Precedent in Administrative Decision-Making: Judicial Discipline, Consistency and the Freedom to Change

Courts are bound by the decisions of higher courts and, within limits, by their own. Administrative authorities are not courts, and the doctrine of stare decisis does not apply to them in terms: an authority exercising a discretion must decide each case on its own facts, and a rule that its earlier decisions bound it would be a fetter on the discretion. Yet an administration that reaches opposite conclusions on identical facts is arbitrary, and an officer who declines to follow a ruling of the appellate authority above him defeats the statutory hierarchy. Indian law resolves this through two distinct requirements: judicial discipline, which binds a subordinate authority to the orders of the appellate authority, and consistency, which requires reasons for departing from a settled position. This topic sets out both.

1. Judicial Discipline within the Hierarchy

📖 Union of India v. Kamlakshi Finance Corporation Ltd., AIR 1992 SC 711

Facts: Questions of classification of goods for excise duty had been decided in the assessee's favour by the Collector (Appeals), whose orders had not been stayed or set aside. In subsequent proceedings the Assistant Collector, an officer subordinate in the statutory hierarchy, declined to follow those appellate orders and decided the same question the other way, observing that the appellate orders had not been accepted by the Department and that an appeal was contemplated.

Held: The Supreme Court upheld the strictures passed by the High Court and stated the principle in strong terms. It held that the principles of judicial discipline require that the orders of higher appellate authorities be followed unreservedly by subordinate authorities; the mere fact that the order of the appellate authority is not acceptable to the Department, or that an appeal against it is contemplated or has been filed, is no ground for refusing to follow it unless its operation has been suspended by a competent court. The Court held that if this were not so there would be utter confusion in the administration of the law and harassment to assessees, who would be compelled to litigate the same question repeatedly; officers should not start proceedings afresh on a question already decided by a higher authority, and any contrary practice is destructive of the rule of law within the administration.

Ratio: Judicial discipline requires a subordinate authority to follow the orders of a higher appellate authority unreservedly. Non-acceptance by the Department or a pending appeal is no ground for refusing to follow them unless the order has been stayed.

2. Consistency Where the Facts Have Not Changed

📖 Radhasoami Satsang v. Commissioner of Income Tax, (1992) 1 SCC 659

Facts: The assessee had for many years been treated by the Revenue as a religious institution whose income was exempt, that position having been reached after consideration and having been maintained consistently across a long series of assessment years. In a later year, on facts which had not changed, the Revenue departed from that position and sought to tax the income.

Held: The Supreme Court held that the Revenue could not depart from the settled position on the facts of the case. It held that strictly speaking res judicata does not apply to income tax proceedings, each assessment year being a separate unit and a decision in one year not operating as a binding precedent for another; but it held that where a fundamental aspect permeating through different assessment years has been found as a fact one way or the other, and parties have allowed that position to be sustained by not challenging it, it would not be at all appropriate to allow the position to be changed in a subsequent year. The Court emphasised that it was deciding on the facts before it and was not laying down that the Revenue can never revise a view, but held that consistency requires that a long-settled position on unchanged facts should not be disturbed without good reason.

Ratio: Res judicata does not apply to successive assessment proceedings, but where a fundamental aspect has been settled and sustained across years on unchanged facts, that position should not be altered without good reason.

3. The Position by Situation

Situation	Position
An order of a higher appellate authority on the same question	Binding on the subordinate authority; must be followed unreservedly (Kamlakshi)
An appellate order not accepted by the department, appeal contemplated	Still binding unless stayed by a competent court
A judgment of the jurisdictional High Court	Binding on all authorities within its territory
A judgment of the Supreme Court	Binding on all authorities under Article 141
A judgment of another High Court	Persuasive, not binding, though consistency favours following it
The authority's own earlier decision on the same facts	Not binding as precedent, but departure requires reasons
A position settled across years on unchanged facts	Should not be altered without good reason (Radhasoami Satsang)
A decision in a different case with different facts	Not binding; each case is decided on its own facts
A departmental circular interpreting the law	Binds the department in favour of the assessee; cannot override a judgment
A tribunal's own earlier decision	A coordinate bench ordinarily follows it, or refers the matter to a larger bench

4. Why Administrative Precedent Differs from Judicial Precedent

Discretion must remain live. An authority bound by its own earlier decisions would have fettered the discretion the statute conferred.
Facts are rarely identical, and an administrative decision usually turns on a combination of circumstances that does not recur exactly.
Policy may legitimately change, and an administration must be able to adapt to conditions the earlier decision did not contemplate.
There is no system of reporting, so administrative decisions are not accessible in the way judgments are and cannot function as a body of precedent.
Reasons are often unstated, and a decision whose basis is unrecorded cannot yield a ratio.
But the hierarchy is statutory, so an appellate order on the same question binds the subordinate authority not as precedent but as a decision in the hierarchy.

5. Departure and the Duty to Give Reasons

A change of view is permissible, provided the authority is conscious that it is departing and states why.
Unexplained inconsistency is arbitrariness, since deciding like cases differently without a reason offends Article 14.
Legitimate expectation may be engaged where a settled practice has been relied upon, requiring those affected to be heard before the change.
A change of policy should ordinarily operate prospectively, particularly where persons have arranged their affairs on the earlier basis.
A superior authority may lay down a different approach for the future, which binds subordinates as a matter of policy but not as to individual quasi-judicial decisions.
A tribunal departing from its own earlier view should ordinarily refer the matter to a larger bench rather than decide contrary to a coordinate decision.
Reasons are indispensable, since consistency can be tested only where the basis of both decisions is known.

⚠ Two different obligations are commonly confused

This subject contains two requirements that look similar and operate quite differently. Judicial discipline is a rule of the statutory hierarchy: a subordinate officer must follow the appellate authority's order on the same question, and his own opinion, the department's disagreement and a pending appeal are all irrelevant unless the order has been stayed. It admits of no exception and is not a matter of discretion at all. Consistency is a requirement of Article 14 addressed to an authority's own decisions: it does not bind the authority to its earlier view, but it requires that a departure be conscious and reasoned, and an unexplained inconsistency is arbitrary. The first tells an officer what he must do; the second tells him what he must explain.

6. The Position in Summary

Stare decisis does not apply to administrative authorities in terms, since an authority bound by its own earlier decisions would have fettered the discretion conferred on it.
Judicial discipline requires a subordinate authority to follow the orders of a higher appellate authority unreservedly, non-acceptance or a pending appeal being no ground unless the order is stayed (Kamlakshi Finance).
Judgments of the Supreme Court bind all authorities under Article 141 and those of the jurisdictional High Court bind authorities within its territory.
Where a fundamental aspect has been settled across years on unchanged facts, that position should not be altered without good reason, though res judicata does not apply to successive proceedings (Radhasoami Satsang).
An authority may change its view, but the departure must be conscious and reasoned, since unexplained inconsistency is arbitrary, and a settled practice relied upon may engage legitimate expectation.

7. Related Topics and Provisions

Fettering of Discretion (Topic 184): why an authority cannot bind itself absolutely.
Acting under Dictation (Topic 183): the difference between hierarchy and interference.
Doctrine of Legitimate Expectation (Topics 54 and 171): reliance on a settled practice.
Reasoned and Speaking Orders (Topic 70): reasons as the condition of testing consistency.
Doctrine of Non-Arbitrariness (Topics 56 and 182): inconsistency as arbitrariness.
Constitution of India: Articles 14, 141, 226 and 227.