The Role of Obiter Dictum in Indian Judicial Hierarchy

Introduction: The Indian legal system, like other common law jurisdictions, operates on the doctrine of precedent to ensure consistency and predictability in judicial decisions. At the core of this doctrine lies the distinction between ratio decidendi, the legal principle that forms the basis of a decision, and obiter dictum, statements made by judges that are incidental to the main issue and not essential to the outcome of the case. While the former holds the force of binding precedent, the latter carries no binding authority but may be persuasive in nature.

In practice, however, determining whether a particular statement made by a higher bench is ratio or obiter can be contentious. This dilemma becomes especially significant when Single Judges are tasked with interpreting statements made by Division Benches. The Delhi High Court’s recent decision in Balar Marketing Pvt. Ltd. v. Lakha Ram Sharma, CM(M)-IPD 5/2025, decided on March 27, 2025, by Hon’ble Single Judge, Delhi High Court, shed light on the question of whether a Single Judge is bound by an obiter dictum of a Division Bench of the same High Court. The case revolved around the application of Section 124 of the Trade Marks Act, 1999 in trademark infringement and passing off proceedings.

Factual Background and Procedural History:

The dispute between Balar Marketing Pvt. Ltd. (the petitioner) and Lakha Ram Sharma, the proprietor of Kundan Cable India (the respondent), centered on the use of the trademark "KUNDAN" and its variants, including "KUNDAN CAB" and "KUNDAN CABLE." Both parties operated in the electrical goods industry, and each claimed the exclusive right to the trademark based on prior adoption.

The petitioner asserted that its predecessor had adopted the mark in 1975 and had continuously used it. The respondent, on the other hand, claimed to have adopted and used the mark earlier, leading to a series of protracted legal disputes. Multiple suits were filed between 1994 and 2006, including passing off and infringement actions. These suits were consolidated, and the case went through various procedural developments.

In January 2025, the respondent sought a stay on all the suits under Section 124 of the Trade Marks Act, citing the pendency of rectification proceedings before the Madras High Court. The Trial Court granted a stay on all suits (except TM No. 931/2016) on January 18, 2025, relying on the Division Bench decision in Amrish Aggarwal Trading as Mahalaxmi Product v. Venus Home Appliances, 2024 SCC OnLine Del 3652.

Aggrieved by this order, the petitioner filed a writ petition under Article 227 of the Constitution of India, seeking judicial review. The decision of the Delhi High Court in Balar Marketing is significant for its clarity in defining the limits of obiter dictum and its binding effect.

Core Legal Issue

The principal legal issue in this case was whether the Trial Court was justified in staying the passing off suits under Section 124 of the Trade Marks Act based on the observations made in Amrish Aggarwal? The subsidiary question was whether the remarks made by the Division Bench regarding the stay of passing off suits were obiter dictum or binding precedent?

Submissions by the Parties

The petitioner contended that the reference to passing off suits in paragraph 44 of Amrish Aggarwal was a mere obiter dictum. The Division Bench in that case was primarily addressing procedural issues concerning the stay of infringement suits during the pendency of rectification proceedings, not passing off actions. The petitioner relied heavily on the judgment in Puma Stationer Pvt. Ltd. v. Hindustan Pencils Ltd., 2010 (43) PTC 479 (Del.) (DB), where the Division Bench had explicitly ruled that passing off suits are not subject to stay under Section 124. This principle, according to the petitioner, should not be disturbed by an incidental remark in Amrish Aggarwal.

The respondent, on the other hand, argued that even obiter dicta from a Division Bench of the High Court must be followed by a Single Judge to ensure judicial consistency. To support this view, the respondent cited cases such as Naseemunisa Begum v. Shaikh Abdul Rehman, 2002 (2) Mah L.J. 115 and Crocs Inc. USA v. Aqualite India Ltd., 2019 SCC OnLine Del 11957, in which it was held that even remarks made in passing by a Division Bench could be binding, especially when they did not contradict established law.

Contextual Interpretation of Amrish Aggarwal Case:

The Hon’ble Single first examined the context of the Amrish Aggarwal case. The Division Bench in that case was primarily concerned with procedural issues arising out of the abolition of the Intellectual Property Appellate Board (IPAB) and whether rectification proceedings triggered a stay under Section 124 of the Trade Marks Act. The primary issue in Amrish Aggarwal was not related to passing off suits, but rather the procedural question of whether infringement actions could be stayed during the pendency of rectification proceedings. The Division Bench’s reference to passing off suits was made incidentally in paragraph 44, without any extensive legal reasoning or argumentation. Therefore, Justice Bansal concluded that the remark was not part of the ratio decidendi and should be treated as obiter dictum.

No Express Overruling of Binding Precedent (Puma Stationer):

The Hon’ble Single Judge, Delhi High Court noted that the Division Bench in Amrish Aggarwal had relied on Puma Stationer Pvt. Ltd. v. Hindustan Pencils Ltd., 2010 (43) PTC 479 (Del.) (DB), which had clearly held that passing off actions are not subject to stay under Section 124. The Division Bench in Amrish Aggarwal did not overrule or even address this binding precedent, further supporting the conclusion that the reference to passing off suits was incidental and lacked any binding authority.

Application of Supreme Court Precedents on Obiter Dictum:

Justice Bansal drew upon established Supreme Court principles that clarify the nature and scope of obiter dictum. In Mohinder Singh Gill v. Chief Election Commissioner, (1978) 1 SCC 405, the Supreme Court held that only the ratio decidendi of a judgment is binding, and obiter dictum, or incidental remarks, are not enforceable in subsequent cases. Similarly, in State of Orissa v. Sudhansu Sekhar Misra, AIR 1968 SC 647, the Supreme Court emphasized that casual observations or statements made without a thorough examination of the issue do not form part of the binding law.

