How do we generally judge a situation or person? We go by our past experiences and prejudices. The "knowledge" that we have built over the years. If we are too entrenched in our notions, if we are puffed up with the pride of the so called knowledge and experience, we will quite often fail to be objective in our judgment. For e.g., when embarking on a new initiative / project, we are expected to evaluate the pros, cons and risks involved. It is quite humane then to lean on our past experience to evaluate the initiative. But if we obstinately stick to only our biases and experiences, we are likely to fail seeing the possible new avenues that lie ahead of us. While it is prudent to learn from our past mistakes and experiences, it is also sagacious to open up our ears and mind to current situation, to other opinions which might be quite contradictory to ours, to diverse perspectives, in order to take advantage of the new opportunities ahead of us.
Good judgment comes from not getting cocooned in our familiar patterns and prejudices. If we are attached to our self i.e. ego, if we are attached to our intelligence and perspectives, if we are attached to a certain thought or person, we are prone to make bad judgments. Attachment blinds our rational mind. That is what our scriptures teach us, to be detached. If we lead a spiritual life, being detached from person or situation, we are better equipped to make those important judgments and decisions in our life.