Second Appeal No.411 of 1990,Civil Application No.2431 of 1993

16th October, 2009

Petitioner Counsel: Shri. R. M. KADAM,A. A. KUMBHAKONI, N. P. DESHPANDE, AGP , Ms. G. P. MULEKAR
Respondent Counsel: S/Shri. D. J. KHAMBATTA,SHEKHAR JAGTAP , SHAILESH CHAVAN,M/s. J. Shekhar & Co.

Cases Cited:
Vithalrao Udhaorao Uttarwar Vs. The State of Maharashtra, AIR 1977 Bom. 99 [Para 3]
Shankarrao Vs. State of Maharashtra,, 1980 Mh.L.J. 888 [Para 3,6,7,24,25,27,32,39]
Shrikant Bhalchandra Karulkar Vs. State of Gujarat, (1994)5 SCC 459 [Para 6,24,25,28,30,32,39,40,41]
M/s. Emkay Exports Vs. Madhusudan Shrikrishna, 2008(5) ALL MR 388 (F.B.)=2008(4) Mh.L.J. 843 [Para 10]
Tribhovandas Purshottamdas Thakkar Vs. Ratilal Motilal Patel, AIR 1968 SC 372 [Para 12]
Sub-Inspector Rooplal Vs. Lt. Governor Through Chief Secretary, Delhi, (2000)1 SCC 644 [Para 13]
Government of Andhra Pradesh Vs. B. Satyanarayana Rao (Dead) by Lrs., (2000)4 SCC 262 [Para 14]
Lily Thomas Vs. Union of India, 2000(3) ALL MR 251 (S.C.)=(2000)6 SCC 224 [Para 15]
Delhi Administration (Now NCT of Delhi) Vs. Manohar Lal, (2002)7 SCC 222 [Para 16,24]
State of Punjab Vs. Bhag Singh, 2004 ALL MR (Cri) 604 (S.C.)=(2004)1 SCC 547 [Para 17]
R. L. Jain (D) By Lrs. Vs. DDA, 2004(5) ALL MR 435 (S.C.)=(2004)4 SCC 79 [Para 18]
ICICI Bank Vs. Municipal Corporation of Greater Bombay, (2005)6 SCC 404 [Para 20]
Paisner Vs. Goodrich, (1955)2 All ER 530 [Para 20]
Bharat Petroleum Corpn. Ltd. Vs. Mumbai Shramik Sangh, (2001)4 SCC 448 [Para 21]
Director of Settlements, A.P. Vs. M. R. Apparao, , (2002)4 SCC 638 [Para 23]
Som Mittal Vs. State of Karnataka, 2008 ALL MR (Cri) 1151 (S.C.)=(2008)3 SCC 574 [Para 31]
Punjab Land Development Vs. Presiding Officer, Labour Court, (1990)3 SCC 682 [Para 33]
Tatoba Bhau Savagave (dead) by LRs. Vs. Vasantrao Dhindiraj Deshpande, (2001)8 SCC 501 [Para 37]
K. Sahadeo Vs. Suresh, 1995(3) SCC (Supp) 668 [Para 41]

JUDGMENT

SWATANTER KUMAR, C.J.:- The State of Maharashtra enacted the Maharashtra Agricultural Lands (Ceiling on Holdings) Act, 1961 (hereinafter referred to as "the Act"), primarily with an object to give effect to the State policy so that the operation of the economic system does not result in the concentration of wealth and means of production to the common detriment as well as to ensure the ownership and control of the material resources of the community are so distributed as best to subserve the common good. The Directive Principles of State policy contained under Part IV of the Constitution of India had attained a different significance and legal stature of the Directive Principles was uplifted by the 25th Amendment Act, 1971 of the Constitution. Article 31-C of the Constitution states that, notwithstanding anything contained in Article 13, no law giving effect to the policy of the State towards securing all or any of the principles laid down in Part IV shall be deemed to be void on the ground that it is inconsistent with, or takes away or abridges any of the rights conferred by Article 14 or Article 19 of the Constitution, and no law containing a declaration that it is for giving effect to such policy shall be called in question in any court on the ground that it does not give effect to such policy. Article 39 of the Constitution places an obligation upon the State under Clauses (b) and (c) to ensure and appropriately control the distribution and ownership of material resources available to the community. The Act, therefore, was intended to unequivocally declare the State policy towards securing principles specified in Clauses (b) and (c) of Article 39 of the Constitution. The implementation of the provisions of the Act faced number of practical and legal impediments and the Act, within the span of 1962 to 2006, was subjected to State Amendment Bills by amending different provisions of the said Act 23 times, including latest amendment by Maharashtra Act 8 of 2006. The Amendment of 2006 was introduced by the Legislature to impose a maximum limit or ceiling on holdings of agricultural land in the State of Maharashtra and to provide for acquisition and distribution of land held in excess of such ceiling.

2. Ours is an agricultural country with large population living in the rural areas and depending upon agriculture for their livelihood. It was felt necessary by the framers of the Act to provide that the lands taken over from undertakings and the integrity of which is maintained in compact blocks, for ensuring the full and efficient use of the land for agriculture and its efficient management through a Corporation or Company, the aim was made clear to secure and distribute the agricultural land as best to subserve the common good and thus it was felt expedient in the public interest to impose a maximum limit or ceiling on acquisition of land. Section 3 of the Act incorporated the prohibition on holding land in excess of ceiling area declaring the area in excess of ceiling to be surplus lands. Constitutional validity of Section 3 of the Act was challenged before a bench of this Court.

3. The Amending Act 21 of 1975 had introduced two important changes viz. definition of 'family unit' and requiring a landholder in the State to declare the agricultural land holding in any other part of the State and States in India for the purposes of clubbing together, in order to determine the ceiling on holdings. By these amendments, the landholders also had a grievance, as under the earlier Act the land possessed by them was lower than the ceiling limit but by amendment, even that land was partially adversely affected. The land owners were required to file fresh returns within the specified time under the amended Act, even declaring the lands held by them situated in other States of India. Various Writ Petitions were filed from time to time which came to be clubbed together before different Benches of this Court. The Division Bench which was hearing the bunch of cases was inter alia concerned with the challenge to the definition of the 'family unit' and lowering of the limit. They came to be disposed of by a judgment of this Court in the case of Vithalrao Udhaorao Uttarwar Vs. The State of Maharashtra, AIR 1977 Bom. 99. However, as a result of oversight, some matters were not listed before the Court and they came up for hearing before another Division Bench. The Division Bench hearing other group of the matters at Nagpur found that they were unable to agree with the conclusions reached by the Division Bench at Bombay. In fact, the Judges presiding over the Division Bench differed with each other on the question of extra territorial jurisdiction. The judgment of the Court in Vithalrao's case (supra) was challenged before the Supreme Court but in that Petition, the question of extra territoriality of the ceiling provision had not been raised. In these circumstances, the matter was placed before the Full Bench on the issue whether the question should be determined by the Full Bench itself or the matter needs to be referred to a 3rd Judge as a member of the Division Bench at Nagpur had differed on certain basic issues, therefore, the Full Bench while dealing with the case of Shankarrao & Ors. Vs. State of Maharashtra, 1980 Mh.L.J. 888 decided to deal and decide the questions of law by itself (Full Bench). At this stage itself, it will be relevant to refer to the questions framed by the Full Bench. Paragraph 4 of the said judgment reads as under :

"4. Since the other challenges are negatived by the judgment of the Supreme Court, the referring judgment framed as many as three points. With the consent of the learned counsel on either side, we have reframed the questions as below :

(1) Whether the scheme of sections 3(1), (2) and (3) read with section 4(1) as well as section 6 of the Maharashtra Agricultural Lands (Ceiling on Holdings) Act, 1961, is extra-territorial in operation ?

(2) Whether the provisions of Chapter III regarding the restrictions on transfers, acquisitions, partitions and consequences ensuing as well as the penalties or liabilities provided for by Sections 10(3), 21-A, 40-A and section 43-A have extra-territorial operation ?

(3) Whether there exist nexus which is sufficient and pertinent for the purpose of the present law ?

