Law of binding precedents - I

In view of the hierarchical character of the judicial system in Pakistan, it is of paramount importance that the law declared by courts should be certain, clear and consistent. Inconsistencies create distrust in the administration of justice. It is an established fact that most decisions of the courts are of significance, not merely because they constitute adjudication on rights of parties and resolve disputes between them, but a fortiori in doing so they embody a declaration of law, operating as a binding principle (stare decisis) in future cases. In this latter aspect lies their particular value in developing the jurisprudence of law.
In recent days, the adjudication in case of leading political figures under Article 184(3) of the Constitution of Islamic Republic of Pakistan has elicited much debate in the media but unfortunately non-professional conduct by certain so-called, all-knowing anchors has created a lot of confusion. It would have been better that such programmes were hosted by trained and experienced lawyers and/or retired judges. In future, media may consider this suggestion.
This detailed paper does not offer detailed comments on the three judgements in the Panama case (Imran Ahmad Khan Niazi v Mian Muhammad Nawaz Sharif & 9 Others PLD 2017 SC 265, Imran Ahmad Khan Niazi v Mian Muhammad Nawaz Sharif & 9 Others PLD 2017 SC 692 and order in CRP 297 to 299 of 2017, CRP 303 of 2017, 308 to 3012 of 2017) and on constitutional petitions against Imran Khan and Jahangir Khan Tareen. We have already written extensively in these columns on all aspects of these cases and issues involved therein. Our viewpoint [Perjury and disqualification, Business Recorder, November 24, 2017, SC: jurisdiction & justice, Business Recorder, August 25 & 27, 2017, Panama case judgement: Dismissal of review petitions, Business Recorder, September 16, 2017] that any wrong declaration on oath and/or concealment of assets/liabilities, intentional or unintentional, attracts penal provisions, was vindicated in the judgements of the Apex Court.
This paper is written to educate the people about the law of binding precedents which is extremely important to analyse the judgements dealing with allegations of perjury, tax evasion and money laundering etc against elected representatives/public officeholders. The politicians criticising the judgements must read the relevant election laws and binding case law that clearly provide for direct disqualification by Supreme Court for perjury. In case of allegation of corruption, matter in the case of Nawaz Sharif and family is rightly referred to the National Accountability Bureau. The argument that elected members could not be disqualified under Article 62(1)(f) of the Constitution without recording evidence, in a proceeding under Article 184(3) of the Constitution, is against the settled principle (stare decisis). Our Supreme Court in the case of Syed Mahmood Akhtar Naqvi v. Federation of Pakistan (2012 PLD SC 1089) while exercising jurisdiction under Article 184(3) of the Constitution, disqualified a person for making a false declaration on solemn affirmation in his nomination papers. Therefore, under the law of binding precedent, this will be applicable wherever there is any false declaration on oath by any public officeholder.
In terms of settled law [Muhammad Jamil v. Munawar Khan and others PLD 2006 SC 24), Khaleefa Muhammad Munawar Butt and another v. Hafiz Muhammad Jamil Nasir and others 2008 SCMR 504) and Muhammad Ahmad Chatta v. Iftikhar Ahmad Cheema and others 2016 SCMR 763)], disqualification will be made even if a delinquent person offers a perfect, legally acceptable explanation for the source of funds for acquiring the undeclared assets. He/she cannot escape the penalty of rejection of his nomination papers or annulment of his/her election. Such is the law of the land and as has been repeatedly and consistently interpreted by the Supreme Court [see latest judgements, namely, Imran Ahmad Khan Niazi v Mian Muhammad Nawaz Sharif & 9 Others PLD 2017 SC 265, Iman Ahmad Khan Niazi v Mian Muhammad Nawaz Sharif & 9 Others PLD 2017 SC 692 and Constitutional Petition No. 36 of 2016 re Muhammad Hanif Abbasi v Jahangir Khan Tareen and others].
The stare decisis rule is based on a sound legal principle that justice and certainty require that established legal principles, under which rights may accrue, be recognised and followed. A number of misconceptions and misgivings prevail in Pakistan about the doctrine of binding precedents [stare decisis] which need to be removed and dispelled. Usually it is not recognised that the rule is not merely a judicial theory but is regulated by the command of Constitution and statutory provisions of the Law Reports Act, 1875.
