The Supreme Court of India emphasized the need to clarify whether judgments are intended to establish binding precedents under Article 141 or resolve specific disputes, urging for cautious and explicit articulation of intent in its rulings.

The Supreme Court of India has emphasized the need for its judgments to clearly specify whether they are intended to set binding precedents under Article 141 of the Constitution or are limited to resolving specific disputes between parties. This move is aimed at addressing the confusion faced by High Courts and Trial Courts in distinguishing between decisions meant for dispute resolution and those establishing authoritative legal principles.
Key Observations
- The Court highlighted its dual role in the legal framework:
- Decision-Making: Disposing of appeals under Article 136 to resolve disputes between parties.
- Precedent-Setting: Establishing binding legal principles under Article 141.
- A bench comprising Justices PS Narasimha and Pankaj Mithal noted:
“As an institution, our Supreme Court performs the twin functions of decision-making and precedent-making. Every judgment or order made in disposing of appeals is not intended to be a binding precedent under Article 141.” - The Court acknowledged the challenges faced by subordinate courts and stated:
“We are aware of the difficulties that High Courts and subordinate courts face in determining whether a judgment is in the process of decision-making or precedent-making, especially when even an obiter dictum of this Court is binding.” - It further stressed the importance of explicitly stating whether a decision is:
- Solely intended to resolve a specific dispute and provide finality.
- Declaring law under Article 141, thereby binding on all subordinate courts.
Case Background
- The observations were made while hearing a case concerning Section 18 of the MSMED Act, 2006, which provides a framework for resolving disputes involving Micro, Small, and Medium Enterprises (MSMEs).
- The Appellant argued that unregistered MSMEs cannot avail dispute resolution under Section 18, relying on precedents that purportedly barred such claims.
- The Court found that the cited precedents dealt with different issues and did not establish binding authority for the case at hand.
Clarification on Precedents
- The Court observed that the precedents cited by the Appellant were intended to resolve specific disputes and were not meant to establish universally applicable legal principles.
- It referred the matter to a larger bench, noting that Section 18 of the MSMED Act raised issues requiring broader interpretation.
- The judgment stated:
“In the process of decision-making, this Court takes care to indicate the instances where the decision of the Supreme Court is not to be treated as precedent. It is therefore necessary to state whether a particular decision is to resolve the dispute between the parties and provide finality or whether the judgment declares the law under Article 141.”
Significance of the Judgment
- This clarification seeks to ensure that lower courts and litigants do not misapply judgments that are fact-specific or context-dependent.
- By explicitly stating the intent of its rulings, the Supreme Court aims to prevent confusion and ensure uniform application of its precedents.
- It also addresses concerns about obiter dicta being treated as binding when not intended to be so.
Case: NBCC (India) Ltd. v. The State of West Bengal & Ors.