Calcutta High Court: Interim Stay Order By Supreme Court Doesn't Effect Binding Nature of High Court's Judgment As A Precedent

Calcutta High Court: Interim Stay Order By Supreme Court Doesn't Effect Binding Nature of High Court's Judgment As A Precedent

The Calcutta High Court (HC) in the case titled Deific Abode LLP v. Union of India & Ors. clarified that the effect of an interim order passed by the Supreme Court (SC) wherein it granted a stay on the HC's judgment would not destroy the binding nature of that judgment.

The single-judge of the HC Justice Shekhar B Saraf passed an order where the Court was dealing with a petition challenging certain show-cause notices under the Prohibition of Benami Property Transactions Act, 1988 (Act) as amended in 2016.

The factual matrix of the case is that the petitioner contended that the Act as amended in 2016 was wrongly applied in respect of property that was purchased before the 2016 amendment took effect.

The petitioner put reliance on the decision of the HC's Division Bench judgment passed in M/s. Ganpati Dealcom Pvt. Ltd v. Union of India, which had interpreted the amendment Act of 2016 to the 1988 Act to be prospective in nature. The said ruling had subsequently been stayed by the SC through an interim order.

Issue before the HC

Whether or not the ruling of the HC in Ganpati Dealcom's case, has a binding effect as the same has been stayed by the SC in an interim order?

Justice Saraf ruled that he is bound by the Division Bench judgment in Ganpati Dealcom, and passed an interim order that authorities will not take any further steps in the matter till the disposal of the writ applications.

The HC issued a set of guidelines with clarifications that are mentioned as under-

1. The effect of an interim order by the SC wherein it has put a stay on operation of an order of the HC is totally different from that of quashing an order of the HC;

2. The SC's order of putting an interim stay on the HC's decision would not be operative from the date of the passing of the order of stay, without annihilating the said impugned order from existence;

3. The quashing of an impugned order restores the position as it stood on the date the impugned order was passed, with the impugned order ceasing to exist in the eyes of the law;

4. When an order is quashed then it would revive the right to appeal before the appellate authority and shall be considered as pending before the appellate authority for fresh consideration;

5. Pending appeal before the SC and it passed an order of stay then it would not lead to declaration of law under Article 141 of the Constitution of India, but is merely binding upon the parties to the said proceedings;

6. An interim order by the appellate authority would not obliterate the binding effect of the judgment of the concerned HC as a precedent. As the appellate authority had no opportunity to lay down any proposition of law which was in variance to the one declared by the HC in its judgment;

7. If a single-judge of the HC is seized of the question of applicability of a Division Bench judgment which is subject to an order of stay in a pending appeal before the SC, the single-judge is to apply the ratio as laid down by the Division Bench of the HC, as per the doctrine of precedent;

8. The decision of one HC is not a binding precedent on another HC. The decision of one HC is neither binding precedent for another HC nor for Courts or Tribunals outside its own territorial jurisdiction;

9. It is well-settled that the decision of a HC will have the force of binding precedent only in the State or territories on which the Court has jurisdiction. In other States or outside the territorial jurisdiction of that HC it may, at best, have only persuasive effect;

10. By no amount of stretching of the doctrine of stare decisis can judgments of one High Court be given the status of a binding precedent so far as other High Courts or courts or tribunals within their territorial jurisdiction are concerned. Any such attempt will go counter to the very doctrine of stare decisis and also the various decisions of the Supreme Court which have interpreted the scope and ambit of the doctrine.

The HC further directed the petitioner to not sell or transfer, deal with, encumber, or part with possession of the properties till the disposal of the writ applications. "The respondent authorities are granted a period of six weeks to file their affidavits-in-opposition from date."

The Court concluded that "The Division Bench Judgment in M/s. Ganpati Dealcom Pvt. Ltd (supra) is binding upon this Court even though the operation of the said judgment has been stayed by the Supreme Court. Accordingly, I am prima facie of the opinion that the writ petitioners are entitled to interim orders at this stage. However, I am of the further view that the Revenue is to be protected as the matter is sub-judice before the Supreme Court."

The Court passed the following interim orders:

1. The reference referred to in Section 24(5) of the 1988 Act shall not be treated as final and shall only be treated as provisional during the whole period, the writ applications are pending before this Court.

2. Subject to its result, the reference will be treated as final. Thereafter, time to pass the adjudication order under Section 26(7) of the 1988 Act will start to run. Hence, it follows that the respondent authorities will not take any further steps in the matter till the disposal of these writ applications.

3. The writ petitioners shall not sell, otherwise transfer, deal with, encumber or part with possession of the subject properties till the disposal of these writ applications.

The Court gave the respondents six weeks time to the respondent authorities to file their affidavits-in-opposition.