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2025 (12) TMI 999 - DELHI HIGH COURT Indian Laws

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Burden of proof for deductions and set-offs requires admissible evidence before they can defeat an established sale claim.
A party claiming deductions, set-offs or adjustments against an admitted sale claim must prove those assertions with admissible and reliable evidence. The Delhi High Court noted that the claimant of the outstanding consideration had established supply of goods and part-payment through pleadings, evidence and admissions, so the burden shifted under Sections 101 to 103 of the Evidence Act to the party asserting fake invoice adjustments, discounts, returns and other offsets. Those defences failed because they were unsupported by ledgers, corroborating documents or credible oral evidence, and the alleged return of goods was neither acknowledged nor backed by proper accounting or input tax credit reversal. Uncertified video material under Section 65B also did not prove the defence.

Entitlement to a decree for recovery - entitlement to pendente-lite and future interest - burden to prove - non-application of mind - violation of principles of natural justice - HELD THAT:- The respondent/plaintiff was able to prove the sale of goods to appellant/defendant and part payment of Rs. 8,00,000/-. This was admitted by appellant/defendant in his written statement, affidavit of evidence and cross-examination - Moreover, as per Section 102 of Indian Evidence Act, 1872 the burden of proving documents rests on the plaintiff, and once plaintiff creates a strong prima facie case, the onus may shift to the appellant/defendant to disprove it. In Muddasani Venkata Narsaiah v. Muddasani Sarojana [2016 (5) TMI 1509 - SUPREME COURT], the Supreme Court held that if a witness is not cross-examined, then their testimony is deemed to be undisputed, and the court would presume that their account is accepted. The Court further clarified that any facts stated by one party in their pleadings, which are neither challenged in the pleadings nor through cross-examination by the opposing party, must be accepted as fully established. In Mohd. Abdullah Azam Khan [2022 (11) TMI 1575 - SUPREME COURT], the Supreme Court observed that the burden of proof lies on the person who asserts a fact and not on a party who denies it, particularly when it is not self-evident, and remains on them unless discharged - the Supreme Court in paragraph 80 of Mohd. Abdullah Azam Khan also observed that Section 103 of IEA provides that the burden of proving a specific fact lies on the party who wants the Court to believe in its existence, unless the law places that burden elsewhere. This amplifies Section 101 of IEA, which states that the burden lies on the party asserting the affirmative. It is apparent from the findings recorded by the Trial Court that the appellant/defendant has failed to discharge the burden of proof cast upon him to establish the alleged return of goods, grant of discount, or any other adjustments as claimed. The appellant/defendant did not lead sufficient evidence to substantiate these assertions, and in the absence of such proof, the law is clear that the person who asserts a fact needs to lead evidence to that respect. Therefore, the Trial Court rightly declined to accept these pleas. The appeal is dismissed.

2025 (12) TMI 553 - Supreme Court Indian Laws

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Issues: (i) Whether the bill discounting transaction was a commercial arrangement governed by the contractual terms, so as to exclude application of the Usurious Loans Act and the plea that the agreed interest and monthly rests were unenforceable as penalty or as opposed to public policy. (ii) Whether clause 4 of the sanction letters could be construed against the respondent on the principle of contra proferentem, or treated as requiring a separate notice before withdrawal of the concessional rate of interest.

Issue (i): Whether the bill discounting transaction was a commercial arrangement governed by the contractual terms, so as to exclude application of the Usurious Loans Act and the plea that the agreed interest and monthly rests were unenforceable as penalty or as opposed to public policy.

Analysis: The facility was held to be a commercial bill discounting arrangement and not a loan or debt transaction. The contractual documents expressly provided for joint and several liability, withdrawal of the concessional rate on default, and payment of the normal rate with monthly rests thereafter. On the construction of Section 31(7)(a) of the Arbitration and Conciliation Act, 1996, party autonomy controls the tribunal's discretion where the parties have otherwise agreed on interest. The agreed interest was therefore not open to challenge as unconscionable, excessive, or contrary to public policy merely because the default rate was high. The Court also treated compounding in a commercial contract of this kind as permissible and not penal, especially where the borrower had voluntarily entered the arrangement and derived benefit from it.

Conclusion: The issue was decided against the appellant and in favour of the respondent; the contractual interest stipulation was held enforceable.

Issue (ii): Whether clause 4 of the sanction letters could be construed against the respondent on the principle of contra proferentem, or treated as requiring a separate notice before withdrawal of the concessional rate of interest.

Analysis: The clause was found to be clear and bilateral, forming part of a negotiated commercial contract between parties of comparable bargaining strength. The contra proferentem rule was held to be inapplicable because it operates only where ambiguity exists and is especially confined to standard form or unequal-bargaining situations. The contention that a separate notice was required before the concessional rate could be withdrawn was also rejected, since no such plea had been consistently raised earlier and, in any event, the contractual text itself specified the consequence of delay or default. The Court further held that a party that has knowingly accepted the contractual benefit cannot later avoid the agreed consequences by alleging unfairness.

Conclusion: The issue was decided against the appellant and in favour of the respondent; clause 4 was upheld as written.

Final Conclusion: The appeals failed because the award and the concurrent High Court orders were sustained on the basis that the parties' commercial bargain governed the interest stipulation and related consequences of default.

Ratio Decidendi: Where sophisticated parties to a commercial contract have expressly agreed to the rate and consequences of default interest, the arbitral tribunal is bound by that agreement under Section 31(7)(a) of the Arbitration and Conciliation Act, 1996, and the stipulated interest cannot be struck down as penal or unconscionable merely because it is high.

Commercial contract interest clauses upheld where parties expressly agreed to default consequences and concessional rate withdrawal.
A commercial bill discounting arrangement was treated as governed by its contractual terms, not as a loan attracting the Usurious Loans Act. The agreed interest, monthly rests, and withdrawal of a concessional rate on default were upheld because party autonomy under Section 31(7)(a) of the Arbitration and Conciliation Act, 1996 required the tribunal to give effect to the bargain, and the stipulated interest was not penal or contrary to public policy merely because it was high. Clause 4 of the sanction letters was also upheld as clear and bilateral; contra proferentem did not apply, and no separate notice was required before withdrawing the concessional rate.

