The authority of the Supreme Court as precedent is found in Article 141 of the Constitution of India. It provides that law declared by the Supreme Court shall be binding on all Courts within territory of India. In order to know exact meaning of the precedent, it is necessary to know as to what is meant by “the law declared by the Supreme Court” appearing in Article 141.
Number of decisions of the Supreme Court have clarified that there is vast difference between the expressions “the law declared by the Supreme Court” and “the law enacted by the Legislature”. To declare the law means to interpret the law. This interpretation of law is binding on all the Courts in India. This is called as precedent. The law declared by the Supreme Court is essential for proper administration of justice. The main object of doctrine of precedent is that the law of the land should be clear, certain & consistent so that the Courts shall follow it without any hesitation
In Union of India Vs. Raghubir Singh, it has been held that The doctrine of binding precedent has the merit of promoting a certainty and consistency in judicial decisions, and enables an organic development of the law, besides providing assurance to the individual as to the consequence of transactions forming part of daily affairs. And, therefore, the need for a clear and consistent enunciation of legal principle in the decisions of a Court.