4. On these questions, the Full Bench found that the provisions of the Maharashtra Act were extra-territorial in their operation and therefore declared the same as beyond the competence of State Legislature and, in paragraph 27 of the Judgment, the Full Bench concluded as under :

"27. The next question that arises for our consideration is whether these provisions are severable and is it possible to save the Act minus those provisions ? We think it is quite possible to give pointed references to certain words and expressions which, if deleted, would give full effect to our conclusions in this judgment. Accordingly, we declare that in sub-section (2) of section 3 the word "whether" in the first line, and the group of words "or any other part of India", occurring in the second line, should be declared beyond the competence of the State Legislature and should be struck down. As a consequence, the entire Explanation clause to sub-section (2) is unlawful and is being declared inoperative and beyond the competence of the State Legislature. We further hold that the last sentence in sub-section (1) of section 43A beginning with the words "The person" and ending with the words "to any Tahsildar" (i.e. "The person shall also furnish such particular of land held by him, if any, in any other part of India to any Tahasildar" should also be declared beyond the competence of State Legislature. If these provisions are struck down as beyond the competence of the State Legislature, as they have the effect of operating extra-territorially, there is no other challenge before us so far as the Ceiling Act is concerned."

5. Thus, the Full Bench settled the position of law as far as this Court is concerned in the year 1980, whereafter certain cases had been decided by different Benches of this Court following the law enunciated by the Full Bench.

6. One Murarao Malojirao Ghorpade instituted suit for declaration that the order passed in Ceiling Case No.43-A and as confirmed by the Chairman Surplus Land Determination Tribunal was bad, illegal, null and void, without jurisdiction and inoperative for different reasons and particularly inter alia that the judgment of the Full Bench of this Court in Shankarrao's case (supra) was the foundation of the suit. The suit was decreed in favour of the Plaintiff. The Appeal filed by the State (Civil Appeal No.46 of 1984) also came to be dismissed vide judgment of the 3rd Additional District and Sessions Judge, Kolhapur dated 23rd October, 1989. Being aggrieved by the affirmation of the decree of the Trial Court dated 15th October, 1983 by the Appellate Court, the State felt aggrieved and filed the Second Appeal before this Court challenging the decisions of the Courts below. It was contended that the Full Bench decision of the Court in Shankarrao's case (supra) was not applicable to the facts of this Case. When this Appeal came up for hearing before the learned Single Judge of this Court for final disposal, the judgment of the Supreme Court in the case of Shrikant Bhalchandra Karulkar & Ors. Vs. State of Gujarat, (1994)5 SCC 459 was brought to the notice of the learned Single Judge. The contention was raised that in view of the judgment of the Supreme Court, the decision of the Full Bench of this Court was no longer a good law while on behalf of the Respondents, the contention was that the decision of the Full Bench was binding on the learned Single Judge and the Court should follow the law stated rather than referring the matter to a Larger Bench. The learned Single Judge formed an opinion that the matter should be referred to a Larger Bench under Rule 7, Chapter I of the Bombay High Court (Appellate Side) Rules, 1960. The order of Reference dated 28th July, 2009 reads as under:

"1. The Second Appeal has been preferred by the State contending that the Courts below have wrongly interpreted the judgment of the Full Bench in the case of Shankarrao Vs. State of Maharashtra, 1980 Mh.L.J. 888. It is also the case of the appellant that the Full Bench judgment of this Court will not hold the field today in view of the decision of the Supreme Court in the case of Shrikant Bhalchandra & Ors. Vs. State of Gujarat, 1994(5) SCC 459. According to the appellants, both the Courts below have not interpreted the provisions of the Maharashtra Agricultural Lands (Ceiling on Holdings) Act in its true spirit.

2. The question raised is whether while determining the land holding of a person in excess of the ceiling area it is necessary to club all lands owned by him anywhere in India with the lands owned by him in the State of Maharashtra. While interpreting section 3(1) of the Maharashtra Agricultural Lands (Ceiling on Holdings) Act (for short, hereinafter referred to as 'the Ceiling Act'), the Full Bench has opined that State of Maharashtra did not have legislative competence to decide about the holdings of a person in areas other than the State of Maharashtra. As a consequence it was held that the explanation to subsection (2) of section 3 is unlawful and inoperative and beyond the competence of the State Legislature. The last sentence in subsection (1) of section 43-A of the Act, requiring a person to furnish particulars of the land held by him in other parts of India to the Tehsildar was also declared to be beyond the competence of the State Legislature. While so holding the Full Bench considered similar provisions in the State of Gujarat and other adjoining states. The Court observed that the Agricultural Ceiling Acts of Gujarat and Maharashtra are similar and on par, whereas the Madhya Pradesh and Andhra Pradesh Acts, although similar do not take cognizance of holdings of agricultural lands by the holders in any other part of India.

3. The Supreme Court in the case of Shrikant Bhalchandra Karulkar & Ors. (supra), was dealing with the Gujarat Agricultural Land Ceiling Act, 1960. The Supreme Court observed that in view of the provisions of Articles 245 and 246 of the Constitution of India, the State Legislature has no legislative competence to make laws having extra territorial operation. The Supreme Court observed thus :

7. It is no doubt correct that under Articles 245 and 246 of the Constitution of India the Legislature of a State can make laws for the State or any part thereof. It would be overstepping the limits of its legislative field when it purports to affect men and property outside the State. In other words the State Legislature has no legislative competence to make laws which have extra-territorial operation. Meaning of the words "extra-territorial operation" have been authoritatively laid down by this court in various judgments. A State Legislature has plenary jurisdiction to enact laws in respect of subjects i Lists II and III, Seventh Schedule, Constitution of India. Such laws may be in respect of person within the territory, of property - immovable or movable - situated within the State, or of acts and events which occur within its borders. So long as the law made by the State Legislature is applicable to the persons residing within its territory and to all things and acts within its territory, it cannot be considered extra-territorial. This Court - over a period of three decades - has evolved a principle called "doctrine of territorial nexus" to find out whether the provisions of a particular State law have extra-territorial operation. The doctrine is well established that there is no dispute as to its principles. If there is a territorial nexus between the persons/property subject-matter of the Act and the State seeking to comply with the provisions of the Act then the Statute cannot be considered as having extra-territorial operation. Sufficiency of the territorial connection involves consideration of two elements, the connection must be real and not illusory and the liability sought to be imposed under the Act must be relevant to that connection. The Act has to satisfy the principles of territorial nexus which are essentially discernible from the factual application of the provisions of the Act.

4. It then observed that within the State a ceiling can be fixed by law beyond which no person can hold agricultural land and if for determining the extent of the ceiling the land held by the person outside the State is taken into consideration such a provision of law pertaining to fixation of such a ceiling would not become extra territorial. This is because in pith and substance, the law remains a legislation, imposing the ceiling on holding of land within the State, under the Entry 18, List II r/w Entry 42, List III, 7th Schedule of the Constitution of India.

5. The learned Counsel for the appellants herein submits that in view of the ratio in the case of Shrikant Bhalchandra Karulkar (supra), the decision of the Full Bench would no longer be a good law. It is submitted that the observations of the Full Bench judgment in the case of the Shankarrao (supra), would have to be revisited especially in light of para 9 of the judgment in Shrikant Bhalchandra Karulkar (supra). Para 9 reads as under :

9. "....... It is obvious that the provisions of Section 6(3-A) of the Act and Section 3(2) of the Bombay Act are entirely different. On the plain reading of Section 3(2) of the Bombay Act it is patent that the Maharashtra Legislature was making law in respect of the land held by a person anywhere in India. The expression "all land held by a person or as the case may be by a family unit whether in this part of the Maharashtra Legislature to make extra-territorial law. No assistance can, thus, be taken by the learned Counsel from the Full Bench judgment of the Bombay High Court. Even otherwise we are of the view that various observations made by the learned Judges of the Bombay High Court are, rather, broadly stated and require to be straightened, if necessary, in some appropriate proceedings"."

6. According to the learned counsel appearing for the State, the observations made by the Full Bench must be reconsidered in the light of the ruling of the Supreme Court while dealing with the Gujarat Agricultural Land Ceiling Act 1960. He therefore submits that the matter be placed before the learned Chief Justice under Rule 7, Chapter 1 of the Bombay High Court (Appellate Side) Rules, 1960.

7. The learned advocate for the respondent submits that such an exercise would not be necessary. She points out the judgment of the Supreme Court in the case of Tribhovandas Purshottam Thakkar Vs. Ratilal Motilal Patel, AIR 1968 SC 372 and submits that the Full Bench judgment is binding on the Single Judge of this Court and, therefore, there would be no need to place the matter before a larger Bench.

8. There can be no doubt that the judgment of the Full Bench is binding on a Single Judge of this Court. However, in view of the judgment of the Supreme Court in the case of Shrikant Bhalchandra Karurkar (supra), in my opinion, it would be appropriate to place the matter before the learned Chief Justice for necessary directions under Rule 7, Chapter 1 of the Bombay High Court (Appellate Side) Rules, 1960.