Nature of commercial contracts between the parties - bill discounting arrangements - transaction between the parties was a loan or a debt, or it was simply in the nature of a commercial transaction? - Grant of interest under the Award and Impugned Orders is opposed to public policy in terms of Section 34(2)(b)(ii) of the Arbitration Act read with Section 80 of the Negotiable Instruments Act, 1881 or not - Section 31(7)(a) and (b) respectively of the Act, 1996 - Is penal interest on penal interest opposed to public policy - Applicability of the maxim 'Verba Chartarum Fortius Accipiuntur Contra proferentem, in the present case - Application of Section 74 of the Contract vis-a-vis Section 31(7)(a) of the Arbitration Act, 1996. Nature of commercial contracts between the parties - HELD THAT:- The crucial difference is that a bill discounting facility is a short-term financing option where a business sells its unpaid invoices to a financial institution for immediate cash, while a business loan is a traditional debt obligation where the business receives a lump sum and is responsible for repaying it with interest. High interest rates are prescribed in a contract, relating to a bill discounting facility primarily due to the higher risk profile of the financing, its nature as a short-term unsecured funding source and the need for the financial institution to compensate for the associated costs and potential for non-payment. The higher rate is a trade-off for the business, which gains immediate liquidity and operational flexibility by paying a premium to offload the waiting period and associated payment risks to a financial institution. In other words, contracts relating to a bill discounting facility typically contain high rates of interest primarily due to the higher risk profile for the lender, the unsecured and short-term nature of the financing, and the quick and hassle-free access to cash it provides. Keeping the fine distinction between a loan and a bill discounting facility in mind, the High Court did well to take the view that the provisions of the Usurious Loans Act, 1918 would not be applicable in the present case. The High Court said so because in the present litigation the commercial transaction was one relating to the bill discounting facility and not a loan. The Usurious Loans Act, 1918 would apply to a loan and not to transaction relating to bill discounting facility. Section 31(7)(a) and (b) respectively of the Act, 1996 - HELD THAT:- From a conjoint analysis of Section 31(7)(a) and Section 31(7)(b) of the Act, 1996 respectively what is discernible is that insofar award of interest from the date on which the cause of action arose till the date of the award is concerned, the legislative intent is that the parties possess the autonomy to determine the interest and the rate of interest for the aforesaid period. Clause (a) i.e. discretion of the arbitral tribunal to award interest is subject to agreement by and between the parties. Therefore, party autonomy takes precedence over the discretion of the arbitral tribunal. However, clause (b) is subject to award of interest by the arbitral tribunal. In other words, as per clause (b), the ‘sum’ directed to be paid under an arbitral award shall carry interest at the rate of 18% p.a. from the date of the award to the date of payment ‘unless the award otherwise directs’. Therefore, this provision is subject to award of interest by the arbitral tribunal. If it awards interest, then the same shall be applicable from the date of the award till the date of payment; if not, then the ‘sum’ as adjudged under clause (a) shall carry interest at the rate of 18%. After the amendment in 2015 interest at the rate of 2% higher than the current rate of interest prevalent on the date of award, from the date of award to the date of payment. A two-Judge Bench of this Court in S.L. Arora [2010 (1) TMI 1261 - SUPREME COURT] considered the question as to whether Section 31(7) of the Act, 1996 authorises and enables arbitral tribunals to award interest on interest from the date of the award? In the facts of that case, the consequential question formulated was as to whether the arbitral award granted future interest from the date of award, only on the principal amount found due to the respondent or on the aggregate of the principal and interest up to the date of the award? After an analysis of the aforesaid provision, the Bench observed that Section 31(7) makes no reference to payment of compound interest or payment of interest upon interest. It was held that in the absence of any provision for interest upon interest in the contract, arbitral tribunals do not have the power to award interest upon interest or compound interest either for the pre-award period or for the post-award period. The view of the court is clearly discernible in that the discretion to grant interest would be available to the arbitral tribunal under clause (a) of sub-section (7) of Section 31 only when there is no agreement to the contrary between the parties. When the parties agree with regard to any of the aspects covered under clause (a) of subsection (7) of Section 31, the arbitral tribunal would cease to have any discretion with regard to the aspects mentioned in the said provision. Only in the absence of such an agreement, the arbitral tribunal would have the discretion to exercise its powers under clause (a) of sub-section (7) of Section 31 of the Act, 1996. Is penal interest on penal interest opposed to public policy - HELD THAT:- Public policy is dictated by the law-making power the legislature, and is found in the general tenor of statutes, and in direct enactments. When the legislature, within the powers conferred by the constitution, has declared the public policy, and fixed the rights of the people by statute, the courts cannot declare a different policy or fix different rights. Section 74 of the Indian Contract Act explicitly bars any liquidated damages to be paid which is in the nature of penalty. However, the Act does not define “penalty”. A clause is considered to be in the nature of penalty if it provides for “a payment of money stipulated as in terrorem of the offending party” or, if the clause's contractual nature is “deterrent rather than compensatory”. On the other hand, a clause is said to be one of liquidated damages if it is a genuine endeavour by the parties to stipulate the loss arising out of the breach in advance. The nature of the clause would also depend on its construction and the encompassing circumstances during the time of entering into the contract or at the time of doing the material variation in the contract. It is well settled that a contract is a commercial document between the parties, and it must be interpretated in such a manner so as to give efficacy to the contract rather than to invalidate it in the name of public policy, unconscionability etc. It is equally well settled principle that the terms of the contract executed between two parties, are not open to judicial scrutiny unless the same is arbitrary, discriminatory, mala fide or actuated by bias. The courts should not strike down the terms of a contract because it feels that some other terms would have been fair, wiser or logical. The appellant was in need of finance and on its own will and volition approached the respondent for the same and knowingly entered into the bill discounting facility agreement. Had the appellant abided by the terms and conditions of repayment it could have availed facility of concessional rate as provided in the agreement, however, the appellant just shut its eyes and declined to make the payment for years together. In such circumstances the conditions stipulated in the agreement of compound interest at the rate of 36% monthly rest cannot be termed as burdensome or oppressive in any manner - The grant of pendente lite interest depends upon the phraseology used in the agreement, clauses conferring power relating to arbitration, the nature of claim and dispute referred to the arbitrator, and on what items the power to award interest has been taken away and for which period. Also, the position under Section 31(7) of the 1996 Act, is wholly different, inasmuch as Section 31(7) of the 1996 Act sanctifies agreements between the parties and states that the moment the agreement says otherwise, no interest becomes payable right from the date of the cause of action until the award is delivered. Applicability of the maxim 'Verba Chartarum Fortius Accipiuntur Contra proferentem, in the present case - HELD THAT:- It is a rule of interpretation that contracts are to be interpreted based on their plain meaning, as a whole and in accordance with the language used. It is also a settled principle that in case of any ambiguity, a contract will have to be interpreted taking into consideration the surrounding facts and circumstances. The true construction of a commercial contract must depend upon the import of the words used and not upon what the parties choose to say afterwards. Nor does subsequent conduct of the parties in the performance of the contract affect the true effect of the clear and unambiguous words used in the contract. The intention of the parties must be ascertained from the language they have used, considered in the light of the surrounding circumstances and the object of the contract. The nature and purpose of the contract is an important guide in ascertaining the intention of the parties - It is also a well-recognised principle of construction of a contract that it must be read as a whole in order to ascertain the true meaning of its several clauses and the words of each clause should be interpreted so as to bring them into harmony with the other provisions if that interpretation does no violence to the meaning of which they are naturally susceptible. Application of Section 74 of the Contract vis-a-vis Section 31(7)(a) of the Arbitration Act, 1996 - HELD THAT:- Any question as to the unconscionableness of a stipulation contained in an agreement would probably arise for consideration only if it is shown that the relationship between the contracting parties was such that one of them was in a position to dominate the will of the other and that he had made use of such position to obtain an unfair advantage over the other. It is only in cases where both the conditions mentioned above are clearly established by the person who seeks to avoid the transaction and the court further finds that the bargain is in itself unconscionable that the impugned provision will be held to be unenforceable on the ground of unconscionableness. There are no hesitation in going to the extent of saying that where in a contract under which interest is payable it is agreed between the parties that if such interest be not paid punctually the defaulter shall be liable to pay interest at an enhanced rate, whether from the time of default or from the time when interest first became payable under the contract such agreement does not come within Section 74 of the Indian Contract Act, and is to be construed according to the intentions of the parties as expressed therein and not as a stipulation for a penalty. Such agreement is to be enforced according to its terms, unless it be found to have been when made unconscionable or fraudulent. Appeal dismissed.

