Law of Precedent and Applicability of Inversion Test
According to some, the roots of the doctrine of precedent can be traced back to the text of Mahabharata which mentions, ‘that path is the right one which has been followed by virtuous men’ although it largely evolved in the Anglo Saxon world in the absence of codified laws and statutes. During the British Raj, Indian laws were mostly based on the colonial Common law, therefore the doctrine of precedent was adopted in India as embodied in Section 212 of the Government of India Act, 1935, that made the law declared by the Federal Court or the judgment of Privy Council binding on all the courts in British India. Upon independence, Article 141 of the Constitution of India made it binding on all the courts in the territory of India to follow the law declared by the Hon’ble Supreme Court of India. Despite its accepted status as well as its tremendous value, to tease out precedent and its implications do cause a difference in opinion. In order for anything to enjoy the privilege of being a binding precedent, what the court actually ruled needs to be crisp, precise, and unequivocally clear. This thus raises the question of teasing out what exactly the court ruled and the answer can be found in the famous Wambaugh or the inversion test- which comes with its own controversies.
The judicial utterings become important to decipher what the court’s ruling is. The ‘law declared’ by the Supreme Court of India can be wide enough to include the interpretation of the law to which material facts are applied. In other words, any proposition of law or principle of law which can be derived after the conclusion of the substantial questions that were raised in that particular judgment becomes the ratio. However, it is certainly not necessary for every single judgment to declare novel ideas of law. It is the court that takes the reference of the judgments of the superior court or the previous decisions being referred to, in order for it to constitute as precedent under Article 141. The observations in judgment constituting obiter dictum may not have a binding effect but can be of considerable persuasive importance in arriving at the conclusion for the question before the court, thus, the law which will be binding under Article 141. The language of Article 141 is clear to include the Supreme Court itself to be obliged to follow its earlier decisions if it is a precedent under Article 141.
However, the Apex Court can depart from its earlier decisions if it is reflecting any error and baneful effect on public interest. This was made clear by the Supreme Court that the decisions made by it are final and cannot be ignored, but for the interest of public good it would be open for them to review their earlier decisions which have a significant impact on the fundamental rights of citizens.
The jurist Gray has defined precedent as follows: “a precedent covers everything said or done, which furnishes a rule for subsequent practice.” In other words, it is an authority or guidance of the earlier decisions on a set pattern of circumstances that ruled out the new principle of law for future references in cases with similar circumstances. The observations given in the judgment which may be otherwise obiter becomes ratio decidendi for the case before the Court having identical or similar facts or similar questions involved in it. This sieving of the relevant reasoning thus assists in concluding using factual scenarios. In such cases, the court is obliged to follow the observations as precedent under Article 141, however, the Court has to carefully ascertain the principle law involved. In other words, only those statements of the earlier decisions are binding which constitute the ratio decidendi and not the other statements that are not necessary or authoritative for the case at hand.
Application of the Inversion Test
Every judgment referred by the Court to support its decision is precedent under Article 141. It is upon the subordinate courts to determine the ‘law declared’ from the plethora of observations in judgments by the Apex Court. To determine the same, the “inversion test” is often used- propounded by Professor Eugene Wambaugh. It is also known as the ‘Reversal test’ or the ‘Wambaugh test’.
The inversion test is used to identify the ratio decidendi i.e. the binding aspect of the judgment. According to Prof. Wambaugh “without the ratio decidendi the case must have been decided otherwise.”
In order to apply the inversion test, he states that “let the judge first frame carefully the supposed proposition of law. Then insert in the proposition a word reversing its meaning. Then inquire whether, if the court had conceived this new proposition to be good, and had it in mind, the decision could have been the same. If yes, then, the case is not a precedent for that proposition, but if the answer is negative then the case is a precedent for the original proposition.”
This has been recently defined by the Supreme Court of India in State of Gujarat and others v. Utility Users Welfare Associationwherein the issue came before the bench whether the decision of the coordinate bench in the other matter related to the same issue is binding upon them. The Court used the inversion test upon the decision of coordinate bench and it was observed that the decision of the coordinate bench fell short of the inversion test, thus the observation given by the coordinate bench was not considered to be precedent and hence not binding upon the bench in Utility Users Welfare Association.
The Supreme Court of India has employed the inversion test in order to check whether the proposition framed in the case at hand was actually the ratio decidendi of the earlier decision as opposed to obiter. In the Puttuswamy Judgment, the Court ascertained the ratio decidendi in M. P. Sharma v. Satish Chandrawith respect to the “right to privacy” wherein the right to privacy was touched by the court while dealing with the scope and applicability of the right under Article 20(3) of the Constitution of India. The Court in Puttuswamy opined that in the M.P. Sharma case, the right to privacy was only used once in the entire judgment and was of corollary importance and that too in the context of search and seizure without constitutional safeguards. It was thus ruled that the comments on the right to privacy did not constitute the ratio of the case.
This inversion test was again used by the Supreme Court of India in Nevada Properties Private Ltd. v. State of Maharashtra to determine whether the proposition that “immovable property would fall under the expression “any property” under section 102 of the Cr.P.C.” was the ratio decidendi or obiter dicta in State of Maharashtra v. Tapas D. Neogy. Here, the court ruled that the observations vis-à-vis “any property” , was limited to the question raised with respect to bank accounts. Thus, the said proposition was not the ratio decidendi of State of Maharashtra v. Tapas D. Neogy.