9. Registry to take necessary steps accordingly."

7. In view of the above Order of Reference and in view of the fact that the correctness of the law stated by Full Bench of this Court in Shankarrao's case (supra) was questioned, the matter was referred to the present Bench consisting of five Judges. When the matter came up for hearing, it was noticed that the learned Single Judge had not formulated any question and/or proposition of law which is required to be considered by the Larger Bench as suggested by the learned Single Judge in the Order of Reference. When the matter came up for hearing before us on 26th August, 2009 and after hearing the learned counsel appearing for the parties, we felt that it will be appropriate to formulate the questions which need to be examined by the Larger Bench during the course of hearing. Thus, in paragraph 4 of our Order, we recorded the questions as under :

"4. As no question of reference to be answered by this Bench has been formulated by the learned Single Judge vide order dated 28th July, 2009, we would like to prefer to state broadly the matters in issue before this Bench :

(a) What is the scope of an order of reference and whether the order of reference was called for in view of the Judgment of the Supreme Court in the case of Shrikant Bhalchandra Karulkar & Ors. Vs. State of Gujarat, 1994(5) SCC 459.

(b) How the law declared by the Full Bench of this Court could be construed in light of the judgment of the Supreme Court and what will be its effect and consequences;

(c) Whether the judgment of this Bench would relate back to the date of earlier decision of the Full Bench or will be given effect prospectively in view of the fact that the Full Bench had declared the provisions of Section 43-A(1) of the Maharashtra Agricultural Lands (Ceiling on Holdings) Act, 1961 as ultra vires."

8. From paragraph 4 of our order dated 26th August, 2009, it necessarily follows that the first and foremost question to be considered by us relate to the law of precedents and judicial propriety.

9. Salmond on Jurisprudence discusses in some detail the origin and significance of judicial precedents. In the 12th Edition of Salmond on Jurisprudence, it has been recorded that the importance of judicial precedents has always been a distinguishing characteristic of English law. In recent years, the value of doctrine of precedent has been much debated. It has two meanings. The first, which may be called the loose meaning, and the second, the strict meaning. Under the first meaning, precedents are reported, may be cited, and will probably be followed by the courts. Whilst in the second meaning, precedents not only have great authority but must in certain circumstances be followed. It is said that the practice is necessary to secure the certainty of the law, predictability of decisions being more important than approximation to an ideal, any very unsatisfactory decision can be reversed for the future by statute. Judicial decisions may be distinguished as authoritative and persuasive. An authoritative precedent is one which judges must follow whether they approve of it or not. A persuasive precedent is one which the judges are under no obligation to follow, but which they will take into consideration, and to which they will attach such weight as it seems to them to deserve. In other words, authoritative precedents are legal sources of law, while persuasive precedents are merely historical. (Ref : Salmond on Jurisprudence, 12th Edition, by P.J. Fitzgerald).

10. A Full Bench of this Court in the case of M/s. Emkay Exports & Anr. Vs. Madhusudan Shrikrishna, 2008(4) Mh.L.J. 843 : [2008(5) ALL MR 388 (F.B.)], while dealing with the concept of precedent and significance in judicial decision making process, held as under :

"6. The concept of precedent has attained important role in administration of justice in the modern times. The case before the Court should be decided in accordance with law and the doctrines. The mind of the Court should be clearly reflecting on the material in issue with regard to the facts of the case. The reason and spirit of case make law and not the letter of a particular precedent. Halsbury's "The Laws of England", explained the word "ratio decidendi" as "It may be laid down as a general rule that part alone of a decision by a Court of Law is binding upon Courts of coordinate jurisdiction and inferior Courts which consists of the enunciation of the reason or principle upon which the question before the Court has really been determined. This underlying principle which forms the only authoritative element of a precedent is often termed the ratio decidendi". It is by the choice of material facts that the Court create law. The law so created would be a good precedent for similar subsequent cases unless it falls within the exceptions hereinafter indicated.

7. The doctrine of precedent relates to following of previous decisions within its limitations. It introduces the concept of finality and adherence to the previous decisions and while attaining it, it creates consistency in application of law. The later judgment should be similar to the earlier judgment, which on material facts are the same. Finding ratio decidendi is not a mechanical process but an art which one gradually acquires through practice. What is really involved in finding the ratio decidendi of a case is the process of abstraction. Ratio decidendi is a term used in contrast to obiter dictum which is not necessarily binding in law. According to Sir John Salmond, "a precedent is a judicial decision, which contains in itself a principle. The only principle which forms its authoritative element is often termed the 'ratio decidendi'. The concrete decision is binding between the parties to it, but it is the abstract ratio decidendi which alone has the force of law as regards the world at large". According to Austin, the general reasons or principles of judicial decision abstracted from peculiarities of the case are commonly styled by writers on jurisprudence as 'ratio decidendi'.

8. Amongst the principles of law governing the binding value of judgments, doctrine of precedent is not only a well accepted principle but is one of the most pertinent facets of judicial interpretation. A ruling of Bench of higher court is considered to be binding on the lower courts and the courts having a smaller Bench structure. Earlier judgments are even taken to be binding on subsequent equi Bench unless and until reasons compelling for taking a divergent view are stated. To apply this principle, the court must examine by process of appropriate reasoning as to the applicability of the precedent cited before the court or even which of the views expressed by a higher court or even a larger Bench or even a Bench of equi strength is more aptly applicable to the facts and circumstances of the case in hand. The essence of law of precedent is its applicability on the basis of ratio decidendi. The importance and significance of adherence to alw of precedent was emphasized by the Supreme Court in the case of S. I. Rooplal and another Vs. Lt. Governor through Chief Secretary, Delhi and others, A.I.R. 2000 SC 594."

11. With the development of law, the doctrine of precedents has become an integral part of judicial discipline. The doctrine of precedent is a habit of following previous decisions within more or less well-defined limits. What the doctrine of precedent declares is that cases must be decided the same way when their material facts are the same. The part of a case that is said to possess authority is the "ratio decidendi". Finding "ratio decidendi" is not a mechanical process but is an art that one gradually acquires through practice and study. What is really involved in finding the "ratio decidendi" of a case is a process of abstraction. The ascertainment of the "ratio decidendi" of a case depends upon a process of abstraction from the totality of facts that occurred in it. The higher the abstraction, the wider the "ratio decidendi". In contrast with the "ratio decidendi" is the "obiter dictum". "Obiter dictum" is a mere saying by the way, a chance remark, which is not binding on the future Courts, though it may be respected according to reputation of the Judge, the eminence of the Court and the circumstances in which it came to be pronounced. The reason for not regarding an "obiter dictum" as binding is that it was probably made without a full consideration of the case on the point, and that, if very broad in its terms, it was probably made without a full consideration of all the consequences that may follow from it; or the judge may not have expressed a concluded opinion. (Ref : Paper submitted in Third Workshop of 2005 on the Subject of Law of Precedents and appropriate use of case law in Court working by U. B. Shukla).

12. In light of the above, now let us examine some judgments of the Supreme Court which have some bearing on the issue before us. In the case of Tribhovandas Purshottamdas Thakkar Vs. Ratilal Motilal Patel & Ors., AIR 1968 SC 372, the Supreme Court examined the question as to when a reference can be made to a Full Bench and whether mere irregularity in the constitution of Full Bench would nullify the law laid down by the so constituted larger bench. The Supreme Court held as under :