2026 (2) TMI 774 - GAUHATI HIGH COURT Indian Laws

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Curable defect in company authorisation for cheque complaint; later board resolution and power of attorney may be accepted.
A complaint under the Negotiable Instruments Act by a company is maintainable when filed through an authorised representative with knowledge of the transaction. An initial defect in authorisation is not fatal if it can be cured later by a valid board resolution and ratification. Permitting additional evidence to place the subsequent resolution and fresh power of attorney on record does not ordinarily amount to impermissible filling up of a lacuna. The accused may challenge the sufficiency of authorisation and knowledge at trial, but such objections do not generally justify quashing at the threshold.

Initial of defect in authorization for instituting a complaint u/s 138 of the Negotiable Instruments Act, 1881 - Curable defect - company acts through natural persons - representation of a company by an authorised employee - prima facie material for taking cognizance - dismissal at threshold for lack of authorization is too hasty - quashing u/s 482 CrPC not warranted where factual disputes exist - HELD THAT:- In TRL Krosaki Refractories Ltd. [2022 (2) TMI 1112 - SUPREME COURT], the Apex Court has held that in cases under Section 138 of the NI Act, the complainant necessarily should be the company which should be represented by an employee who is authorized and prima facie in such a situation, the indication in the complaint and the sworn statement to the effect that the complainant company is represented by an authorized person who has knowledge would be sufficient. The Apex Court further held that if at all there is any serious dispute with regard to the person prosecuting the complaint not being authorized or if it is to be demonstrated that the person who filed the complaint has no knowledge of the transaction, it would be open for the accused to dispute the position and establish the same during the course of the trial and the Magistrate would not be justified in dismissing the complaint at the threshold on the question of authorization. It was further held that in such circumstances, entertaining a petition under Section 482 to quash the order taking cognizance by the Magistrate would be unjustified when the issue of proper authorization can only be an issue for trial. Further, it has been clearly held in MMTC Limited [2001 (11) TMI 837 - SUPREME COURT] that the initial absence of a Board Resolution or authorization for filing a complaint under Section 138 N.I Act is a curable defect and not a ground to quash the proceedings and that a company acts through natural persons and subsequent ratification validates the complaint. Thus, it is abundantly clear that any initial defect as regards authorization at the time of initiation of the complaint is a curable defect which can be subsequently cured during the course of the trial or even at the appellate stage as held by the Supreme Court in George Joseph & Another [2014 (10) TMI 1088 - KARNATAKA HIGH COURT] No infirmity in the impugned order of the Magistrate permitting the complainant to adduce additional evidence to bring on record the subsequent resolution of the Board of Directors and General Power of Attorney authorizing the complainant to institute the complaint. Accordingly, the instant criminal petition is found to be devoid of merit and is dismissed accordingly.

2025 (12) TMI 551 - KARNATAKA HIGH COURT Indian Laws

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Issues: (i) Whether the suit was within limitation on the basis of a running account and the last payment made by the defendants; (ii) Whether the defendants were liable for the principal amount under the invoices, the alleged hand loan, set-off, and interest.

Issue (i): Whether the suit was within limitation on the basis of a running account and the last payment made by the defendants.

Analysis: The transactions between the parties were found to be continuous and were reflected in a running account. The invoices were issued over a period of time and the ledger showed periodic payments, with the last admitted payment made on 01.09.2020. The Court applied the principle that where payments are made towards an outstanding running account, limitation is computed from the last payment, and also relied on the statutory effect of part-payment under the Limitation Act, 1963. Since the suit was filed within three years of the last payment, the claim was not time-barred.

Conclusion: The suit was held to be within limitation, against the appellants and in favour of the respondent.

Issue (ii): Whether the defendants were liable for the principal amount under the invoices, the alleged hand loan, set-off, and interest.

Analysis: The ledger and invoices established liability for the goods supplied under the running account. The alleged hand loan of Rs. 3 lakhs was not proved by the plaintiff through the pleadings, testimony, or bank records, and that component could not be sustained. The defendants failed to prove any legally acceptable set-off or reversal of input tax credit, and their objection regarding a separate loan transaction also failed for want of supporting material. The invoices contained a stipulation for interest at 18% in commercial transactions, which justified the award of interest on the proved liability. Accordingly, the decree required modification only to exclude the unproved hand-loan component.

Conclusion: The defendants were held liable for the invoice amount proved on record and interest thereon, but not for the alleged hand loan of Rs. 3 lakhs; the decree was modified accordingly, partly in favour of the appellants and substantially in favour of the respondent.

Final Conclusion: The appeal resulted in a limited reduction of the decretal amount, while the finding on limitation and the liability arising from the commercial running account was sustained.

Ratio Decidendi: In a continuous commercial running account with admitted part-payments, limitation runs from the last acknowledged payment, and a claimed money component not proved by evidence cannot be included in the decree.

Running account limitation and proof of liability control recovery in commercial invoice disputes
In a continuous commercial running account, limitation was computed from the last acknowledged payment, and part-payment under the Limitation Act, 1963 supported timeliness where the suit was filed within three years of that payment. Liability for goods supplied under the invoices was supported by the ledger and invoices, but the alleged hand loan was excluded because it was not proved by pleadings, testimony, or bank records. The claimed set-off and reversal of input tax credit were not established on acceptable evidence, while the contractual interest clause at 18% in commercial transactions justified interest on the proved liability.

