tribunals below the rank of High Court throughout the country.

In this case, a law was declared ultra vires by the Madras High Court, and no contrary view was there by any other High Court. The Tribunal proceeded on the basis of the judgment of the Madras High Court, and it was held by the Bombay High Court as follows:

“Until a contrary decision is given by any other competent High Court, which is binding on a Tribunal in the State of Bombay, it has to proceed on the footing that the law declared by the High Court, though of another State, is the final law of the land. When the Tribunal set aside the order of penalty, it did not go into the question of intra vires or ultra vires. It did not go into the question of the constitutionality of section 140A(3). That section was already declared ultra vires by a competent High Court in the country, and an authority like an Income-tax Tribunal acting anywhere in the country has to respect the law laid down by the High Court, though of a different State, so long as there is no contrary decision of any other High Court on that question. It is admitted before us that at the time when the Tribunal decided the question, no other High Court in the country had taken a contrary view on the question of the constitutionality of section 140A(3). That being the position, it is not possible for us to take the view that the Tribunal in Bombay, when it set aside the order of penalty, went into the question of the constitutionality of that section and gave a finding that it is ultra vires following the decision of the Madras High Court. What the Tribunal really did was that in view of the law pronounced by the Madras High Court, it proceeded on the footing that section 140A(3) was non-existent, and so the order of penalty passed thereunder cannot be sustained.”

Regards

In an article titled Judicial Precedents – Their Binding Force and Their Review by Mr. Subash Agarwal, Advocate, available in the link <link outdated-removed>, the issue of the binding nature of judicial precedents has been elaborately discussed. Paragraph 5 of this article deals with the issue posted by you in this thread. The following is an extract of paragraph 5 of the article referred to. I trust that this article will be of interest to you.

"The Court held that the observations in Jayantilal's case leave no scope for doubt that the court merely observed what according to it is desirable and did not intend to lay down any principle of law making the decisions of other High Courts binding precedents for another Court. Any other construction of these observations in the above cases will lead to an anomalous situation as it will have the effect of giving the decisions of any other High Court the status of law binding on all Courts or Tribunals throughout the country—a status which the Constitution by virtue of article 141, has conferred only on the judgements of the Supreme Court. If for the sake of uniformity, the decisions of any High Court are to be accepted as a binding precedent by all courts including other High Courts and Tribunals in the country, the very distinction between the precedent value of Supreme Court decisions and the High Court decisions will be obliterated. Such a situation is neither contemplated by the constitution nor is it in consonance with the principles laid down by the Supreme Court and the doctrine of stare decisis."

In Commissioner of Income Tax vs. Thana Electricity Supply Co, the Bombay High Court has summarized the binding nature of precedents in the following words. The following extract from that judgment touches the issue in this thread, and I feel that this extract will be of interest and use to all.

"21. From the foregoing discussion, the following propositions emerge:

(a) The law declared by the Supreme Court being binding on all courts in India, the decisions of the Supreme Court are binding on all courts, except, however, the Supreme Court itself which is free to review the same and depart from its earlier opinion if the situation so warrants. What is binding is, of course, the ratio of the decision and not every expression found therein.

(b) The decisions of the High Court are binding on the subordinate courts and authorities or Tribunals under its superintendence throughout the territories in relation to which it exercises jurisdiction. It does not extend beyond its territorial jurisdiction.

(c) The position regarding the binding nature of the decisions of a High Court on different Benches of the same court may be summed up as follows:

(i) A single judge of a High Court is bound by the decision of another single judge or a Division Bench of the same High Court. It would be judicial impropriety to ignore that decision. Judicial comity demands that a binding decision to which his attention had been drawn should neither be ignored nor overlooked. If he does not find himself in agreement with the same, the proper procedure is to refer the binding decision and direct the papers to be placed before the Chief Justice to enable him to constitute a larger Bench to examine the question (see Food Corporation of India v. Yadav Engineer and Contractor).

(ii) A Division Bench of a High Court should follow the decision of another Division Bench of equal strength or a Full Bench of the same High Court. If one Division Bench differs from another Division Bench of the same High Court, it should refer the case to a larger Bench.

(iii) Where there are conflicting decisions of courts of co-ordinate jurisdiction, the later decision is to be preferred if reached after full consideration of the earlier decisions.

(d) [U]The decision of one High Court is neither a binding precedent for another High Court nor for courts or Tribunals outside its own territorial jurisdiction. It is well settled that the decision of a High Court will have the force of binding precedent only in the State or territories on which the court has jurisdiction. In other States or outside the territorial jurisdiction of that High Court, it may, at best, have only persuasive effect. By no amount of stretching of the doctrine of stare decisis, can judgments of one High Court be given the status of a binding precedent so far as other High Courts or Tribunals within their territorial jurisdiction are concerned. Any such attempt will go counter to the very doctrine of stare decisis and also the various decisions of the Supreme Court which have interpreted the scope and ambit thereof. The fact that there is only one decision of any one High Court on a particular point or that a number of different High Courts have taken identical views in that regard is [\/U]not at all relevant for that purpose. Whatever may be the conclusion, the decisions cannot have the force of binding precedent on other High Courts or on any subordinate courts or Tribunals within their jurisdiction. That status is reserved only for the decisions of the Supreme Court which are binding on all courts in the country by virtue of article 141 of the Constitution.

Regards

Thank you for your valuable input. The issue is very critical and complicated. I will get back to you on this later. The question is, can a central government organization like Income Tax, EPFO, etc., have a different set of rules/guidelines as per the judgment given by the High Court of the respective states?

Regards,
Kamal

You may have noticed in this forum certain postings that point out the different views taken by various High Courts regarding the contribution for EPF on minimum wages. In cases where the total amount of minimum wages paid is equal to or greater than the minimum wages notified, some employers are reducing the basic pay amount to lower their liability under the EPF Act. It is imperative for the EPF organization to seek a clear ruling on this matter from the Honorable Supreme Court. I believe that the EPFO has taken steps to approach the Honorable Supreme Court, although I am not entirely certain. Until then, the issue will remain uncertain. If conflicting views on the same or similar matters exist among different High Courts, the relevant department must take the matter to the Supreme Court to obtain a definitive verdict.

With regards,

I found a Supreme Court judgment stating that the High Court of another state is binding only when there is no judgment from that state. This aligns with what the Saraf case also indicates.