"10. The effect of a precedent of the Gujarat High Court fell to be considered indirectly in this case. Before Raju, J., it was urged for the first time in the course of this litigation that in the absence of the sanction of the Charity Commissioner the Court sale was invalid. Counsel for the auction purchaser contended that this question was not raised before the District Court and that Court cannot be said to have acted illegally or with material irregularity in not deciding the question. Counsel for the auction purchaser relied upon two decisions in support of that proposition : Pinjare Karimbhai Vs. Shukla Hariprasad, 1962-3 Guj.L.R. 529 and Haridas Vs. Ratansey, 23 Bom.L.R. 802 : (AIR 1922 Bom. 149). He urged that under the Bombay Reorganization Act, 1960, the jurisdiction of the Bombay High Court which originally extended over the territory now forming part of the State of Gujarat, ceased when a new High Court was set up in the State of Gujarat, but it was held by a Full Bench of the High Court of Gujarat in State of Gujarat Vs. Gordhandas, 3 Guj.L.R. 269 : (AIR 1962 Guj 128) (F.B.) that the decision of the Bombay High Court will be regarded as binding since the Gujarat High Court had inherited the jurisdiction, power and authority in respect of the territory of Gujarat. When pressed with the observations made in the two cases cited at the Bar, Raju, J., found an easy way out. He observed that the judgment of the Full Bench of the Gujarat High Court had "no existence in law", for in the absence of a provision in the Constitution and the Charter Act of 1861, a Judge of a High Court had no power to refer a case to a Full Bench for determination of a question of law arising before him, and a decision given on a reference "had no existence n law". The learned Judge also thought that if a Judge or a Division Bench of a Court makes a reference on a question of law to a Full Bench for decision, it would in effect be assuming the jurisdiction which is vested by the Charter of the Court in the Chief Justice of the High Court. In so observing the learned Judge completely misconceived the nature of a reference made by a Judge or a Bench of Judges to a large Bench. When it appears as a Single Judge or a Division Bench that there are conflicting decisions of the same Court, or there are decisions of other High Courts in India which are strongly persuasive and take a different view from the view which prevails in his or their High Court, or that a question of law of importance arises in the trial of a case, the Judge or the Bench passes an order that the papers be placed before the Chief Justice of the High Court with a request to form a special or Full Bench to hear and dispose of the case or the questions raised in the case. For making such a request to the Chief Justice, no authority of the Constitution or of the Charter of the High Court is needed, and by making such a request a Judge does not assume to himself the powers of the Chief Justice. A Single Judge does not by himself refer the matter to the Full Bench : he only requests the Chief Justice to constitute a Full Bench for hearing the matter. Such a Bench is constituted by the Chief Justice. The Chief Justice of a Court may as a rule, out of deference to the views expressed by his colleague, refer to the case; that does not mean, however, that the source of the authority is in the order of reference. Again it would be impossible to h old that a judgment delivered by a Full Bench of a High Court after due consideration of the points before it is liable to be regarded as irrelevant by Judges of that Court on the ground of some alleged irregularity in the constitution of the Full Bench."

13. While citing the above judgment with approval, the Supreme Court again in the case of Sub-Inspector Rooplal & Anr. Vs. Lt. Governor Through Chief Secretary, Delhi & Ors., (2000)1 SCC 644 considered the question that subordinate Court is bound by the precedent of superior court, and a Bench of a Court is bound by the precedent of a Coordinate Bench. While discussing the jurisprudential basis for honouring a precedent, the Supreme Court also expressed a view that even the co-ordinate bench cannot pronounce a judgment contrary to declaration of law made by another Bench. The Supreme Court held as under :

"12. At the outset, we must express our serious dis-satisfaction in regard to the manner in which a Co-ordinate Bench of the Tribunal has overruled, in effect, an earlier judgment of another Co-ordinate Bench of the same Tribunal. This is opposed to all principles of judicial discipline. If at all, the subsequent Bench of the Tribunal was of the opinion that the earlier view taken by the Co-ordinate Bench of the same Tribunal was incorrect, it ought to have referred the matter to a larger Bench so that the difference of opinion between the two Co-ordinate Benches on the same point could have been avoided. It is not as if the latter Bench was unaware of the judgment of the earlier Bench but knowingly it proceeded to disagree with the said judgment against all known rules of precedents. Precedents which enunciate rules of law form the foundation of administration of justice under our system. This is a fundamental principle which every presiding officer of a judicial forum ought to know, for consistency in interpretation of law alone can lead to public confidence in our judicial system. This Court has laid down time and again that precedent law must be followed by all concerned; deviation from the same should be only on a procedure known to law. A subordinate court is bound by the enunciation of law made by the superior courts. A Coordinate Bench of a Court cannot pronounce judgment contrary to declaration of law made by another Bench. It can only refer it to a larger Bench if it disagrees with the earlier pronouncement. This Court in the case of Tribhovandas Purshottamdas Thakkar Vs. Ratilal Motilal Patel, AIR 1968 SC 372, while dealing with a case in which a Judge of the High Court had failed to follow the earlier judgment of a larger Bench of the same Court observed thus :

"The judgment of the Full Bench of the Gujarat High Court was binding upon Raju, J. If the learned Judge was of the view that the decision of Bhagwati, J., in Pinjare Karimbhai case, (1962)3 Guj.L.R. 529 and of Macleod, C.J., in Haridas case, AIR 1922 Bom 149(2) did not lay down the correct law or rule of practice, it was open to him to recommend to the Chief Justice that the question be considered by a larger Bench. Judicial decorum, propriety and discipline required that he should not ignore it. Our system of administration of justice aims at certainty in the law and that can be achieved only if Judges do not ignore decisions by courts of coordinate authority or of superior authority. Gajendragadkar, C.J., observed in Bhagwan Vs. Ram Chand, AIR 1965 SC 1767 :

'It is hardly necessary to emphasise that considerations of judicial propriety and decorum require that if a learned Single Judge hearing a matter is inclined to take the view that the earlier decisions of the High Court, whether of a Division Bench or of a Single Judge, need to be reconsidered, he should not embark upon that inquiry sitting as a Single Judge, but should refer the matter to a Division Bench, or, in a proper case, place the relevant papers before the Chief Justice to enable him to constitute a larger Bench to examine the question. That is the proper and traditional way to deal with such matters and it is founded on healthy principles of judicial decorum and propriety'."

14. The respect for the law of precedent was illucidated by the Supreme Court again in the case of Government of Andhra Pradesh & Anr. Vs. B. Satyanarayana Rao (Dead) by Lrs. & Ors., (2000)4 SCC 262, where the Court explained rule of per incuriam decisions and held as under:

"8. ..... The rule of per incuriam can be applied where a court omits to consider a binding precedent of the same court or the superior court rendered on the same issue or where a court omits to consider any statute while deciding that issue. ......"

15. Similarly, in the case of Lily Thomas & Ors. Vs. Union of India & Ors., (2000)6 SCC 224 : [2000(3) ALL MR (S.C.) 251], the Supreme Court reiterated the principle that rulings of larger benches should be followed and those of coordinate benches of equal strength not be differed from and must be followed. The Supreme Court also observed that the division bench would not be justified in ignoring the full bench judgment or even that of a co-ordinate bench.

16. The law declared by the Supreme Court is binding on all the Courts but such a decision has to be made on the expected norms of the ratio decidendi. The Supreme Court itself stated a word of caution that the judgment of the Supreme Court and the law declared should not be applied mechanically but after due examination and specifying the fact that the judgments are really applicable to the facts and circumstances of the case. In the case of Delhi Administration (Now NCT of Delhi) Vs. Manohar Lal, (2002)7 SCC 222, the Court held as under :

"5. We have carefully considered the submissions of the learned counsel appearing on either side. Apparently, the learned Judge in the High Court was merely swayed by considerations of judicial comity and propriety and failed to see that merely because this Court has issued directions in some other cases, to deal with the fact situation in those other cases, in the purported exercise of its undoubted inherent and plenary powers to do complete justice, keeping aside even technicalities, the High Court, exercising statutory powers under the criminal laws of the land, could not afford to assume to itself the powers or jurisdiction to do the same or similar things. The High Court and all other courts in the country were no doubt ordained to follow and apply the law declared by this Court, but that does not absolve them of the obligation and responsibility to find out the ratio of the decision and ascertain the law, if any, so declared from a careful reading of the decision concerned and only thereafter proceed to apply it appropriately, to the cases before them. Considered in that context, we could not find from the decisions reported in Sukumaran and Santosh Kumar any law having been declared or any principle or question of law having been decided or laid down therein and that in those cases this Court merely proceeded to give certain directions to dispose of the matter in the special circumstances noticed by it and the need felt, in those cases, by this Court to give such a disposal. The same could not have been mechanically adopted as a general formula to dispose of, as a matter of routine, all cases coming before any or all the courts as a universal and invariable solution in all such future cases also. The High Court had no justifying reason to disturb the conclusion of the first appellate court, in this regard."

17. The importance of following the law declared by the Supreme Court was emphasized by the Court in the case of State of Punjab Vs. Bhag Singh, (2004)1 SCC 547 : [2004 ALL MR (Cri) 604 (S.C.)] where the Supreme Court said that judicial discipline to abide by declaration of law by the Supreme Court cannot be forsaken under any pretext by any authority or court, be it even the highest court in a State, oblivious to Article 141 of the Constitution.

18. Of course, it was aptly stated by the Supreme Court in R. L. Jain (D) By Lrs. Vs. DDA & Others, (2004)4 SCC 79, that a decision is an authority for what it actually decides. What is of the essence in a decision is its ratio and not every observation found therein nor what logically follows from the various observations made therein.