Suit for recovery of money filed by the respondent/plaintiff against the appellants/defendants has been decreed - defendant placed the purchase order and the plaintiff have supplied the materials to the defendants on credit and issued invoice as per the rule 46 of GST - suit barred by time limitation or not - entitlement for set-off of various amounts as claimed. Whether the trial Court was justified in recording a finding that the suit is within time? - HELD THAT:- The suit was filed on 30.06.2023 within three years from the last date of payment. Hence, the trial Court held that the suit is within time. The plaintiff has specifically averred regarding supply of goods to the defendants periodically as per the request made by the defendants. The invoices under which the goods supplied were marked as Exs.P3 to P67. The defendants had acknowledged the receipt of the goods under the respective invoices, wherein the date and time as well as the vehicle number is mentioned. The ledger account extract (Ex.P68) clearly discloses that lumpsum amounts were paid periodically and the balance amount due [after deducting the amounts paid from the cumulative value of the goods supplied] were carried forward to the next financial year. The payments were not made as per specific invoices. The defendants in the written statement had also specifically detailed as to various payments made by them. Hence, it is clear that the plaintiff had maintained a running account in respect of its transactions with the defendants. As noticed in the said running account (Ex.P68) the last transaction was a payment of Rs. 1,89,060/- on 01.09.2020, admittedly made by the defendants to the plaintiff. Hence, the suit was filed on 30.06.2023, within 3 years of the last transaction - the issue framed for consideration is answered in the affirmative. Whether the trial Court was justified in holding that the defendants are liable to pay the plaintiff the amount due under the various invoices raised by the plaintiff? - Whether the trial Court was justified in recording a finding that the defendants are liable to pay a sum of Rs.3 lakhs allegedly advance as hand loan by the plaintiff? - Whether the defendants are liable for set-off of various amounts as claimed? - Whether the trial Court was justified in awarding interest @ 18% per annum? - Whether the judgment and decree passed by the trial Court warrants interference in the present appeal? - HELD THAT:- It is pertinent to note that the trial Court had recorded a finding that since no order under Section 14 of the Insolvency and Bankruptcy, 2016 (IBC) declaring a moratorium had been passed, the question of staying the further proceedings in the suit did not arise. Further, the respondents-plaintiffs had stated that proceedings before the NCLT had been initiated and the same were at a preliminary stage. The said proceedings were not listed before the NCLT and no orders were passed in the same. The appellants have also not produced any material as to the stage of the proceedings before the NCLT as also as to whether any orders have been passed in the said proceedings. Hence, no ground is made out by the appellants to interfere with the impugned judgment and decree on the said ground. As regards the contention of the defendants that there was no agreement to pay interest at 18% and that the Trial Court ought not to have awarded interest at 18%, it is pertinent to note that in the invoices (Exs.P3 to P67) it is specifically mentioned that interest will be charged at 18% if the amount under the invoices is not paid within 30 days. Further, the transaction between the parties being a commercial one, the decision of the Trial Court awarding interest at 18% per annum cannot be faulted. The Trial Court while decreeing the suit has awarded the principal sum of Rs. 42,54,223/- as claimed by the plaintiff. However, in view of the finding recorded hereinabove with regard to the plaintiff not having adequately proved the hand loan of Rs. 3.00 lakhs, the plaintiff is not entitled to the said amount. To the said extent, the judgment and decree passed by the Trial Court is required to be interfered with/modified. The judgment and decree passed by the Trial Court in all other respects is required to be affirmed. The judgment and decree dated 30.1.2025 passed in Com. O.S.No.762/2023 by the LXXXII Additional city civil and Sessions Judge, Bengaluru (CCH-83), is modified by directing that the appellants/defendants pay the respondent/plaintiff the principal amount of Rs. 39,54,223/- together with interest at 18% per annum from 1.9.2020 up to date of payment with costs - Appeal allowed in part.

2025 (12) TMI 1854 - Supreme Court Indian Laws

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Maintainability of a second special leave petition barred after prior dismissal and limited liberty to seek review.
A fresh special leave petition under Article 136 was held not maintainable where an earlier challenge to the same High Court judgment had already been dismissed and the later recall application was withdrawn with liberty limited only to seek review before the High Court. Applying finality of litigation, withdrawal without broader liberty, the doctrine of merger, and the limited scope of review jurisdiction, the SC held that a second invocation of Article 136 was barred in the absence of express liberty to reapproach the Court after review. The review court had also found no infirmity warranting interference, and the petition was dismissed in limine.

Maintainability of second special leave petition - Finality of litigation - Review jurisdiction after dismissal of special leave petition - Binding force of existing precedent despite pending reference - Scope of review jurisdiction - Doctrine of merger - Finality in litigation - Public policy - Res judicata - Review jurisdiction - Withdrawal without liberty - Abuse of process Maintainability of second special leave petition - Finality of litigation - Review jurisdiction - HELD THAT: - The Court held that, although dismissal of a special leave petition by a non-speaking order does not bar a review before the High Court, that principle does not entitle the same party to return to this Court once again after the review has failed, unless specific liberty to do so had been granted. Rejection of review does not result in merger of the original judgment into the review order; the original judgment remains intact. In the present case, the earlier special leave petition against the main judgment had already been dismissed, the recall application was withdrawn only with liberty to seek review before the High Court, and no further liberty was reserved to approach this Court again. Entertaining the present petition would therefore amount to permitting a second challenge to the same matter and would offend the principle of finality in litigation. The Court also noted that, though the High Court need not have treated the earlier dismissal of the special leave petition as an inhibition on its review power, it had nevertheless found no infirmity warranting review, and that limited review determination was sufficient to sustain the impugned order. [Paras 20, 21, 22, 23] The preliminary objection was upheld and the special leave petition was held not maintainable and dismissed in limine. Pending reference to larger Bench - Binding precedent - HELD THAT: - The Court reiterated that a mere reference to a larger Bench does not dilute or suspend the operation of the law already declared. Unless this Court specifically directs otherwise, courts must decide matters on the basis of the law as it presently stands, and a later doubt expressed by a coordinate Bench or pendency of review or reference cannot be treated as a reason to defer adjudication. [Paras 24] The pending reference was held not to affect application of the prevailing precedents governing maintainability. Final Conclusion: The Court accepted the preliminary objection and held that the present special leave petition was not maintainable, since the earlier challenge to the main judgment had already failed and no liberty had been reserved to approach this Court again after review. While dismissing the petition in limine, the Court clarified, in exercise of Article 142 and on the special facts of the case, that the liability would remain confined to the identified pensioners and spouses mentioned in the order.

2025 (12) TMI 1848 - MADRAS HIGH COURT Indian Laws

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Property survey and demarcation require notice to neighbours, consideration of objections, and timely completion with police assistance if needed.
Property survey and demarcation may proceed only after notice is issued to neighbouring landowners and any other necessary party, with objections considered before the exercise. The Madras HC directed the respondents to complete the survey and demarcation of the petitioner's property within 12 weeks, and to provide police assistance if requested. The direction emphasizes prior notice, hearing of objections, and orderly implementation of the survey process.

2025 (12) TMI 1875 - Supreme Court Indian Laws

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Issues: (i) Whether the allegations and charge-sheet disclosed voyeurism under Section 354C of the Indian Penal Code, 1860; (ii) Whether the material disclosed criminal intimidation under Section 506 of the Indian Penal Code, 1860; (iii) Whether the material disclosed wrongful restraint under Section 341 of the Indian Penal Code, 1860 and justified refusal of discharge.