In Constitution of Pakistan, the doctrine of stare decisis is reflected in Article 189 and 201, which reads as under:
"189. Any decision of the Supreme Court shall, to the extent that it decides a question of law or is based upon or enunciates a principle of law, be binding on all other courts in Pakistan."
"201. Subject to Article 189, any decision of a High Court shall, to the extent that it decides a question of law or is based upon or enunciates a principle of law, be binding on all courts subordinate to it."
Judgments of the Federal Shariat Court, a Service Tribunal, the Income Tax Appellate Tribunal and the National Industrial Relations Commission have the force of precedent which can be inferred from Explanation to section 5 of the Law Reports Act, 1875 which reads as follows:-
"Explanation: For the purpose of this Act the expression, Court or Tribunal includes the Federal Shariat Court, a Service Tribunal, the Income Tax Appellate Tribunal and the National Industrial Relations Commission."
As evident from above, the doctrine of stare decisis has constitutional and statutory command and thus needs to be implemented in letter and spirit. Any violation of this rule will amount to violation of the Constitution and law of the land.
In the light of above explicit provisions, it can be safely concluded that an important element of our legal system is that the reasoning and decisions found in preceding cases are not simply considered with respect or as good guide, but are BINDING. This is known as the principle of stare rationibus decidendis; popularly referred to as stare decisis. It translates simply as 'let the decision stand'. Stare rationibus decidendis is the more accurate statement because, it is the reasoning (rationibus) that is the vital binding element in judicial precedent. However, nobody refers to it this way [Learning Legal Rules by James A. Holding & Julian S. Webb, Blackstone Press Limited, U.K. Page 119].
Rulings of Supreme Court
There is a common misconception that only ratio decidendi is applicable and an obiter dictum is to be ignored while applying judgements of the apex court. The legal sweep of Article 189 of the Constitution of Pakistan takes the situation out of the usual circular limits of ratio decidendi, obiter dictum and casual observations. Once the declaration of law is succinct and clear, any attempt to distinguish decisions on facts or to say factual position is almost impermissible. In a recent case reported as Shahid Pervaiz v Ejaz Ahmad and others 2017 SCMR 206, the Supreme Court of Pakistan held as under:
"A 14-member bench of this court in the case of Justice Khurshid Anwar Bhinder v. Federation of Pakistan (PLD 2010 SC 483), has concluded that where the Supreme Court deliberately and with the intention of settling the law, pronounces upon a question of law, such pronouncement is the law declared by the Supreme Court within the meaning of Article 189 and is binding on all the Courts of Pakistan. It cannot be treated as mere obiter dictum. Even obiter dictum of the Supreme Court, due to high place which the Court holds in the hierarchy in the country enjoy a highly respected position as if it contains a definite expression of the Court's view on a legal principle, or the meaning of law".
Declaration of law by the apex court has a binding force and in that regard the position has a special characteristic as distinct from the strength or weakness of a judicial precedent under the theory of precedents. It is not permissible to bypass decisions of the apex court while observing that the Court was dealing with almost the other side of the coin of a two-sided question [CIT v Autokast Ltd. (1997) 90 Taxman 103 (Ker.)].
Even in respect of a per incuriam judgement of Supreme Court, it is for the apex court to declare it so; not for any lower court. A decision is given per incuriam when Court has acted in ignorance of a previous decision of its own or of a Court of co-ordinate jurisdiction which covered the case before it in which case it must decide, which case to follow or when it has acted in ignorance of decisions of higher courts, which are binding; or when the decision is given in ignorance of the term of a statute or rule having statutory force. A decision should not be treated as given per incuriam, however, simply because of a deficiency of parties, or because the Court had not the benefit of the best argument and, as a general rule, the only cases in which decisions should be held to be given per incuriam are those given in ignorance of some inconsistent statute or binding authority.