19. Normally, the judgment of a higher Court or a larger bench or coordinate bench would be binding on a bench of a lesser strength. The exception to the applicability of the law of precedent is, if on the facts of a given case and the law applicable, the case falls for good and valid reasons within the exception specified in the judgment, or that the judgment is per incuriam, sub silentio and/or hit by stare decisis. Unless the subsequent judgment discusses such an issue and records reasons, it may fall within the mischief of violating the law of precedent which may not be in conformity with the canons of judicial discipline. The concept of certainty and finality is essential in judicial decision making process.

20. Whether a precedent is binding and effective itself is an issue to be considered by the Court. The ratio and effect of the judgment is required to be ascertained with reference to the question of law as decided by the Court. The ratio of the judgment or the principle upon which the question before the Court is decided is alone binding as a precedent, and this must be ascertained and determined by analysing all the material facts and issues involved in the case. While observing so, the Supreme Court in the case of ICICI Bank & Anr. Vs. Municipal Corporation of Greater Bombay & Ors., (2005)6 SCC 404 relied upon the decision in the matter of Paisner Vs. Goodrich, (1955)2 All ER 530, (All ER at p.332 H-1), where Lord Denning observed :

"When the judges of this Court give a decision on the interpretation of an Act of Parliament, the decision itself is binding on them and their successors : see Cull Vs. IRC, (1939)3 All ER 761; Morelle Ltd. Vs. Wakeling, (1955)1 All ER 708. But the words which the judges use in giving the decision are not binding. This is often a very fine distinction, because the decision can only be expressed in words. Nevertheless, it is a real distinction which will best be appreciated by remembering that, when interpreting a statute, the sole function of the court is to apply the words of the statute to a given situation. Once a decision has been reached on that situation, the doctrine of precedent requires us to apply the statute in the same way in any similar situation; but not in a different situation. Wherever a new situation emerges, not covered by previous decisions, the courts must be governed by the statute and not by the words of the judges."

21. The Supreme Court in the case of Bharat Petroleum Corpn. Ltd. Vs. Mumbai Shramik Sangh & Ors., (2001)4 SCC 448 held as under :

"2. We are of the view that a decision of a Constitution Bench of this Court binds a Bench of two learned Judges of this Court and that judicial discipline obliges them to follow it, regardless of their doubts about its correctness. At the most, they could have ordered that the matter be heard by a Bench of three learned Judges."

22. The settled principle of judicial discipline and propriety requires that a smaller Bench normally may not question the correctness of the decision of a larger Bench even on the ground of sub silentio or per incuriam. Generally, it would lie in the domain of equi Bench to make a reference. The concept of finality as well as judicial hierarchy in the administration of justice would suffer if the norm of precedent is not applied to the functioning of the Court, much less a smaller Bench, that even a equi Bench is expected to follow the law, may be for valid and appropriate reason. It may request for a reference to a larger Bench but the earlier decision cannot be thrown out for any purposes whatsoever.

23. In contra distinction to a binding precedent, the Court has to be careful about the 'obiter dictum' made by a court in a judgment. Again in the case of Director of Settlements, A.P. & Ors. Vs. M. R. Apparao & Anr., (2002)4 SCC 638, the Supreme Court held that it was necessary to follow the law declared by the Supreme Court and said that a judgment of the Court has to be read in context of questions which arose for consideration in the case in which the judgment was delivered. An "obiter dictum" as distinguished from a "ratio decidendi" is an observation by the Court on a legal question suggested in a case before it but not arising in such manner as to require a decision. Such an obiter may not have an effect of a binding precedent but it cannot be denied that it is of considerable weight.

24. The law of precedent thus takes in its ambit an implied but apparent requirement of following the judicial dictum settled by the Superior Court, a larger Bench with strict application equally binding is the judgment of an earlier co-ordinate bench unless there are grounds and reasons felt by the Bench dealing with subsequent matter that the law enunciated by an earlier judgment falls within the exceptions of law of precedent and the facts and circumstances of the case so require. As already noticed, such an approach would be essential to maintain judicial discipline, consistency and certainty in judicial decisions to advance the doctrine of finality. The Full Bench Judgment of this Court in Shankarrao's case (supra) as well as the judgment of the Supreme Court in Shrikant Karulkar's case (supra) were before the learned Single Judge. As already noticed, the Supreme Court in the case Delhi Administration Vs. Manoharlal (supra), had observed that the High Court and all other courts in the country were no doubt ordained to follow and apply the law declared by this Court, and responsibility to find out the ratio of the decision and ascertain the law, if any, so declared from a careful reading of the decision concerned and only thereafter proceed to apply it appropriately, to the cases before them. Therefore, in our humble view, the appropriate course of action that the learned Single Judge ought to have taken was to decide the case in light of the law stated in the aforesaid two judgments, if in the opinion of the learned Single Judge the law stated by the Full Bench was not a good law in view of the judgment of the Supreme Court, the judgment of the Supreme Court being that of the superior Court and in terms of Article 141 of the Constitution of India, the same being binding on all Courts, Tribunals and the Government as the law of land declared by the Supreme Court should be followed. On the other hand, if the learned Single Judge felt that the Supreme Court had practically accepted the view of the Full Bench or there was no conflict between the two judgments, the principles stated by the Full Bench could have been applied. Be that as it may, it is not necessary for this Bench to deliberate on the said issue any further. Suffice it to note that the learned Single Judge, while relying upon Rule 7(1) of the Bombay High Court (Appellate Side) Rules, 1960, felt that it would be more advantageous that the matter be heard and decided by two or more judges, which view was accepted by one of us (Chief Justice), and the present Bench was constituted. Since the learned Single Judge had framed no questions of law for reference to a larger Bench, this Bench by its order dated 26th August, 2009 formulated the questions of law. The said questions of law as are of some importance, it would be more advantageous that the matter be heard and decided by a larger Bench. Thus, we would proceed to discuss the questions of law formulated by us.

25. The ratio decidendi of a previous judgment if applicable to a fact of a subsequent case would be a binding precedent. Similarly, an obiter dicta of the Supreme Court again is having a binding effect but not of the value as that of a binding precedent if the obiter is a finding recorded on the facts of a given case. Mere observations on facts, the superior Court cannot be said to be binding precedent. However, they may have some weightage or persuasive value subject to exercise of judicial discretion by the Court hearing the case. Once the "ratio decidendi" of an earlier judgment does not fall within the three exceptions i.e. Per incuriam, stare decisis and/or sub silentio with reference to facts and law of a subsequent case, it would be a binding precedent to be followed, particularly where the judgment is of the Supreme Court. It will be law of land and binding in terms of Article 141 of the Constitution of India. The judgment of the Supreme Court in the case of Shrikant Karulkar (supra) has to be taken as a binding precedent. Before the Supreme Court, the Appellants had raised the contentions based on the Full Bench Judgment of the Bombay High Court in the case of Shankarrao's (supra) which was duly considered by the Supreme Court and upon discussion the findings were recorded in paragraph 9 of the judgment. In other words, a point was raised, argued and entertained by the Supreme Court with direct reference to the question for consideration before that Court and the reasoned findings were recorded. Quantitative and qualitative value of the findings recorded by the superior Court cannot be a matter of consideration before a Court as the judgment of the Supreme Court is binding in terms of the Constitutional mandate on all other Courts. Thus, we must accept the judgment of the Supreme Court to the facts and circumstances of the case before us in its appropriate perspective.

KEEPING IN VIEW THE PROVISIONS OF THE MAHARASHTRA ACT, HOW THE LAW DECLARED BY THE FULL BENCH IS TO BE CONSTRUED IN LIGHT OF THE JUDGMENT OF THE SUPREME COURT :

26. At the very outset, it will be important for us to examine the provisions of Section 3(2) of the Maharashtra Act. Section 3(2) of the Maharashtra Act reads thus :

"3(2) All the land held by a person, or as the case may be, a family unit whether in this State or any other part of India in excess of the ceiling area, shall, notwithstanding anything contained in any law for the time being in force or usage, be deemed to be surplus land, and shall be dealt with in the manner hereinafter provided for surplus land.

Explanation : In calculating the ceiling area to be held in this State, and determining the surplus land, the area of land in any other part of India (being land which a person or family unit is entitled to hold in such other part of India under any law relating to ceiling on land) shall be taken into consideration. Only land held in this State may be declared as surplus."