Issue (i): Whether the allegations and charge-sheet disclosed voyeurism under Section 354C of the Indian Penal Code, 1860.

Analysis: Voyeurism requires watching or capturing a woman while she is engaged in a private act in circumstances giving her a reasonable expectation of privacy. The FIR and charge-sheet alleged only that photographs and videos were taken, without alleging that the complainant was engaged in a private act.

Conclusion: No offence of voyeurism was made out; the finding is in favour of the appellant.

Issue (ii): Whether the material disclosed criminal intimidation under Section 506 of the Indian Penal Code, 1860.

Analysis: Criminal intimidation requires a threat of injury to person, reputation, or property, made with intent to cause alarm. Apart from a bare assertion of intimidation through photographing, the record contained no particulars of any threat, injury, or words used, and no supporting statement of the complainant or accompanying persons.

Conclusion: The ingredients of criminal intimidation were not attracted; the finding is in favour of the appellant.

Issue (iii): Whether the material disclosed wrongful restraint under Section 341 of the Indian Penal Code, 1860 and justified refusal of discharge.

Analysis: Wrongful restraint requires obstruction of a person entitled to proceed in the relevant direction, subject to the exception where obstruction is caused in good faith under a belief of lawful right. The material did not establish that the complainant was a tenant or otherwise entitled to enter the property; it indicated that she was only a prospective tenant. Her proposed induction also conflicted with the subsisting injunction against creation of third-party rights. The appellant's conduct was consistent with a bona fide assertion of lawful rights arising from the injunction. At the discharge stage, prosecution material must generate strong suspicion founded on evidence capable of translation at trial; that threshold was absent.

Conclusion: Wrongful restraint was not made out and discharge was warranted; the finding is in favour of the appellant.

Final Conclusion: The criminal prosecution lacked legally tenable material creating strong suspicion for any of the alleged offences, and the dispute was properly confined to available civil remedies.

Ratio Decidendi: An accused must be discharged where prosecution material, even accepted at face value, does not disclose the statutory ingredients of the alleged offences or generate strong suspicion founded on legally tenable evidence.

Statutory ingredients and strong suspicion govern discharge where allegations of voyeurism, intimidation and wrongful restraint lack supporting material.
Voyeurism requires allegations that a woman was watched or recorded while engaged in a private act with a reasonable expectation of privacy; photographs or videos alone do not satisfy that requirement. Criminal intimidation requires a particularised threat of injury intended to cause alarm, which cannot rest on a bare assertion. Wrongful restraint requires obstruction of a person entitled to proceed, subject to a good-faith belief in lawful right. Where prosecution material does not disclose these statutory ingredients or create strong suspicion based on legally tenable evidence, discharge is warranted and the dispute remains within available civil remedies.

Discharge for absence of strong suspicion - Voyeurism-requirement of private act - Criminal intimidation-essential ingredients - Wrongful restraint-right to proceed and lawful obstruction Discharge for absence of strong suspicion - Prima facie case at charge stage - Discharge of an accused where the prosecution material does not raise strong suspicion capable of being translated into evidence at trial. - HELD THAT: - At the discharge stage, the court may sift the prosecution material to ascertain whether there is sufficient ground to proceed. While the material is to be accepted as true and its probative value cannot be evaluated, a charge must rest on material giving rise to strong suspicion; suspicion alone is insufficient. [Paras 15, 16, 17] The prosecution material did not disclose strong suspicion founded on legally tenable evidence, warranting the appellant's discharge. Voyeurism-requirement of private act - Whether photographing or recording the complainant while she sought entry into the property constituted voyeurism under Section 354C IPC. - HELD THAT: - Voyeurism requires watching or capturing the image of a woman engaging in a private act in circumstances giving her an expectation of privacy. The FIR and chargesheet did not allege that the complainant was watched or recorded while engaging in any such private act. [Paras 19, 20, 21] No offence of voyeurism under Section 354C IPC was disclosed. Criminal intimidation-essential ingredients - Whether the allegation that the appellant intimidated the complainant by clicking photographs established criminal intimidation under Section 506 IPC. - HELD THAT: - Criminal intimidation requires a threat of injury to person, reputation or property, made with intent to cause alarm. The FIR and chargesheet contained only a bald allegation of intimidation, without stating any threatening words, manner of threat, or injury threatened; nor was there any statement substantiating the allegation. [Paras 22] The ingredients of criminal intimidation under Section 506 IPC were not attracted. Wrongful restraint-right to proceed and lawful obstruction - Good-faith assertion of lawful right - Whether preventing a prospective tenant from entering property subject to a subsisting injunction constituted wrongful restraint under Section 341 IPC. - HELD THAT: - Wrongful restraint requires obstruction of a person proceeding in a direction in which that person has a right to proceed; the statutory exception applies where the alleged obstructer in good faith believes that he has a lawful right to obstruct. The material did not establish that the complainant was a tenant or had a right to enter the property, and indicated that she was only a prospective tenant. The appellant's conduct was, at most, an assertion of what he bona fide believed to be his lawful right under the subsisting injunction. [Paras 24, 25, 26, 27, 29] No offence of wrongful restraint under Section 341 IPC was made out, and the criminal proceedings could not continue. Final Conclusion: The appeal was allowed, the impugned judgment and order were set aside, and the appellant was discharged from the criminal case.

2025 (12) TMI 760 - BOMBAY HIGH COURT Indian Laws

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1. ISSUES PRESENTED AND CONSIDERED

1.1 Whether the writ petition under Article 226 challenging a show cause notice and the consequential adjudication order is maintainable in the presence of an alternate and efficacious statutory remedy of appeal.

1.2 Whether alleged breach of principles of natural justice, including denial of cross-examination and alleged inadequate opportunity, justifies bypassing the statutory appellate remedy.

1.3 Whether the requirement of pre-deposit for filing a statutory appeal, having regard to the quantum of penalty, constitutes a ground to invoke writ jurisdiction in preference to the alternate remedy.

1.4 Whether, in writ proceedings, the Court should examine factual findings on the petitioner's alleged role in a fraudulent export syndicate when such findings can be assailed in statutory appeal.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Maintainability of writ petition in presence of alternate and efficacious statutory remedy

Legal framework (as discussed)

2.1 The Court considered the settled principle that writ jurisdiction under Article 226 is ordinarily not to be exercised where an alternate and efficacious statutory remedy of appeal is available, save in exceptional situations. The Court relied upon and followed its own prior decisions and the decision of the Supreme Court reiterating this doctrine and delineating the limited exceptions.

Interpretation and reasoning

2.2 The impugned show cause notice had culminated in an adjudication order against which a statutory appeal was available. The Court held this remedy to be alternate and efficacious.

