Precedent: ratio decidendi, obiter dicta and binding force

1. Meaning

A precedent is a judicial decision that contains a principle, which later courts follow. Salmond: “a judicial precedent is a judicial decision which contains in itself a principle. The underlying principle which thus forms its authoritative element is termed the ratio decidendi.” The doctrine that courts must follow precedent is stare decisis, “to stand by things decided.” It rests on certainty, equality (like cases decided alike), and the saving of judicial time.

2. Kinds of precedent

• Declaratory and original. A declaratory precedent applies an existing rule; an original precedent creates and applies a new one. Only original precedents add to the law, but both are equally binding.
• Authoritative and persuasive. An authoritative precedent must be followed by the court whether or not it agrees: decisions of superior courts in the same hierarchy. A persuasive precedent may be followed if the court agrees: decisions of foreign courts, of other High Courts, the Privy Council after 1950, and obiter dicta.
• Absolutely and conditionally authoritative. An absolutely authoritative precedent must be followed even if wrong. A conditionally authoritative one may in certain circumstances be disregarded, for instance where it is plainly erroneous or per incuriam.

3. Stare decisis in England and in India

In England the House of Lords held itself bound by its own decisions in London Street Tramways v. London County Council (1898), but by the Practice Statement of 1966 it announced that it would depart from a previous decision when it appeared right to do so. The Court of Appeal is bound by its own decisions subject to the exceptions in Young v. Bristol Aeroplane Co. (1944).

In India, Article 141 provides that the law declared by the Supreme Court shall be binding on all courts within the territory of India. The rules that follow:

• The Supreme Court is not bound by its own decisions and may overrule them: Bengal Immunity Co. Ltd. v. State of Bihar, 1955 INSC 36, AIR 1955 SC 661, where the Court overruled its own earlier view on the State’s power to tax inter-State sales.
• A decision of a larger bench binds a smaller bench. A bench of equal strength that doubts an earlier decision must refer the question to a larger bench rather than overrule it: Union of India v. Raghubir Singh, 1989 INSC 192, (1989) 2 SCC 754, and Central Board of Dawoodi Bohra Community v. State of Maharashtra, 2004 INSC 720, (2005) 2 SCC 673, which restated the rules on bench strength.
• A High Court binds courts subordinate to it. It is not binding on other High Courts, whose decisions are persuasive.

4. Ratio decidendi and obiter dicta

The ratio decidendi (reason for the decision) is the principle of law on which the decision is based, the rule necessary to reach the result on the material facts. It alone binds. An obiter dictum (a thing said by the way) is a statement of law not necessary for the decision: a remark on a hypothetical case, or on a point the court did not have to decide. It is persuasive only, though an obiter of the Supreme Court is treated with great respect by lower courts.

How is the ratio found?

• Wambaugh’s reversal test. Frame the supposed proposition of law, then insert its opposite. If the court, accepting the opposite, would still have reached the same decision, the proposition was not the ratio. If the decision would have been different, it was.
• Goodhart’s material facts test. The ratio is found by taking the facts treated as material by the judge, and his decision on them. A later case with the same material facts must be decided the same way, unless there are further facts treated as material.
• Where a court gives two reasons for its decision, both are ratio. Where judges in a bench give different reasons, the ratio is the reason shared by the majority.

5. Circumstances destroying or weakening binding force

• Abrogated decisions. A decision is no longer binding when it is reversed on appeal, overruled by a higher court, or abrogated by statute.
• Decisions per incuriam: given in ignorance of a statute or of a binding decision. In State of U.P. v. Synthetics and Chemicals Ltd., 1991 INSC 159, (1991) 4 SCC 139, the Supreme Court explained that a decision rendered per incuriam, or one passed sub silentio on a point not argued or considered, does not have binding force under Article 141.
• Inconsistent decisions of courts of co-ordinate authority: the later court may choose which to follow.
• Precedents sub silentio or not fully argued.
• Decisions of equally divided courts, which settle the case but lay down no ratio.
• Erroneous decisions on a point of fundamental principle (Salmond), which a court of co-ordinate jurisdiction may refuse to follow.
• Affirmation or reversal on a different ground by an appellate court.
• Lapse of time and changed circumstances may weaken a precedent, though they may also strengthen it where people have arranged their affairs on it.

6. Prospective overruling

When a court overrules a precedent, the new rule ordinarily applies to past transactions too. In I.C. Golak Nath v. State of Punjab, 1967 INSC 45, AIR 1967 SC 1643, the Supreme Court adopted the American doctrine of prospective overruling: it held that Parliament could not amend fundamental rights, but applied the ruling only for the future, so as not to unsettle land reforms already made.

7. Merits and demerits of precedent

Merits: certainty, consistency, practical rules developed from real cases, flexibility through distinguishing, and a means of filling gaps in statute. Demerits: rigidity where a bad precedent binds, the bulk of case law, the difficulty of extracting the ratio, and retrospective operation. Comparison with legislation is in the previous note.

How this is examined

As a short note: “Ratio decidendi” (January 2026, Q.8(c); June 2025, Q.3(b); February 2025, Q.3(b)). As an essay: “What is precedent? Discuss kinds of precedents” (February 2025, Q.3(a)); “Explain the circumstances destroying the binding force of precedent” (June 2025, Q.3(a)). For the short note give the definition, the distinction from obiter, both tests and Article 141. For the essays use the lists above, with Bengal Immunity, Raghubir Singh and Synthetics and Chemicals.