It was Aristotle who said, “the habit of lightly changing the laws is an evil”. The doctrine of stare decisis, which is more commonly referred to as the rule of precedents, is the product of this shared belief of societies and is one of the means by which the concept of rule of law is made reliable.

Stable laws and dependable precedents ensure the presence of a continual legal yardstick around which law abiding citizens can hope to direct their activities and affairs.

In their disposition to adhere to the precedents, the judges of the Supreme Court of the United States fall under two broad categories. They are, the pragmatists and the originalists.

The pragmatists revere the strict adherence to precedents principle. Their faith is best expressed in the words of Justice Lewis Powell of the Supreme Court who declared, “inevitability of change touches law as it does every aspect of life. But stability and moderation are uniquely important to law.”

The originalists, on the other hand feel, that a rigid and inflexible adherence to the principle of stare decisis is a betrayal of the judges’ duty to apply the law and the principles of the Constitution and thus of the rule of law itself. Their beliefs are best expressed in the words of Justice William O. Douglas who said,

“A judge looking at a constitutional decision may have compulsions to revere past history and accept what was once written. But he remembers above all else that it is the constitution which he swore to support and defend and not the gloss which his predecessors may have put on it.”

The American Constitution, of course, does not have the equivalent of Article 141 of the Indian Constitution, which mandates in explicit terms that the “law declared” by the Supreme Court is binding upon all the courts within the territory of India.

Therefore, by and large, we have a system that swears allegiance to the system of precedents.

However, as is often said, “every rule has an exception including this one”, and so the law of precedents also has exceptions. The four commonly recognised ones are a) consent orders, b) obiter dicta, c) per incuriam and d) sub silentio. Around each of these concepts is a formidable array of case laws and the present attempt is not to analyse the same.

However, one recurring and persistent difficulty in applying these principles is how is a subordinate court to determine the “law declared” by a superior court from and out of the very many things a court states in its judgment. It is to provide an answer to this problem that the Supreme Court has introduced the facility of the “inversion test”, through its judgment in State of Gujarat and others v. Utility Users Welfare Association and others.

So, what is this inversion test and how is it a facility to determine the “law declared”? The inversion test was first propounded by Professor Eugene Wambaugh, a professor at The Harvard Law School. Professor Wambaugh wrote an interesting book in 1892 titled 'The Study of Cases'. In the said book, he sets out the concept of the "inversion test" as an aid in interpreting judicial pronouncements and to identify their ratio decidendi which he then argues is the only aspect of the judgment that is binding.

He states the inversion test to be as follows,

“In order to make the test, let him (the judge) first frame carefully the supposed proposition of law. Let him then insert in the proposition a word reversing its meaning. Let him then inquire whether, if the court had conceived this new proposition to be good, and had it in mind, the decision could have been the same. If the answer be affirmative, then, however excellent the original proposition may be, the case is not a precedent for that proposition, but if the answer be negative the case is a precedent for the original proposition and possibly for other propositions also.”

Let us now examine how the Supreme Court applied the above test to a case before it. Its application came about in the earlier referred decision in Utility Users Welfare Association. In that case, a two-judge bench of the Supreme Court consisting of Justice Jasti Chelameswar and Justice Sanjay Kishan Kaul had occasion to consider whether the judgment of a coordinate bench in TANGEDCO Ltd. v. PPN Power Generation Co. (P) Ltd. was binding on it.

One of the points on which the Supreme Court in TANGEDCO’s case had pronounced judgment was as to who should head Electricity Regulatory Commissions constituted under the Electricity Act, 2003. The Senior Counsel for the respondents PPN Power Generation, Rohinton Nariman (as he then was) had contended inter alia, that the function of a Chairman of such a commission required only a retired judge of the High Court to occupy that post. The Supreme Court accepted that argument and noting that no judicial member had been appointed to the Tamil Nadu Electricity Regulatory Commission, directed the consideration of the feasibility for appointment of a person as a Chairman from amongst persons, who is, or has been a judge of the High Court.

Ordinarily ,this ratio would have been binding on the coordinate bench of two judges in the subsequent case i.e. the Utility Users Welfare Association case, in which the question directly involved was whether the Electricity Commission constituted under the Electricity Act 2003 should be headed by a High Court judge.

Justice Kaul, writing the judgment in the Utility Users Welfare Association, however, posed the question,

“Thus the issue arises, whether the observations made, albeit to be constituted as advisory or suggestive qua the appointment of a Chairman and a Member are to be treated as ratio decidendi or obiter dicta."

The Supreme Court then applied the inversion test in the following terms:

“In order 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.”

Applying the test, the Supreme Court, though it held that the presence of judicial member to a commission was indisputable in so far as the Chairman of the commission was concerned, held as follows,

“Now applying the test to the aforesaid judgment the proposition is reversed, i.e., “the Chairman need not be a judicial member”, the fact remains that it would have no impact on the decision in that case, which was related to inter alia the interpretation of Section 86 of the said Act. This in fact testifies what we have held aforesaid qua of the appointment a chairman from the pool of Judges."

In effect, the Supreme Court while agreeing with that part of the judgment in TANGEDGO that the commission must have a legally trained member, did not feel bound by the other observation that it should be headed by a retired High Court judge since it did not pass the inversion test.

Thus, through the judgment in Utility Users Welfare Association, the “inversion test” has come to stay in Indian jurisprudence.

This infant in fact has now grown in stature since it was subsequently adopted and applied by a three-judge bench of the Supreme Court headed by Chief Justice Ranjan Gogoi in Nevada Properties Pvt Ltd v. State of Maharashtra. It is therefore slowly but steadily creeping into the tomes of Indian jurisprudence to supply valuable guidance to subordinate courts struggling to identify the “law declared” by a superior court.

Its future applications hold plenty of interest to students of law, advocates, judges and jurists alike.

The author is a Senior Advocate practicing before the Madras High Court.