27. The Full Bench of this Court, while dealing with the case of Shankarrao (supra), had declared that the above underlined portions of Section 3(2) and explanation thereto are extra territorial in its operation and, therefore, is unlawful and inoperative and beyond the competence of the State Legislature. The judgment of the Full Bench of this Court has not been assailed in appeal before the Supreme Court either by the parties or by the State. Thus, it has attained finality as far as this Court is concerned. In other words, the underlined portions "in any part of India", and the word "whether" occurring in Section 3(2) were declared beyond the legislative competence of the State Legislature, and therefore, were struck down. The Bench further clarified that the entire explanation clause to sub-section (2) of Section 3 of the Maharashtra Act was unlawful and declared it in-operative as being beyond the legislative competence of the State Legislature. The Judgment of the Full Bench was declared in the year 1980. Since then neither the State Legislature has taken any steps to amend the provision of Section 3(2) of the Maharashtra Act nor the State Government has assailed the judgment of the Court before the Higher Court. The obvious and inevitable result is that the judgment of the Full Bench of this Court has been accepted by the parties and now for all these 28 years, the said judgment has remained in force. Large number of cases have been dealt with and disposed of by this Court in terms of law enunciated by the Full Bench of this Court.

28. Both the parties before us had relied upon and referred to the judgment of the Supreme Court in the case of Shrikant Karulkar (supra). In that case, the Supreme Court was considering the provisions of Section 6(3-A) of Gujarat Agricultural Land Ceiling Act, 1960 (hereinafter referred to as the "Gujarat Act"). In order to avoid any ambiguity, we consider it appropriate to reproduce the said provision at this juncture itself. Section 6(3-A) of the Gujarat Act reads thus :

"6(3-A) Where any person hold any land in any other part of the India outside the State, then, the area of land so held by him in such other part, not exceeding the maximum area of land, which such person is entitled to hold in such other part of India under any law, if any, relating to ceiling on land, used or capable of being used for agricultural purposes, shall be excluded from the ceiling area in excess of which a person is not entitled to hold land under this section and the extent of land determined after so excluding such area shall in relation to such person, be deemed to be the ceiling area, held by him in this State: Provided that where any such disposes of, at any time before the determination of ceiling area under this Act, any land or part thereof so held by him in any other part of India outside the State, in accordance with the provisions of law in force in such part, the area equal to the land or part thereof so disposed of shall not be excluded while determining the ceiling area under this sub-section."

29. The Supreme Court, while dealing with the provisions of Gujarat Act, discussed the question of extra territoriality with reference to the doctrine of territorial nexus as well as examined the implications arising out of the provisions of Section 6(3-A) of the Gujarat Act. It will be useful to reproduce the relevant extract of the Supreme Court judgment. The Supreme Court after noticing the provisions in paragraph 3 held as under :

"3. .............................................................

It is clear from the plain language of Section 6(3-A) of the Act that for the purpose of computing the permissible area of a person in the State of Gujarat the area held by him in any other part of India, not exceeding the maximum area of land which such person is entitled to hold there, is to be excluded from the permissible ceiling area under the Act. In other words, the ceiling area of land permissible under the Act is reduced by deducting the area of the land owned by a person in another State not - exceeding the maximum area of land which such person is entitled to hold in the other State - and whatever is the balance would be the ceiling area in the State of Gujarat under the Act. If a person already holds land in other State/States in excess of the ceiling provided under the Act, he becomes disentitled to hold any land in the State of Gujarat. Holding agricultural land outside the State of Gujarat is, thus, considered as a relevant factor for deciding whether a person can hold agricultural land in the State of Gujarat and, if so, to what extent."

30. Paragraphs 7 to 9 of the Supreme Court Judgment in Shrikant Karulkar's case (supra) are the other observations which need to be referred by us in order to examine the matter in its proper perspective.

"7. It is no doubt correct that under Articles 245 and 246 of the Constitution of India the Legislature of a State can make laws for the State or any part thereof. It would be overstepping the limits of its legislative field when it purports to affect men and property outside the State. In other words the State Legislature has no legislative competence to make laws which have extra-territorial operation. Meaning of the words "extra-territorial operation" have been authoritatively laid down by this Court in various judgments. A State Legislature has plenary jurisdiction to enact laws in respect of subjects in Lists II and III, Seventh Schedule, Constitution of India. Such laws may be in respect of persons within the territory, of property-immovable or movable - - - situated within the State, or of acts and events which occur within its borders. So long as the law made by the State Legislature is applicable to the persons residing within its territory and to all things and acts within its territory, it cannot be considered extra-territorial. This Court over a period of three decades - - - has evolved a principle called "doctrine of territorial nexus" to find out whether the provisions of a particular State law have extra-territorial operation. The doctrine is well-established and there is no dispute as to its principles. If there is a territorial nexus between the persons/property subject-matter of the Act and the State seeking to comply with the provisions of the Act then the Statute cannot be considered as having extra-territorial operation. Sufficiency of the territorial connection involves consideration of two elements, the connection must be real and not illusory and the liability sought to be imposed under the Act must be relevant to that connection. The Act has to satisfy the principles of territorial nexus which are essentially discernible from the factual application of the provisions of the Act.

8. The State Legislature has the legislative competence to enact th Act under Entry 18, List II, read with Entry 42, Seventh Schedule, Constitution of India. The lands - - - governed by the provisions of the Act - - - are situated within the territory of the State of Gujarat. The provisions of the Act provide for fixation of ceiling in respect of the agricultural lands which are within the territory of the State of Gujarat. The declaration of the surplus land under the Act is also in respect of the lands held by various persons in the State of Gujarat. The territorial nexus is obvious. It is the land and the persons holding such land within the territory of Gujarat to which the provisions of the Act are applicable. If a person has no land within the State of Gujarat the provisions of the Act are not applicable to him or to the land which he owns outside the territory of the State of Gujarat. The sine qua non within the State of Gujarat. The territorial connection is thus, real and sufficient and the liability sought to be imposed under Section 6(3-A) of the Act is directly in relation to that connection. The factum of a person holding land outside the State of Gujarat is undoubtedly an aspect pertinent to the question of his entitlement under the Act to hold land in the State of Gujarat. There is no dispute that within the State a ceiling can be fixed by law beyond which no person can hold agricultural land, and if for determining the extent of said ceiling, the land held by a person outside the State is taken into consideration, the law pertaining to fixation of ceiling would not become extra-territorial. In pith and substance the law remains to be a legislation imposing the ceiling on holding of land within the State under Entry 18, List II, read with Entry 42, List III, Seventh Schedule, Constitution of India. Mere consideration of some factors which exist outside the State, for the purpose of legislating in respect of the subject for which the legislature is competent to make law, would not amount to extra-territorial legislation. Such considerations are part of the plenary legislative function of the State Legislature. The legislative entries not only indicate the subjects for the exercise of legislative power but their scope is much wider in the sense that they specify a field for legislation on the subject concerned. Therefore, when a statute fixes a ceiling on agricultural land holding within the State, it would not become extra-territorial simply because it provides that while determining the permissible area of a person under the said statute the land owned by him outside the State is to be taken into consideration. We are, therefore, of the view that the impugned provisions are within the legislative competence of the State Legislature and have been validly enacted.

9. The learned counsel for the appellants have placed reliance on the Full Bench judgment of the Bombay High Court in Shankarrao Vs. State of Maharashtra, 1980 Mah.L.J. 888 and other connected matters decided on 2-10-1980. We have been taken through the judgment of the Full Bench. Section 3(2) of the Maharashtra Agricultural Lands Act, 1961 (Bombay Act) which was struck down by the Bombay High Court was as under :

"All land held by a person, or as the case may be, a family unit whether in this State or any other part of India in excess of the ceiling area, shall, notwithstanding anything contained in any law for the time being in force or usage, be deemed to be surplus land, and shall be dealt with in the manner hereinafter provided for surplus land ....."

It is obvious that the provisions of Section 6(3-A) of the Gujarat Act and Section 3(2) of the Maharashtra Act are entirely different. On the plain reading of Section 3(2) of the Maharashtra Act it is patent that the Maharashtra Legislature was making law in respect of the land held by a person anywhere in India. The expression "all land held by a person or as the case may be by a family unit whether in this State or any other part of India..." clearly indicates the intention on the part of the Maharashtra Legislature to make extra-territorial law. No assistance can, thus, be taken by the learned counsel from the Full Bench judgment of the Bombay High Court. Even otherwise we are of the view that various observations made by the learned Judges of the Bombay High Court are, rather, broadly stated and require to be straightened, if necessary, in some appropriate proceedings."

