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New Delhi: The observations of judges in their judgments are not binding precedents and courts should not place reliance on such decisions without analysing the factual situation arising in that particular case, the Supreme Court has held.

“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 (decision that is binding on courts of lower jurisdiction),” said a Bench of Justice Arijit Pasayat and Justice Lokeshwar Singh Panta.

Writing the judgment, Justice Pasayat said: “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 or what logically flows from the various observations made in the judgment. 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.”

The Bench said: “Courts should not place reliance on decisions without discussing as to how the factual situation fits in with the 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.”

The Bench said: “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.”

In the instant case, a Motor Accidents Claims Tribunal in Punjab awarded Rs. 50,000 to a woman and her children as compensation for the death of her husband Karan Singh in an accident in July 1984.


On appeal, the Punjab and Haryana High Court enhanced the compensation to Rs.1,25,000 to be paid to her with a direction to the insurance company to recover Rs.75,000 from the owner of the vehicle since the insured amount was only for Rs.50,000.

The High Court in giving such a direction relied on an earlier decision of the apex court. The present appeal is directed against the impugned judgment.

The apex court Bench, while allowing the appeal from the insurance company, limited its liability to Rs.50,000 and asked the vehicle owner to pay the balance of Rs.75,000 to the claimants within three months.

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