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

Meridian Life, a Mumbai insurer, loses a dispute with a policyholder before a District Court in Maharashtra. Its legal adviser says the High Court's earlier ruling on a similar point, given in Maharashtra, must be followed by that District Court. Which statement best describes the basis for this?

A High Court's decision binds the subordinate courts within its own territorial jurisdiction through the doctrine of precedent. It is only persuasive for other High Courts, and only Supreme Court rulings bind all courts across India.

  1. AThe High Court's decision is binding on subordinate courts within its territorial jurisdiction under the doctrine of precedentCorrect
  2. BThe High Court's decision is only persuasive, since District Courts are free to depart from it
  3. CThe High Court's decision binds only the parties to that earlier case
  4. DThe District Court must follow it only if the Supreme Court has also endorsed it
  5. The High Court's decision binds every court in India including other High Courts

Explanation

Under the doctrine of precedent (stare decisis), a High Court ruling binds courts subordinate to it within its state or territory. Other High Courts treat it as persuasive only, and only the Supreme Court's law binds all courts in India. Hence the option that extends it to every court is wrong.

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