Mercedes Benz vs. UOI (Bombay High Court)

DATE: (Date of pronouncement)
DATE: March 29, 2010 (Date of publication)

Click here to download the judgement (mercedes_judicial_discipline.pdf)

One Bench cannot differ from the view of another co-ordinate Bench but must refer to a larger Bench

One Bench of the Tribunal decided an appeal in favour of the assessee. However, another Bench refused to follow that decision even though the facts were the same on the ground that the earlier decision did not address the grievance of the Revenue and did not consider all the facts and did not lay down a clear ratio. The assessee filed a writ petition complaining of breach of propriety on the part of the Tribunal by not referring the issue to a larger Bench. HELD upholding the challenge:

(i) We are not happy to observe but constrained to say that one must remember that pursuit of the law, however glamorous it is, has its own limitation on the Bench. In a multi-judge court, the Judges are bound by precedents and procedure. They could use their discretion only when there is no declared principle to be found, no rule and no authority. The judicial decorum and legal propriety demand that where a learned single Judge or a Division Bench does not agree with the decision of a Bench of co-ordinate jurisdiction, the matter should be referred to a larger Bench. It is a subversion of judicial process not to follow this procedure. In our system of judicial review which is a part of our Constitutional scheme, we hold it to be the duty of the judges of the courts and members of the tribunals to make the law more predictable. The question of law directly arising in the case should not be dealt with apologetic approaches. The law must be made more effective as a guide to behavior. It must be determined with reasons which carry convictions within the Courts, profession and public. Otherwise, the lawyers would be in a predicament and would not know how to advise their clients. Subordinate courts would find themselves in an embarrassing position to choose between the conflicting opinions. The general public would be in dilemma to obey or not to obey such law and it, ultimately, falls into disrepute.

(ii) The view taken by the Tribunal is not the correct approach. If the Tribunal wanted to differ to the earlier view taken by the Tribunal in the identical set of facts, judicial discipline required reference to the larger bench. One co-ordinate bench finding fault with another co-ordinate bench is not a healthy way of dealing with the matters.

Note: In Mehratex India vs. DCIT 3 SOT 539 (Mum) it was held following UOI vs. Paras Laminates 186 ITR 722 (SC) that an order which did not follow a co-ordinate Bench decision was “per incuriam” i.e. not a binding judicial precedent.