31. Here it is appropriate to make reference to a decision in the case of Som Mittal Vs. State of Karnataka, (2008)3 SCC 574 : [2008 ALL MR (Cri) 1151 (S.C.)], where the Supreme Court held that the stray observation or obiter of the Supreme Court cannot be relied to do away with the ratio of the judgment.

32. From a bare reading of the above paragraphs in the Supreme Court judgment in Shrikant Karulkar's case (supra), it is clear that; (a) the provisions of Section 6(3-A) of the Gujarat Act were held to be not suffering from the legislative vice of extra territorial legislation as the essentials of the doctrine of territorial nexus were satisfied. The territorial connection was found to be real and sufficient and the liability sought to be imposed under Section 6(3-A) of the Gujarat Act was noticed to be direct in that connection. The statute which fixes ceiling on an agricultural land holding within the State, would not become extra territorial simply because it provides that while determining the permissible area of a person under the said Statute the land owned by him outside the State is to be taken into consideration. Thus, it was held that Section 6(3-A) of the Gujarat Act does not have extra territorial operation and the appeal preferred by the land owners was dismissed; (b) the Supreme Court noticed the provisions of Section 3(2) of the Maharashtra Act and specifically held in paragraph 9 that the provisions of Section 6(3-A) of the Gujarat Act and Section 3(2) of the Maharashtra Act are entirely different; (c) The supreme Court specifically held that the expression "all land held by a person, or as the case may be, by a family unit whether in this State or any other part of India..." clearly indicated the intention on the part of the Maharashtra Legislature to make extra territorial law. The above dichotomy of the findings clearly shows that the view taken by the Full Bench of this Court was specifically noticed by the Supreme Court with approval. The provisions of the Maharashtra Act were found to be entirely different than the Gujarat Act, of course, only limited part of the provision of Section 3(2) of the Maharashtra Act, has been reproduced in the judgment of the Supreme Court however as noticed in the opening line of paragraph 9 the provisions were brought to the notice of the Court and it had been gone into by the Supreme Court. These undisputed facts and categorical findings recorded by the Supreme Court, which are binding on us, leaves no further doubt in our minds that the provisions of the Maharashtra Act are different and distinct from the provisions of the Gujarat Act, as held by the Supreme Court. The provisions of the Gujarat Act were held to be not having extra territorial operation while the provisions of the Maharashtra Act were clearly stated to be based on intent of the Maharashtra Legislature to make extra territorial law which in face of Articles 245, 246 of the Constitution of India was not permissible. The observations of the Supreme Court in paragraph 9 of the judgment that the principles broadly stated by the Full Bench are required to be straightened, if necessary, in some appropriate proceedings, neither falls within the ambit of binding precedent nor even a obiter dictum. These are mere observations of the Supreme Court. The stand of the Full Bench of this Court was not overruled even impliedly much less expressly. The findings recorded by the Supreme Court take the same view as is expressed by the Full Bench of this Court and therefore, would be a binding precedent as far as this Court is concerned. We may also notice that these observations of the Supreme Court at best can be referred to the view expressed by the Full Bench of this Court in the case of Shankarrao (supra) where it observed that the Ceiling Acts of Gujarat and Maharashtra are similar and on par. Thus, we have to follow what has been infact decided with reference to the direct provisions of the Maharashtra Act and follow it as a binding precedent. A mere observation by the Supreme Court will have to be understood in its proper perspective and with reference to the part of the findings which are directly in conflict with the observations or findings recorded by the full Bench of this Court in Shankarrao's case (supra).

33. In the case of Punjab Land Development Vs. Presiding Officer, Labour Court, (1990)3 SCC 682, the Supreme Court while referring to ratio decidendi of a case observed that the only thing in a Judge's decision binding as an authority upon a subsequent Judge is the principle upon which the case was decided. The ratio decidendi of a decision may be narrowed or widened by the Judges before whom it was cited as a precedent. In the process, the ratio decidendi which the judges who decided the case would themselves have chosen may be even different from the one which has been approved by subsequent judges. Therefore, that is binding.

34. Now we will proceed on the basis that, as noticed by the Supreme Court, the provisions of the Maharashtra and Gujarat Act are entirely different. A bare reading of the provisions of the Gujarat Act shows that any land which any person is entitled to hold in such other part of India outside the State under the law, if any, relating to ceiling on land, shall be excluded from the ceiling area in excess to which a person is not entitled hold a land under those provisions and the extent of land determined after so excluding such area shall in relation to such person, be deemed to be ceiling area, held by him in the State of Gujarat. Therefore, the provisions of the Gujarat Act contemplates "exclusion or reduction". The term "exclusion" is derived from the word "exclude" which means deny access to or keep out or remove from consideration and exclusion is the process or state of excluding or being excluded. (Ref : Oxford Dictionary, Indian Edition).

35. Section 3(2) of the Maharashtra Act does not use the expression "excluded". On the contrary, under the Maharashtra Act, it states that all land held by a person, whether in this State or in any other part of India in excess of ceiling area shall, notwithstanding anything contained in any other law for the time being in force would be deemed to be surplus land. The explanation then provides how the surplus land is to be calculated. In terms of explanation, while calculating the ceiling area to be held in the State of Maharashtra, and determining the surplus land, the area of land in any part of India, being land which a person or family unit is entitled to hold in such other part of India under any law relating to ceiling on land, shall be taken into consideration, though, only the land held in the State may be declared as surplus. As is obvious, in contra distinction to the provisions of the Gujarat Act which uses the word "excluded/excluding", the land held in other State has to be taken into consideration while calculating the surplus land. The expression "consideration" means a fact that is taken into account for making a decision. The consideration normally would not mean incidental or colateral. It has to be a matter directly connected to the subject matter. (Ref : Aiyar's Judicial Dictionary, 11th Edition).

36. The provisions of the Maharashtra Act thus are to be examined while keeping in mind the fact that the expression noticed by the Full Bench is no longer valid and in fact does not remain on the statute book as a lawful piece of legislation. The two main distinctions, therefore, will be the extra territorial law emerging in Section 3(2) of the Maharashtra Act and use of the word "consideration" instead of word "exclusion" as used in Section 6(3-A) of the Gujarat Act.

37. The Supreme Court, having unambiguously found that the provisions of the Acts of two States viz. Gujarat and Maharashtra were distinct and different, there is nothing in the judgment which would demonstrate that the Supreme Court has set-aside the reasons recorded by the Full Bench (Shankarrao's case) while declaring the part of provisions of section 3(2) as extra-territorial. On the contrary, the Supreme Court itself has come to a definite conclusion that the provisions of the Maharashtra Act are extra-territorial and therefore, the question of legislative competence would hit the provisions. In the light of these findings, the judgment of the Full Bench can hardly be faulted with except to the extent we have specifically noticed. The determination of land holding has to be examined and the calculations as to surplus must be made in terms of provisions of section 3(2) while ignoring the offending expressions used by the Legislature in that provision. Interestingly, notice can be taken of another judgment of the Supreme Court in Tatoba Bhau Savagave (dead) by LRs. and another Vs. Vasantrao Dhindiraj Deshpande and others, (2001)8 SCC 501, where the Supreme Court was considering the provisions of Section 43(1-B) of the Bombay Tenancy and Agriculture Lands Act, 1948, in relation to the land owner who was a member of the Armed Forces claiming exemption to the extent of his share in certain lands held by the tenants. The application was dismissed as not maintainable but the revision was allowed by the High Court remanding the matter to the Collector requiring him to record the findings. The decision of the Collector was confirmed in revision and by the High Court in its writ jurisdiction. The authorities had taken into consideration the land held by the member of the Armed Forces in Karnataka and added the same to the land held by him in Maharashtra to calculate the entitlement of exemption. The Supreme Court referred to its judgment in Shrikant Karulkar's case and held as under :

"12. Relying on the judgment of this Court in Shrikant Bhalchandra Karulkar Vs. State of Gujarat it was urged by Mr. Lalit that as there was territorial nexus in this case hence the land of the first respondent in Karnataka State had to be taken into computation. We are unable to agree with this submission. In that case the validity of Section 6(3-A) of the Gujarat Agricultural Lands Ceiling Act, 1960 was under challenge. The High Court upheld the validity of the said provision. On appeal, this Court confirmed the judgment of the High Court. It was held : (SCC pp.463-64, para 7)

"This Court over a period of three decades has evolved a principle called 'doctrine of territorial nexus' to find out whether the provisions of a particular State law have extra-territorial operation. The doctrine is well established and there is no dispute as to its principles. If there is a territorial nexus between the persons/property subject-matter of the Act and the State seeking to comply with the provisions of the Act then the statute cannot be considered as having extra-territorial operation. Sufficiency of the territorial connection involves consideration of two elements, the connection must be real and not illusory and the liability sought to be imposed under the Act must be relevant to that connection. The Act has to satisfy the principles of territorial nexus which are essentially discernible from the factual application of the provisions of the Act."