Principle of stare decisis has been explained authoritatively by the apex court of Pakistan in the following case:
1. PLD 1987 Supreme Court 145:
"There is a distinction in what a case decides generally and as against all the world from what it decides between the parties themselves. Salmond "On Jurisprudence", Twelfth Edition, at page 175, brings out this distinction in these words:-
"What it decides generally is the ratio decidendi or rule of law for which it is authority; what it decides between the parties includes far more than just this. Since it would be obviously impracticable if there were no end to litigation and if either party to a legal dispute were at liberty to reopen the dispute at any time, the law provides that once a case has been heard and all appeals have been taken (or the time for appeal has gone by) all parties to the dispute and their successors are bound by the Court's findings on the issues raised between them and on questions of fact and law necessary to the decision of such issues. According to this principle, these matters are now res judicata between them and cannot be the subject of further dispute. But the Court's findings will not be conclusive except as between the same parties... Third parties not involved in the original case, however, will not be bound, nor will either of the original parties be bound in a subsequent dispute with a third party."
Elaborating further, it is the policy of the Court to stand by the ratio decidendi, that is, the rule of law and not to disturb a settled point. This policy of the Courts is conveniently termed as the doctrine of rule of stare decisis. The rationale behind this policy is the need to promote certainty, stability, and predictability of law. This, however, does not mean that the rule is inflexible. In this context, it will be advantageous to sum up what Hamoodur Rahman, C.J., in the case reported as Asma Jilani v Government of the Punjab PLD 1972 SC 139, said:-
"I am not unmindful of the importance of this doctrine but in spite of a Judge's fondness for the written word and his normal inclination to adhere to prior precedents I cannot fail to recognize that it is equally important to remember that there is need for flexibility in the application of this rule, for law cannot stand still nor can we become mere slaves of precedents....
It will thus be seen that the rule of stare decisis does not apply with the same strictness in criminal, fiscal and constitutional matters where the liberty of the subject is involved or some other grave injustice is likely to occur by strict adherence to the rule."
Even the House of Lords has modified its present practice of giving strict adherence to its own precedents. In this connection, I would here refer to a note published at page 77 in the case reported as Lloyds Bank Ltd. v. Dawson and others (1966) 3 All E R 77, which reads:-
"Before judgments were given in the House of Lords on July 26, 1966, LORD GARDINER, L.C., made the following statement on behalf of himself and the Lords of Appeal in Ordinary:-
Their Lordships regard the use of precedent as an indispensable foundation upon which to decide what is the law and its application to individual cases. It provides at least some degree of certainty upon which individuals can rely in the conduct of their affairs, as well as a basis for orderly development of legal rules.
Their Lordships nevertheless recognize that too rigid adherence to precedent may lead to injustice in a particular case and also unduly restrict the proper development of the law. They propose, therefore, to modify their present practice and, while treating former decisions of this House as normally binding, to depart from a previous decision when it appears right to do so.
In this connexion, they will bear in mind the danger of disturbing retrospectively the basis on which contracts, settlements of property and fiscal arrangements have been entered into and also the especial need for certainty as to the criminal law.
This announcement is not intended to affect the use of precedent elsewhere than in this House."
There is, therefore, exception to the rigid adherence to this rule, and I am of the view that this Court being the Court of ultimate jurisdiction has power to review its own judgments. This doctrine should not be confused with res judicata which rests on a different principle.
In American Jurisprudence 2nd, Volume 20, at page 521, the distinction between these two concepts is brought out in these words:-
"While res judicata applies only when the same parties, or their privies, are involved in the subsequent case as were involved in the prior case, the applicability of stare decisis is not affected by the fact that different parties are involved in the case where the precedent was established. Res judicata applies to decisions of both law and fact. Stare decisis, on the other hand, is applicable only on questions of law. Res judicata is a rule of law that must be applied even where the decision binding as res judicata was erroneous, whereas stare decisis is a judicial policy in which a certain flexibility is inherent, and which, therefore, does not prevent a Court from overruling its prior decision if, upon re-examination thereof, it is convinced that the decision was erroneous. It has also been pointed out, as a difference between res judicata and stare decisis, that stare decisis is based upon the legal principle or rule involved in a prior case and not upon the adjudication which resulted therefrom, whereas res judicata is based upon the adjudication."