2.3 The Court referred to its detailed analysis on exhaustion of alternate remedies in a previous decision and to the Supreme Court's reiteration that High Courts should not entertain writ petitions where statutory remedies exist, except in exceptional cases supported by proper pleadings and material.

2.4 It was noted that the petitioners attempted to bring the case within the recognised exceptions without adequate pleadings or substantiating material, and even tried to argue a case not pleaded while abandoning what was cursorily pleaded.

Conclusions

2.5 The Court held that no exceptional case had been made out to depart from the standard rule of relegating the petitioner to the alternate statutory remedy and that the writ petition was not maintainable on this ground.

Issue 2: Alleged violation of principles of natural justice (including denial of cross-examination and adequacy of opportunity)

Legal framework (as discussed)

2.6 The Court reiterated that there is "nothing like a mere technical breach of natural justice"; prejudice must be specifically pleaded and established. Only serious violations, properly articulated and supported, can justify bypassing alternate remedies.

Interpretation and reasoning

2.7 The petitioner alleged violation of natural justice, inter alia on the ground that it was not permitted to cross-examine certain persons whose statements were relied upon in adjudication, and that it was innocent and unconnected with the alleged fraudulent syndicate.

2.8 The Court held that the allegations of breach of natural justice were "vague" and at best indicated a case of alleged "inadequate opportunity," not "no opportunity." Determining whether there was any violation would require examination of several factual issues, which is ordinarily within the domain of the appellate authority rather than the writ court.

2.9 The Court found that the pleadings did not meet the required standard because there was no clear articulation of prejudice suffered by the petitioner as a consequence of the alleged breach.

2.10 The Court observed, prima facie, that the plea of violation of natural justice appeared to be invoked mainly to circumvent the requirement of pre-deposit in appeal, rather than as a substantiated ground of serious procedural illegality.

Conclusions

2.11 The Court held that the alleged violation of natural justice did not, on the pleadings and material presented, constitute an exceptional ground to entertain the writ petition in the face of an efficacious appellate remedy, and that such contentions should be raised before the appellate authority.

Issue 3: Effect of pre-deposit requirement and alleged harshness of quantum on recourse to writ jurisdiction

Interpretation and reasoning

2.12 The petitioner argued that, having regard to the quantum of penalty, it would be harsh to insist on availing the appellate remedy, which required a statutory pre-deposit.

2.13 The Court noted that the learned counsel for the petitioner did not contend that the petitioner was unable to afford the pre-deposit amount, only that the requirement was harsh given the penalty quantum.

2.14 Relying on its own recent decision in a similar context, where vague claims of incapacity to comply with pre-deposit were rejected, the Court reaffirmed that mere assertion of harshness or inconvenience does not render the statutory remedy inefficacious nor justify bypassing it.

Conclusions

2.15 The Court held that the pre-deposit requirement, even in the context of a high penalty, does not by itself constitute a valid ground to invoke writ jurisdiction in preference to the prescribed appeal, absent concrete pleadings and proof of genuine incapacity.

Issue 4: Scope of writ jurisdiction in reassessing factual findings on involvement in alleged fraudulent export syndicate

Interpretation and reasoning

2.16 The adjudication order recorded detailed findings that the petitioner had emerged as a "key orchestrator of a fraudulent diamond export syndicate, centrally coordinating operations involving the misuse of dummy IECs, forged documents and shell firms," and contained particulars of the petitioner's alleged involvement.

2.17 Against such detailed findings, the petitioner's case in the writ petition largely comprised bare denials and general assertions of innocence and lack of involvement.

2.18 The Court emphasized that it could not, in writ jurisdiction, re-appreciate evidence or undertake a reassessment of factual findings based on such bare denials, especially where a comprehensive appellate mechanism existed and the impugned order itself detailed the modus operandi and role attributed to the petitioner.

2.19 The appropriate forum to challenge and seek reversal of these factual findings is the statutory appellate authority, where the petitioner can lead arguments and material to contest the conclusions in the impugned order.

Conclusions

2.20 The Court declined to entertain the petitioner's challenge to the factual findings on involvement in the fraudulent syndicate under writ jurisdiction and held that such issues must be agitated in appeal.

Overall Disposition

2.21 The writ petition was dismissed, with liberty to the petitioner to avail of the alternate statutory remedy of appeal against the impugned adjudication order; no order as to costs was made.

Writ petition against diamond export fraud adjudication dismissed as non-maintainable due to alternate appellate remedy, liberty reserved
HC dismissed the writ petition challenging the adjudication order concerning alleged participation in a fraudulent diamond export syndicate, holding it non-maintainable in view of the efficacious statutory appellate remedy. The Court rejected the plea of violation of natural justice as vague and unsubstantiated, noting the case involved, at most, alleged inadequate opportunity without pleaded or demonstrated prejudice. It held that disputed factual issues and the petitioner's denial of involvement must be addressed in appeal, not in writ jurisdiction. The Court also inferred that the natural justice plea was raised primarily to circumvent the statutory pre-deposit requirement, and granted liberty to file an appeal.

Maintainability of petition - availability of alternative remedy - requirement of making pre-deposit - involvement in fraudulent diamond export syndicate - denial to cross-examine some of the parties who had given statements in the adjudication proceedings - violation of principles of natural justice - HELD THAT:- The allegations in the Petition regarding the violation of natural justice are vague. In any event, this is not a case of ‘no opportunity’, but at the highest, this is a case of alleged inadequate opportunity. To determine whether there was indeed any violation of natural justice, this Court would have to examine the several factual issues. Besides, it is well settled that there is nothing like a mere technical breach of natural justice. Prejudice must be pleaded and established. The pleadings fall short of this standard - The plea of violation of natural justice, at least prima facie, has been raised only to avoid making a pre-deposit in the Appeal. The learned counsel for the Petitioner did not even submit that the Petitioner cannot afford to make the pre-deposit amount. The order gives details about the Petitioner’s involvement. Therefore, the submission that the Petitioner is innocent or is not at all involved in the fraudulent diamond export syndicate cannot be accepted at its face value or at this stage. No doubt the Petitioner would be at liberty to appeal the impugned order and convince the appellate authority that the findings recorded in the impugned order are incorrect. However, that is not an exercise which the Writ Court can be expected to undertake based upon bare denials. In the case of Oberoi Constructions Ltd. Vs. Union of India & Ors.[2024 (11) TMI 588 - BOMBAY HIGH COURT], this Court, examined the issue of exhaustion of alternate remedies in great detail. Relying on the reasoning in the said decision and the reasoning in the several precedents referred to therein, we are satisfied that no case is made out to deviate from the practice of exhaustion of alternate remedies in both these Petitions. This Court in the case of Nikhil Garg S/o Vishnu Prasad Garg Vs. Union of India & Anr. [2025 (12) TMI 142 - BOMBAY HIGH COURT] declined to entertain the Writ Petition based on vague allegations of breach of principles of natural justice or incapacity to comply with the pre-deposit requirements. Here, the impugned order has recorded that the fraudulent exports were valued at over Rs. 180 crores. The order also records the modus operandi adopted and the Petitioner's role herein, which involved fraudulent operations. This Petition is dismissed with liberty to the Petitioner to avail of the alternate remedy of Appeal.