13. In the instant case there is no provision in the Act like Section 6(3-A) of the said Gujarat Act.That judgment is of no help to the appellant."

38. As the provisions like section 6(3-A) of the Gujarat Act were not to be found in the Bombay Tenancy Act the view taken by the High Court setting-aside the action of the authorities in taking into consideration the land in Karnataka was affirmed. Thus, the absence of specific provision was found to be the basic infirmity in the actions of the respondents while in the present case the provisions of section 3(2) of the Maharashtra Act as enacted suffer from excessive legislation. The State Legislature has no powers to enact laws which will have real and effective impact on the property situated in another State. The section to that extent has extra-territorial operation and is not protected by the doctrine of territorial nexus and therefore, necessarily has to be quashed. The Supreme Court and the Full Bench of this Court have clearly stated the law that the provisions of section 3(2) of the Maharashtra Act to the extent mentioned in Full Bench judgment in Shankarrao's case are beyond legislative competence of the State Legislature.

CONCLUSIONS

39. Since we were of the considered view that the findings recorded by the Supreme Court in para 9 of the judgment in the case of Shrikant Karulkar (supra) has the force of "ratio decidindi" to be followed by us in the present case, we felt it unnecessary to discuss in detail the principle of statutory interpretation in relation to the provisions of section 3(2) of the Maharashtra Act. In any case, the Full Bench judgment of this case in the case of Shankarrao (supra) holding part of Section 3(2) ultra vires on the principle of extra territorial operation having found favour with the Supreme Court as well, that question in any case, hardly calls for any further deliberation. On appropriate analysis of the law of precedent and other principles of law stated by us (supra) and particularly in terms of the judgment of the Supreme Court in Shrikant's case it is evident that there is a clear markable distinction between the provisions of section 3(2) of the Maharashtra Act and section 6(3-A) of the Gujarat Act. The Supreme Court has recorded that they are 'entirely different'. The second linguistic distinction between the two provisions which is bound to have some effect on the application of these provisions is the use of the word 'consideration' in the explanation to section 3(2) of the Maharashtra Act and "exclusion" in section 6(3-A). These words convey the legislative intent which has to be given its ordinary meaning in implementing the provisions of the Act. It is a settled principle of law that no sentence or word in a provision is used by the Legislature without any purpose. Unless otherwise necessitated, every word has to be given its meaning in accordance with the doctrine of "plain interpretation" unless there were compelling circumstances to divert from such an approach. The part of provisions of Section 3(2) of the Maharashtra Act has been stated to be exfacie extra territorial in its operation and, thus, beyond legislative competence of the State. Extra territorium jus dicenti non paretur impune. One who exercises jurisdiction out of his territory is not obeyed with impunity.

40. Neither we are expected nor we propose to go into the question of calculation of surplus land on the basis of the principle aforestated. We are required only to state/restate the principles of law which emerge from the judgment of the Supreme Court (Shrikant's case), Full Bench of this court (Shankarrao's case) and the provisions of section 3(2) of the Maharashtra Act. The merits of the matter and impact of the principles stated on the question of calculation of surplus land will have to be examined by the court of competent jurisdiction. However, we are unable to approve the finding recorded by the Full Bench (Shankarrao's case) that the provisions of the Maharashtra Act and the Gujarat Act are "on par" or similar. These observations cannot hold the field primarily for the reason that the Supreme Court in the case of Shrikant Karulkar (supra) has returned the finding that these provisions are "entirely different". The distinction between the provisions is not a fine one but there is a markable difference in language and its consequencial effect in law. In the Maharashtra Act, there is not merely a reference to the land held in other State but in fact, all the land held by a person or a family unit whether in the State of Maharashtra or any other part of India in excess of ceiling area by deeming fiction of law becomes the surplus land. As per the explanation provided to Section 3(2) in calculating the ceiling area to be held in Maharashtra State and determining "surplus land", the area of land in any part of India shall be taken into consideration. Considering all the land held by a person or as the case may be by a family unit whether in State or any part of India, was found to be beyond legislative competence of the State by the Full Bench (Shankarrao's case) and was termed by the Supreme Court as an "intent to enact extra territorial law". We have already indicated that the observations recorded by the Supreme Court in the last line of para 9 are neither a binding precedent nor obiter. They are simple observations made by the Supreme Court expressing its desire to state the law in a better manner than the law stated by Full Bench of this court. These observations of the Supreme Court are ascribable to the observations of the Full Bench with regard to the similarity between the provisions of the Maharashtra and Gujarat Act.

41. It was contended before us that as per the judicial dictum stated by the Supreme Court in the case of Shrikant Karulkar (supra) the provisions of section 6(3-A) of the Gujarat Act were not having an extra territorial operation and as such, the provisions of section 3(2) of the Maharashtra Act would also have to fall in the same category and to that extent, Full Bench judgment of this court would stand overruled. Firstly, this contention is misconceived. The Supreme Court neither specifically nor by necessary implication has set aside the Full Bench judgment of this court. On the contrary, it has specifically stated that the provisions of section 3(2) of the Maharashtra Act is a law enacted by the legislature with the intent of creating an extra-territorial law. The Supreme Court after noticing the Full Bench judgment in Shankarrao's case specifically held that the provisions of the Maharashtra and Gujarat Acts were entirely different. In these circumstances, this contention is incapable of acceptance. Furthermore, in the case of K. Sahadeo Vs. Suresh, 1995(3) SCC (Supp) 668, the Supreme Court enunciated the principle that :

"5. In our opinion the learned Single Judge in recording the finding that the decision in Ataur Rehman was no more a good law, did not act properly as unless the decision in Ataur Rehman was set aside by a larger bench the declaration given by it that Section 4 was ultra vires could not be put at naught by a decision given by this Court in respect of another Act. The proper course for the learned Single Judge was to refer the matter to the Division Bench. In the absence of any such decision by a larger bench the section could not revive."

42. Merely because the provisions of some enactments appear to be pari materia, they cannot be stated to be impliedly struck down. Merely because the provisions of Gujarat Act were upheld by the Supreme Court would not mean that the provisions of Maharashtra Act are also free from any legal infirmity, more so when they have been found to be distinctly different.

43. ow we proceed to record our answers to the questions formulated by us in our order dated 26th August, 2009:

(a) In our humble view, the appropriate course of action before the learned Single Judge would have been to decide the case in the light of the judgment of the Full Bench of this court in Shankarrao's case (supra) and the judgment of the Supreme Court in the case of Shrikant Karulkar (supra). However, keeping in view the language of Rule 7 of the Bombay High Court, Appellate Side Rules, 1960 and feeling that the matter can be appropriately decided by the larger bench, the question raised being of some importance, this Bench has proceeded to deal with the matter on merits.

(b) From the findings recorded by the Supreme Court in the case of Shrikant Karulkar (supra), it is clear that the Full Bench judgment of this court has neither been overruled nor can be stated to be incorrect exposition of law. To reiterate and follow the dictum of the Supreme Court, we hold that the provisions of section 3(2) of the Maharashtra Act are 'entirely different' from section 6(3-A) of the Gujarat Act. The view of the Full Bench of this court in the case of Shankarrao (supra) holding that the words "all the land held by a person or as the case may be by a family unit whether in this State or any part of India", had extra territorial operation and are, therefore, beyond the legislative competence of the State Legislature is approved by the Supreme Court. Thus, these provisions cannot be given effect to since it has an extra territorial operation beyond the State of Maharashtra. In fact, it does not exist in the statute book in view of the decision of the Full Bench that the same is unconstitutional. We make it clear that the finding recorded by the Full Bench treating the two provisions are similar and on par is not a good statement in law. Whereas the judgment of the Supreme Court that these provisions are entirely different shall be binding on this court. The observations that Section 3(2) of Maharashtra Act and Section 6(3-A) of Gujarat Act are "similar and on par", made by the Full Bench alone have been disapproved by the Supreme Court.

(c) As far as question (c) is concerned, it need not be answered by us as it will be purely an academic question in view of our answer to questions (a) and (b) and would hardly arise for consideration.

44. Having answered the questions of law as formulated by this Bench, now we direct the matter to be placed before the learned Single Judge for disposal in accordance with law. Keeping in view the importance of the questions involved in the present case, we leave the parties to bear their own costs.

Ordered accordingly.