An earlier decision which has not proceeded on interpretation or analysis of the issue does not have a binding effect: High Court of New Delhi

Since none of the earlier decisions relied upon by the appellant have actually undertaken the process of analysis and interpretation of the contractual clauses namely Clause 16(2) of the GCC, or the similar clause contained in Clause 13(3) of the contract considered in Bright Power Projects (India) Private Limited (supra), we are of the view that there is no merit in the submission of learned counsel for the appellant that the decision in M/s Pradeep Vinod Construction Co. (supra) has been rendered in ignorance of the earlier binding precedents rendered by the Supreme Court. UNION OF INDIA v. MANRAJ ENTERPRISES[FAO(OS) 52/2018] in the High Court of New Delhi division bench consisting of JUSTICE VIPIN SANGHI and MS. JUSTICE REKHA PALLI.

Facts are that the appellant has filed an appeal against the order passed by the learned Single Judge disposing of the objections preferred under Section 34 of the Arbitration & Conciliation Act to the award made on-claim to pre- suit, pendente lite, and future interest awarded on the balance due payment, from the due date of payment.

The counsel for the appellant contended that the learned Single Judge reliance on M/s Pradeep Vinod Construction Co. was misplaced, and the said decision is per incuriam as it has not taken into consideration the earlier larger bench decisions rendered by the Supreme Court, and cited Union of India Vs. Bright Power Projects (India) Private Limited.

The court in order to discuss the interpretation of Clause 16(2) of the GCC made reference to the judgement of the Apex court in, M/s Pradeep Vinod Construction Co., wherein it was held that “7. Having given our thoughtful consideration to the contractual obligations entered into by the parties through clause 16, we have no reason to doubt, firstly, that the clause related exclusively to earnest money and security deposit. The above Clause did not relate to the other contractual obligations between the parties…Therefore, there can be no doubt, that non-payment of interest, contemplated between the parties under clause 16, was exclusively limited to the component of earnest money and the security deposit, which was held by the appellant and nothing else.”

The court in order to highlight the aspect as to what constitutes a judgment binding precedent, also made reference to the Supreme Court judgment in State of U.P. and Another Vs. Synthetics and Chemicals Ltd. and Another., wherein the following observations were made, “40.In practice per incuriam appears to mean per ignoratium. English courts have developed this principle in relaxation of the rule of stare decisis. The „quotable in law‟ is avoided and ignored if it is rendered, in ignoratium of a statute or other binding authority‟. (Young v. Bristol Aeroplane Co. Ltd. [(1944) 1 KB 718 : (1944) 2 All ER 293] ). Same has been accepted, approved and adopted by this Court while interpreting Article 141 of the Constitution which embodies the doctrine of precedents as a matter of law. In Jaisri Sahu v. Rajdewan Dubey [(1962) 2 SCR 558: AIR 1962 SC 83] this Court while pointing out the procedure to be followed when conflicting decisions are placed before a bench extracted a passage from Halsbury’s Laws of England incorporating one of the exceptions when the decision of an appellate court is not binding.

Considering the law and the facts of the case the court held that, that the decisions that were relied upon, by the appellant did not constitute a binding precedent on the interpretation of Clauses 13(3), or 16(2) of the GCC. Thus dismissing the appeal.

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