Interim order of Supreme Court staying High Court judgment does not obliterate binding effect of High Court judgment: Calcutta High Court

The Calcutta High Court was recently prompted to clarify the effect of an interim order passed by the Supreme Court staying a High Court judgment (Deific Abode LLP v. Union of India & Ors). .Pertinently, Justice Shekhar B Saraf emphasised that such an interim stay order would not obliterate the binding value of the High Court judgment under challenge. .After examining a host of case laws on the subject, the High Court issued the following guidelines:1. The effect of an interim order staying the operation of an order under challenge and the quashing of an impugned order are considerably different from one another;2. An interim stay order merely ensures that the order impugned 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. The quashing of the impugned order would revive the appeal before the appellate authority and would be considered pending before such appellate authority, awaiting the appellate authority‟s fresh consideration; 5. Where an appeal remains pending before the Supreme Court and an order of stay remains operative in such a pending appeal, such stay of order does not amount to any "declaration of law‟ under Article 141 of the Constitution of India, but is merely binding upon the parties to the said proceedings;6. Such an order of stay, which is interim in nature, does not obliterate the binding effect of the judgment of the concerned High Court as a precedent. This is because in passing the interim order staying the order of the High Court, the Supreme Court had no opportunity to lay down any proposition of law which was in variance to the one declared by the High Court in its judgment;7. If a single-judge of the High Court 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 Supreme Court, the single-judge is to apply the ratio as laid down by the Division Bench of the High Court, as per the doctrine of precedent;8. The decision of one High Court is not a binding precedent on another High Court. The decision of one High Court is neither binding precedent for another High Court nor for courts or tribunals outside its own territorial jurisdiction;9. It is well-settled that the decision of a High Court 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 High Court 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 High Court passed the order while dealing with a petition challenging certain show cause notices under the Prohibition of Benami Property Transactions Act, 1988, as amended in 2016. 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. .To buttress his case, the petitioner relied on the Calcutta High Court's Division Bench judgment 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..However, the said ruling in Ganpati Dealcom's case had subsequently been stayed by the Supreme Court by way of an interim order. .The question before the single-judge was whether he was bound by the ruling in Ganpati Dealcom's case, keeping in view the fact that the order has been stayed by the Supreme Court in an interim order. .In view of the above findings, Justice Saraf ultimately 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 petitioners were also directed not to sell or otherwise transfer, deal with, encumber or part with possession of the properties till the disposal of the writ applications.."Based on the above principles that emerge, I am of the view that the Bombay High Court judgment in Joseph Isharat (supra) and the Gujarat High Court decision in Niharika Jain (supra) are not binding on this Court even though they are having persuasive effect. As already concluded earlier, 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 said. .Senior Advocate JP Khaitan and Advocates Ratnanko Banerjee, Manju Agarwal, Bajrang Manot, Sourab Seth, Kanishk Kejriwal, S Chakraborty and Sweta Mohanty appeared for various petitioners. .Senior Advocate YJ Dastoor and advocates Smarajit Roy Chowdhury and Soumen Bhattacharjee appeared for the Union of India, whereas Advocate Dhiraj Kumar Trivedi appeared for another respondent..[Read Order]