The Hon’ble Single Judge also referred to the case of Gudri v. Ram Kishun, AIR 1984 All 100, where it was held that even stray or inadvertent remarks made by a Full Bench, if inconsistent with settled law, do not bind lower courts. This case further reinforced the position that obiter dictum, even when expressed by larger benches, cannot override established legal principles.

Lack of Detailed Legal Reasoning in Amrish Aggarwal on Passing Off

The Division Bench in Amrish Aggarwal made no reference to key statutory provisions such as Section 27(2) of the Trade Marks Act, which expressly preserves common law rights in passing off actions, independent of the statutory registration status. Moreover, the Division Bench did not cite or discuss previous case law that dealt directly with the application of Section 124 to passing off claims. The lack of legal reasoning and analysis led Justice Bansal to conclude that the reference to passing off suits was inadvertent and non-binding.

Distinction from Other Cases Cited by the Respondent

Court distinguished the cases relied upon by the respondent, such as Naseemunisa Begum v. Shaikh Abdul Rehman and Crocs Inc. USA v. Aqualite India Ltd., where the observations made by the higher benches were integral to the judicial reasoning and central to the legal issues at hand. In contrast, the reference to passing off in Amrish Aggarwal was not framed as an issue for determination and did not involve a detailed examination of the law.

Decision and Legal Principle Clarified:

In light of the above analysis, the Court held that the Trial Court had misapplied the judgment in Amrish Aggarwal by staying the passing off suits. Paragraph 44 of the judgment was not part of the ratio decidendi, and as such, the Single Judge was not bound to follow it. Justice Bansal emphasized that a Single Judge is not bound by an obiter dictum of a Division Bench of the same High Court, particularly when it contradicts established precedent and lacks legal reasoning.Accordingly, the Court set aside the stay order dated January 18, 2025, and directed that all the pending suits—TM Nos. 968/2016, 971/2016, 1030/2016, and 932/2016—proceed to trial along with TM No. 931/2016.

Author’s Comment:A Call for Doctrinal Coherence and Resolution by Larger Bench

The decision in Balar Marketing Pvt. Ltd. v. Lakha Ram Sharma reaffirms a crucial tenet of the doctrine of precedent: that only the ratio decidendi of a judgment possesses binding force, whereas obiter dicta, even if emanating from a Division Bench, lack precedential authority if they are unreasoned or conflict with established legal principles. Justice Amit Bansal's judgment emphasizes the necessity of maintaining doctrinal clarity to prevent the misapplication of incidental judicial remarks as binding law. This ruling serves to uphold the autonomy of common law rights—particularly the right of passing off—while also delimiting the scope of Section 124 of the Trade Marks Act, 1999, which concerns the stay of infringement suits pending rectification proceedings.

However, a critical unresolved issue lingers at the intersection of judicial interpretation and precedential conflict. In the earlier Division Bench decision of Puma Stationer Pvt. Ltd. v. Hindustan Pencils Ltd., the Court stayed the trademark infringement suit under Section 124 but permitted the passing off action to continue. Contrastingly, in the subsequent Amrish Aggarwal v. Venus Home Appliances Pvt. Ltd. (DB), the Division Bench—after noting the petitioner’s reliance on Puma (see para 34)—expressly rejected that reasoning (see para 53) and held (at paras 2 and 44) that both infringement and passing off claims must await the outcome of rectification proceedings.

This divergence reveals an apparent conflict between two Division Bench decisions. In such cases, as established in Christian Louboutin v. Abu Baker, 2019 (78) PTC 262 (Del) (DB), paras 32 and 35, when two coordinate Bench decisions conflict, the matter should be referred to a larger Bench for authoritative resolution. The Balar Marketing judgment, however, sidesteps this necessity by characterizing the relevant observations in Amrish Aggarwal as obiter, thereby preserving the Puma precedent.

This interpretive strategy is complicated further by the earlier Single Judge decision in Abbott Healthcare Pvt. Ltd. v. Raj Kumar Prasad & Anr. [2018:DHC:53] @Para 23,24, where the Court concluded that Puma’s observations regarding the continuation of passing off actions did not constitute binding precedent. The judgment reasoned that since the Division Bench in Puma did not fully adjudicate the issue with reasoned analysis, its observations were not authoritative.

This leads to a paradox: in Abbott, the Single Judge declined to treat Puma as binding, while in Balar, a subsequent Single Judge relied on Puma while dismissing Amrish Aggarwal as mere obiter. In both instances, the judges attempted to reconcile conflicting DB judgments through the lens of ratio vs obiter, yet arrived at opposing conclusions regarding which precedent to follow.

The resulting jurisprudential inconsistency underscores the urgent need for clarity. When two Division Bench judgments express diametrically opposed views on the procedural bifurcation of infringement and passing off under Section 124, reliance on interpretive discretion at the Single Judge level only perpetuates confusion. A definitive pronouncement by a Larger Bench is essential to restore uniformity and doctrinal stability.Until such clarity is provided, judicial uncertainty will persist, potentially undermining the predictability and coherence that the doctrine of precedent is designed to secure.

Balar Marketing Pvt. Ltd. v. Lakha Ram Sharma, CM(M)-IPD 5/2025, decided on March 27, 2025/Delhi High Court, Hon'ble Justice Shri Amit Bansal

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Written By: Advocate Ajay Amitabh Suman,IP Adjutor [Patent and Trademark Attorney] ,High Court of Delhi