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2023 (5) TMI 715 - SC - Indian LawsInterpretation of statute - meaning of principles of obiter dicta and ratio decidendi - HELD THAT:- The judgment in VIDYA DROLIA AND OTHERS VERSUS DURGA TRADING CORPORATION [2020 (12) TMI 1227 - SUPREME COURT] did not examine and decide the issue of effect of unstamped or under-stamped underlying contract on the arbitration agreement. As this issue and question has not been decided in Vidya Drolia, the decision is not a precedent on this question. Vidya Drolia did refer to the judgment in the case of GARWARE WALL ROPES LTD. VERSUS COASTAL MARINE CONSTRUCTIONS & ENGINEERING LTD. [2019 (4) TMI 716 - SUPREME COURT], but in a different context - reference to the decision in Garware Wall Ropes Limited (supra) was made to interpret the word ‘existence’, and whether an ‘invalid’ arbitration agreement, can be said to exist? This examination was to decide "who decides existence of an arbitration agreement” in the context of Sections 8 and 11 of the Arbitration and Conciliation Act, 1996. The distinction between obiter dicta and ratio decidendi in a judgment, as a proposition of law, has been examined by several judgments of this Court, but we would like to refer to two, namely, State of Gujarat & Ors. vs. Utility Users’ Welfare Association & Ors. [2018 (4) TMI 1945 - SUPREME COURT] and JAYANT VERMA AND ORS. VERSUS UNION OF INDIA AND ORS. [2018 (2) TMI 1326 - SUPREME COURT]. The first judgment in State of Gujarat applies, what is called, “the inversion test” to identify what is ratio decidendi in a judgment. To test whether a particular proposition of law is to be treated as the ratio decidendi of the case, the proposition is to be inversed, i.e. to remove from the text of the judgment as if it did not exist. If the conclusion of the case would still have been the same even without examining the proposition, then it cannot be regarded as the ratio decidendi of the case. In Jayant Verma, this Court has referred to an earlier decision of this Court in DALBIR SINGH VERSUS STATE OF PUNJAB [1979 (5) TMI 148 - SUPREME COURT] to state that it is not the findings of material facts, direct and inferential, but the statements of the principles of law applicable to the legal problems disclosed by the facts, which is the vital element in the decision and operates as a precedent. Even the conclusion does not operate as a precedent, albeit operates as res judicata. Thus, it is not everything said by a Judge when giving judgment that constitutes a precedent. The only thing in a Judge's decision binding as a legal precedent 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 obiter dicta. SLP dismissed.
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