2025 (12) TMI 357 - DELHI HIGH COURT Indian Laws

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Issues: (i) Whether the complaint under Section 138 of the Negotiable Instruments Act, 1881 and the summoning order were liable to be quashed on the ground that the cheque was issued only as security and there was no legally enforceable debt or subsisting liability; (ii) Whether the complaint disclosed sufficient averments to prosecute the directors under Section 141 of the Negotiable Instruments Act, 1881.

Issue (i): Whether the complaint under Section 138 of the Negotiable Instruments Act, 1881 and the summoning order were liable to be quashed on the ground that the cheque was issued only as security and there was no legally enforceable debt or subsisting liability.

Analysis: The loan arrangement was found to be a continuation of the earlier commercial transaction, and the amount earlier advanced was expressly carried forward and acknowledged in the later loan agreement. The cheque in question, though asserted to be a security cheque, had prima facie fructified against an existing liability under the loan agreement. The defence that the payment was stopped because the transaction had failed, that the liability had been discharged by alleged losses, or that the cheque was not supported by enforceable debt, was held to raise disputed questions of fact. Such defences were held to be matters for trial and not for exercise of inherent jurisdiction at the stage of quashing. The subsequent arbitral findings also supported the existence of liability to repay the balance amount.

Conclusion: The complaint was not liable to be quashed on the ground of absence of legally enforceable debt; the finding was against the petitioners.

Issue (ii): Whether the complaint disclosed sufficient averments to prosecute the directors under Section 141 of the Negotiable Instruments Act, 1881.

Analysis: The complaint specifically alleged that the directors and officers were in charge of the company's day-to-day affairs and were responsible for its decisions. For vicarious liability under Section 141, it was sufficient at the threshold that the complaint contained such averments, particularly where the chairman and managing director was directly involved in the transactions. The court held that the sufficiency of the directors' defence could not be tested at the quashing stage, and the complaint was not required to reproduce the statutory language verbatim so long as the substance of the role attributed to the accused was clear.

Conclusion: The complaint disclosed sufficient basis to proceed against the directors; the finding was against the petitioners.

Final Conclusion: The inherent jurisdiction was not warranted because the dishonour complaint disclosed a prima facie case under the negotiable instruments law, and the challenge to the summoning order failed.

Ratio Decidendi: At the stage of quashing a prosecution under Section 138 of the Negotiable Instruments Act, 1881, a cheque asserted to be security may still attract criminal liability if the complaint and surrounding documents prima facie show an existing enforceable liability, while disputed questions regarding contractual breach or discharge of liability must be left to trial; for directors, specific averments that they in charge of and responsible for the company's affairs are sufficient to proceed under Section 141.

Security cheque disputes may still support Section 138 prosecution where prima facie liability exists and factual defences require trial.
A cheque described as a security cheque can still support prosecution under Section 138 of the Negotiable Instruments Act where the complaint and surrounding documents prima facie show an existing enforceable liability; disputed assertions about discharge, failed transaction, or absence of debt are questions for trial and not for quashing. The complaint was also held sufficient against directors under Section 141 because it specifically alleged that they were in charge of and responsible for the company's day-to-day affairs. On that basis, the inherent jurisdiction was declined and the dishonour complaint was allowed to proceed.

Dishonour of cheque - whther the Cheque was for security and the debt did not exist - vicarious Liability of Directors - commercial relationship between the parties, which is governed by two successive and distinct Agreements. Legally Enforceable Debt - HELD THAT:- The fact that the loan of Rs. 2.5 crores became the subject matter of the second Loan Agreement, stands established by the findings of the learned Arbitral Tribunal, which by the Majority Award held the Petitioner liable to pay the remaining amount along with interest, under the Loan Agreement - It is, therefore, concluded that prima facie it cannot be said that the cheque in dispute, was not issued for a legally enforceable liability and the Complaint under S.138 NI Act, is not liable to be quashed on this ground. Liability of Directors - HELD THAT:- The liability of the Directors and officers of the Petitioner Company, International Public School Ltd. /Accused No. 1, arises from the principle of vicarious liability, as stipulated in Section 141 of the Negotiable Instruments Act, 1881 - The general principle for corporate offenses under Section 138 NI Act is that the Company is primarily liable. However, Section 141 extends this liability to include individuals within the Company who were responsible for its conduct and business of the Company at the time of commission of the offense. The Court underscored that the essence of the allegations is more important than their form. If the Complaint sufficiently indicates that the Director was actively involved in the Company’s day-to-day operations and played a role in the transactions in question, this is enough to meet the threshold for vicarious liability under Section 141(1) NI Act, even if the statutory expression “in charge of and responsible for the conduct of the business” is not quoted verbatim - In this case, the Complaint satisfies the legal requirement by naming all accused Directors/officers, with specific averments that they were all “in charge of day to day affairs and responsible for the decisions” of the Company. The Trial Court correctly found sufficient grounds to issue the Summons to all the Directors/petitioners. There is no merit in the Petitions seeking to quash the Complaints under S.138 NI Act or to set aside the Summoning Order - Petition dismissed.

2026 (3) TMI 471 - Supreme Court Indian Laws

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Issues: (i) Whether bail could be granted solely on the ground of parity with a co-accused. (ii) Whether a bail order that does not disclose relevant reasons or consider material factors can be sustained.

Issue (i): Whether bail could be granted solely on the ground of parity with a co-accused.

Analysis: Parity is not a standalone entitlement to bail. It operates with reference to the role, position, and factual similarity of the accused in relation to the offence. Mere participation in the same occurrence does not establish parity where the roles are different. Bail decisions must consider the nature of the accusation and the specific role attributed to the applicant.

Conclusion: Bail cannot be granted solely on the basis of parity when the accused does not stand on the same footing as the co-accused.

Issue (ii): Whether a bail order that does not disclose relevant reasons or consider material factors can be sustained.

Analysis: An order granting bail must reflect application of mind and consideration of relevant factors such as the gravity of the offence, the role of the accused, and other circumstances bearing on the exercise of discretion. An order bereft of reasons, or one that fails to engage with the material considerations, cannot be allowed to stand. Where the defect is confined to the order of grant of bail and the matter requires reconsideration, remand to the High Court is appropriate.

Conclusion: A bail order lacking relevant reasons and consideration of material factors is unsustainable and may be set aside, with the bail question remitted for fresh consideration.

Final Conclusion: The appeal concerning one accused was allowed and bail was set aside, while the connected appeal was set aside and remitted for fresh consideration on proper principles. The overall effect is that parity alone is insufficient for bail and reasoned consideration remains essential.

Ratio Decidendi: Parity in bail depends on comparable role and position in the offence, and a bail order must show application of mind to the relevant factors before it can be sustained.

