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IAI Actuarial Core Principles · Business Management · Sources of Indian law and valid contracts

In a judgment, the Supreme Court of India decides a point of contract law and also makes a passing remark, unrelated to the facts, on how a different statute might apply to insurers. A High Court later considers both points. Which treatment is correct under Indian precedent principles?

The ratio decidendi of a Supreme Court judgment binds the High Court, whereas an unrelated passing remark, obiter dictum, is only persuasive. The High Court has no discretion to ignore the binding ratio, since the Supreme Court's law binds all courts in India.

  1. AThe decision on the point in issue (ratio decidendi) binds the High Court, while the unrelated remark (obiter dictum) is only persuasiveCorrect
  2. BBoth the ratio and the obiter bind the High Court equally
  3. CNeither binds the High Court because it is a separate constitutional court
  4. DOnly the obiter binds, as it shows wider legal thinking
  5. The ratio binds only if the High Court agrees with its reasoning

Explanation

The ratio decidendi, the legal principle necessary to the decision, binds lower courts, including High Courts when it comes from the Supreme Court. Obiter dicta are incidental remarks with persuasive weight only. High Courts are bound by Supreme Court law and cannot choose to disregard the ratio.

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