Thus, in a given case, it is the thing the Court adjudges which constitutes estoppel under the doctrine of res judicata, but the reasons which the Court may give for the decision are not in themselves to be invoked as the estoppel under the doctrine of stare decisis. See Yazoo & M. V. R. Co. v. Adams 180 US 1, 45 L ed. 395 and Heisler v. Thomas Colliery Co. 260 US 245, 67 L ed. 237. Here lies the distinction.
Cooley in his treatise "On the Constitutional Limitations", at page 50 while commenting on accepting adjudged cases as precedents, quotes Chancellor Kent as saying:
"A solemn decision upon a point of law arising in any given case becomes an authority in a like case, because it is the highest evidence which we can have of the law applicable to the subject, and the Judges are bound to follow that decision so long as it stands unreversed, unless it can be shown that the law was misunderstood or misapplied in that particular case. If a decision has been made upon solemn argument and mature deliberation, the presumption is in favour of its correctness, and the community have a right to regard it as a just declaration or exposition of the law, and to regulate their actions and contracts by it. It would, therefore, be extremely inconvenient to the public if precedents were not duly regarded, and implicitly followed. It is by the notoriety and stability of such rules that professional men can give safe advice to those who consult them, and people in general can venture to buy and trust, and to deal with each other. If judicial decisions were to be lightly disregarded, we should disturb and unsettle the great landmarks of property. When a rule has once been deliberately adopted and declared, it ought not to be disturbed unless by a court of appeal or review, and never by the same court, except for very urgent reasons, and upon a clear manifestation of error; and if the practice were otherwise, it would be leaving us in a perplexing uncertainty as to the law."
This, in my view, is a very subtle exposition of a precedent being the highest evidence of the law and holds the field so long it is regarded as a good law on the principle of stare decisis".
Main principles that emerge from the above cited elaborate judgement of the Supreme Court and many others pronounced by it are:-
-- Law laid down by the apex court is binding on all except Supreme Court itself.
-- Subordinate Courts/Tribunal/Appellate Authorities cannot ignore even obiter dicta of Supreme Court.
-- Legal position as explained by the apex court has to be considered as always in existence. However, in tax matters, on the basis of a later judgment, authorities cannot reopen/revise any assessment that has attained finality. It is an established law that past and closed transactions cannot be disturbed/unsettled unless allowed under the law. The Supreme Court in ITO, Central Circle II, Karachi & Another v Cement Agencies Ltd [1969] 20 TAX 1 (S.C. Pak) strongly disapproved the act of disturbing past and closed transactions in the following terms:
" I do not see how on the basis of the judgement of this in Octavous Steel & Company Ltd's case past and closed transactions could be reopened...Mr. Nusrat has not been able to refer to any authority which lends support to the course adopted by the Income-tax Officer. A decision given by a High Court in another case cannot be ground for reopening an issue which stood finally determined by a decision of a subordinate Court or authority".
Supreme Court is not slave of own judgements
The principle of stare decisis does not apply to Supreme Court as explained in 2017 SCMR 206 as under:
"This court in the case of Hitachi Limited v Rupali Polyester (1998 SCMR 1618), has concluded that the Supreme Court is not a slave of doctrine of stare decisis and can change or modify its view with the passage of time. All the courts and public institutions are bound to follow the principles laid down by this court. No exception to this principle can be created under the garb of rule or procedural niceties".
If there is a conflict between two decisions of the Supreme Court, the decision of the larger bench will prevail- CIT v Trilok Nath Mehrota [1998] 98 Taxman 462 (SC)/ 231 ITR 278.
Where there is conflict between ratio decidendi and obiter dicta of Supreme Court, obiter will not be binding- CIT v Smt. T. P. Sidhwa [1982] 133 ITR 840 (Bom.).
The doctrine that a larger bench of Supreme Court has more authoritative force than a smaller bench is only relevant as between cases which yield different ratio decidendi, and not where one hands down a decision and other merely lays down dictum-Ghansham Singh v CIT [1983] 141 ITR 601 (Mad).
(To be continued)
(The writers, lawyers and partners in Huzaima, Ikram & Ijaz, are member Adjunct Faculty of Lahore University of Management Sciences)