When There are More Than One Reasons by Different Judges of the Same Bench
The decision of the Apex Court is final and has wide reaching consequences, therefore, the court should exercise utmost caution in expounding the ratio of the judgment, especially when there are multiple reasons by different judges of the same bench. The judgment is binding not because of the concurring decision but because of the ratio decidendi laid down therein. Multiple reasons are the result of diversity in the observations of different judges who give their separate independent views which results in the binding composite judgment. In such cases, all the reasons given by judges separately are binding. As stated by the Privy Council in Commissioners of Taxation (NSW) v. Palmer “it is impossible to treat a proposition which a court declares to be a distinct and sufficient ground for its decision as a mere dictum, simply because there is another ground stated upon which, standing alone, the case might have been determined.” Refining the practice, London Jewellers Ltd v. Attenborough, while referring to the decision Folkes v. R.stated that:
“In that case two reasons were given by all the members of the Court of Appeal for their decision and we are not entitled to pick out the first reason as the ratio decidendi and neglect the second, or to pick out the second reason as the ratio decidendi and neglect the first; we must take both as forming the ground of the judgment.”
Similarly in McBride v. Monzie Pty Ltd, the Court stated that “If a judge gives two or more alternative reasons for reaching his (or her) decision each reason is part of the ratio.” Therefore, if the judge gave two reasons for the final decision, none of the grounds is considered to be dictum, rather all the grounds if relied on be considered as the ratio of the judgment.
The practice of precedent promotes clarity, consistency and certainty in the judicial system. Legal reasoning requires a multiplicity of views and diversity of principles to come at decisions. Recently, in the Marital Rape Case, which is being heard before the Delhi High Court, the application of inversion test was examined in Independent Thoughtin order to ascertain whether it could be considered as a binding authority for exception 2 to Section 375 IPC. It is clear from the abovementioned discussion that a decision of the superior courts is binding and will be considered as an authority for what it actually decides. The test of whether a ruling is precedent and of its precedential value is one that needs to consider all the factors mentioned above. Most importantly the two primary functions that the inversion test assists in answering the ratio of the case- which is binding and the controversies around obiter. The inversion test might appear like a clean-cut, well-manicured answer to the question of what constitutes ration- in reality however the answer is way more complicated and bound to include nuanced undercurrents of judicial reasoning.
With judgments that have far reaching consequences and serve as precedent for such a diverse country, it is crucial that we appreciate the importance of reasoning in our judicial making as well as within the adversarial context. The gist of interpretation demands that there is clarity and certainty- two hallmark requirements of a common law system. While inversion test offers some help, it largely does not correspond to the needs of a complex and complicated legal system- only confounded further by diversity of opinions and reasoning. As NL Rajah, Senior Advocate had opined- the inversion test has well and truly crept into the Indian Legal system– with all its adequacies, uses, flaws and inadequacies. It is now for us to see what direction the test takes and to churn its usage so that a concept propounded decades (centuries) ago is put to churning of the diverse legal landscape that we have. The Bar as well as the Bench will certainly take centre stage in seeing this happen.
 Justice Dr. B S Chauhan, Former Judge, Supreme Court of India, Law of Precedent, 14 September 2018, available athttps://nja.gov.in/Concluded_Programmes/2018-19/P-1110_PPTs/9.Law%20of%20Precedent.pdf.
 Section 212, Government of India Act, 1935, available at https://www.legislation.gov.uk/ukpga/Geo5and1Edw8/26/2/section/212/enacted.
 The Constitution of India, Art. 141.
 Fida Hussain v. Moradabad Dev. Authority, (2011) 12 SCC 615.
 Peerless General Finance and Investment Company Ltd. v. Commissioner of Income Tax, 2019 SCC OnLine SC 851.
 Director of Settlement, A.P. and Others v. M. R. Apparao and another, (2002) 4 SCC 638.
 The Constitution of India, Art. 141, “Law declared by Supreme Court to be binding on all courts”.
 Bengal Immunity Co. Ltd. v. the state of Bihar, AIR 1955 SC 661: (1955) 2 SCR 603.
 Sajjan Singh v. State of Rajasthan, AIR 1965 SC 845.
 John Chipman Gray, The nature and sources of the law, New York: Columbia University Press, 1909.
 Commissioner of Income Tax- vis- M’s Sun Engineering Works Private Limited, AIR 1993 SC 43.
 State of Orissa v. Sudhansu Sekhar Mishra, AIR 1968 SC 647.
 Professor Eugene Wambaugh propounded the Inversion test in his book “The Study of Cases: A course of instruction” 1892.
 State of Gujarat and others v. Utility Users Welfare Association, (2018) 6 SCC 21.
 Justice K.S. Puttuswamy v. Union of India, (2017) 10 SCC 1.
 M. P. Sharma v. Satish Chandra, AIR 1954 SC 300.
 Nevada Properties Private Ltd. v. State of Maharashtra, (2019) 20 SCC 119.
 State of Maharashtra v. Tapas D. Neogy, (1999) 7 SCC 685.
 B. Sharma Rao v. Union Territory of Pondicherry, (1967) 2 SCR 650.
 Commissioners of Taxation (NSW) v. Palmer,  AC 179 :  UKPC 9.
 London Jewellers Ltd v. Attenborough, (1934) 2 KB 206 (CA).
 Folkes v. R, (1923) 1 KB 282 (CA).
 McBride v. Monzie Pty Ltd,  FCA 1947.
 Cheater v. Cater, (1918) 1 KB 247 (CA).
 Union of India v. Raghubir Singh, (AIR 1989 SC 1933).
 Independent Thought v. Union of India, (2017) 10 SCC 800.
NL Rajah, The creeping presence of the Inversion Test, Bar and Bench, available at https://www.barandbench.com/columns/the-creeping-presence-of-the-inversion-test.
This blog has been authored by Pallavi Pratap, Advocate on Record, Supreme Court of India. This blog is a part of RSRR’s Excerpts from expert series, initiated to bring forth discussion by experts on contemporary legal issues.