Parity in bail requires comparable roles and reasoned judicial scrutiny before bail can be sustained.
Parity does not by itself justify bail; it depends on whether the accused stands on the same footing as the co-accused in role, position and factual matrix. Mere participation in the same is insufficient where the attributed roles differ, and bail must be assessed on the nature of the accusation and the applicant's specific role. A bail order must also disclose relevant reasons and show consideration of material factors, including the gravity of the offence and surrounding circumstances. An unreasoned order or one that ignores these factors is unsustainable and may be set aside, with the bail question remitted for fresh consideration.

Parity in bail adjudication - gravity of offence - non-speaking order - requirement of application of mind and reasoned order for grant of bail - remand for fresh consideration where order is non speaking - Whether, as done by the High Court in the impugned order, parity with the co-accused persons can be the sole reason for granting bail. Parity in bail adjudication - role of accused in the offence - HELD THAT:- The Court held that parity cannot be invoked as the sole basis for granting bail; parity must focus on the accused's position and role in the crime, not merely participation in the same offence. The High Court erred in granting bail to Rajveer solely on parity with his father without assessing the respective roles. On analysis of the facts recorded in the FIR, Rajveer's role as the instigator who asked another accused to shoot the deceased differed from the role of the co-accused who was a member of the mob; accordingly parity was misplaced and not applicable. [Paras 12, 13, 14, 15, 16] The High Court's bail order insofar as it released Rajveer on the sole ground of parity was set aside and Rajveer was directed to surrender to the trial court within two weeks. Requirement of application of mind and reasoned order for grant of bail - remand for fresh consideration where order is non speaking - HELD THAT: - Relying on the principle that while elaborate reasons may not always be necessary, an order granting bail cannot be bereft of relevant reasons, the Court found the impugned order to be non-speaking. Because the High Court did not disclose any reasons or explain how precedents applied to the facts, the matter could not be left undisturbed. The Court therefore set aside the impugned order and remanded the matter to the High Court to consider bail afresh, taking into account the gravity of the offence, the role of the accused and other established factors governing bail. [Paras 18, 19, 20] The High Court's order granting bail to Prince was set aside and the question of bail was remanded to the High Court for fresh consideration in accordance with law. Final Conclusion: The grant of bail to Rajveer was set aside because parity, without assessment of the accused's role, cannot be the sole basis for bail; Rajveer was directed to surrender. The bail granted to Prince was also set aside and remanded to the High Court for reconsideration because the order was non speaking and failed to apply relevant factors.

2025 (12) TMI 2 - Supreme Court Indian Laws

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Issues: (i) Whether, after the Negotiable Instruments (Amendment) Act, 2015, the court within whose local jurisdiction the payee's branch bank is situated has jurisdiction to try a complaint under Section 138 of the Negotiable Instruments Act, 1881. (ii) Whether a complaint under Section 138 can be transferred to that court when recording of evidence under Section 145(2) has already commenced.

Issue (i): Whether, after the Negotiable Instruments (Amendment) Act, 2015, the court within whose local jurisdiction the payee's branch bank is situated has jurisdiction to try a complaint under Section 138 of the Negotiable Instruments Act, 1881.

Analysis: The pre-amendment position under Sections 177, 178 and 179 of the Code of Criminal Procedure, 1973 was reconsidered in the context of the offence under Section 138 of the Negotiable Instruments Act, 1881. The judgment holds that the amendment introduced Section 142(2), which fixes jurisdiction for account-payee cheques at the branch where the payee maintains the account, read with the Explanation deeming delivery at any branch to be delivery at the home branch. The Court rejects an interpretation that would allow forum shopping by the payee and holds that the special statutory scheme governs territorial jurisdiction.

Conclusion: Yes. The court within whose local jurisdiction the payee's home branch is situated has jurisdiction to try such a complaint.

Issue (ii): Whether a complaint under Section 138 can be transferred to that court when recording of evidence under Section 145(2) has already commenced.

Analysis: Section 142A of the Negotiable Instruments Act, 1881 validates transfer of pending cases to the court having jurisdiction under Section 142(2). At the same time, where proceedings had already reached the stage of evidence, the Court applied the ends-of-justice approach and held that the complaint should be restored and continued in the court to which it had effectively been returned, so that the matter is not re-litigated from the outset.

Conclusion: Yes. The complaint is to be transferred and proceeded with in the competent court from the stage prior to return of the complaint.

Final Conclusion: The jurisdictional issue under the amended cheque dishonour law is resolved in favour of the payee's home branch for account-payee cheques, and the pending proceedings are to continue before the competent court rather than being invalidated by the earlier jurisdictional shift.

Ratio Decidendi: For a cheque delivered for collection through an account, territorial jurisdiction under Section 142(2)(a) of the Negotiable Instruments Act, 1881 lies with the court within whose local jurisdiction the payee's bank branch where the account is maintained is situated, and the special jurisdictional scheme overrides the general criminal venue rules.

Cheque dishonour jurisdiction lies with the payee's bank branch; pending complaints may be transferred to the competent court.
Under the amended cheque dishonour jurisdiction scheme, territorial jurisdiction for an account-payee cheque lies with the court where the payee's bank branch maintaining the account is situated, and the special rule overrides the general venue provisions of the CrPC. The Court rejected a forum-shopping interpretation and treated the payee's home branch as the competent forum. It further held that pending Section 138 complaints may be transferred to the competent court under the validating provision, and where evidence under Section 145(2) had already begun, the matter should continue from the appropriate stage rather than restart, in the interests of justice.

Dishonor of Cheque - Prayer for transfer of the Complaint Case pending in the court of Judicial Magistrate First Class, Bhopal to the Court of Metropolitan Magistrate, Kolkata - whether the cases where the trial had reached the stage of summoning, appearance of accused, and the recording of evidence had commenced as per Section 145(2) Negotiable Instruments Act, 1881, those should continue in the same court where the trial was ongoing? - whether the sending of notice from Delhi, by itself would give rise to a cause of action for taking cognizance under Section 138? - HELD THAT:- This Court held that the cause of action for proceeding against an accused person under Section 138 would arise not from the mere sending of the statutory notice but rather from its receipt by the accused person. The object behind sending of notice was considered by this Court and it was observed that it is only upon receipt of the notice that an accused person may elect to either pay the amount due and payable within a period of 15 days or not to pay the same. Therefore, issuance of notice by itself would not give rise to a cause of action. The service of notice is imperative as it is only when the communication thereof is complete that the cause of action arises. This Court, while applying the principles relating to jurisdiction as laid down in Bhaskaran (supra), explained the legal effect of the act of sending the statutory notice under Section 138 for the purpose of determining the jurisdiction to try a complaint thereunder. It was recognized that conferring jurisdiction on the locality from where the notice was sent would give unfettered powers to a complainant to set jurisdiction at a particular location that may be inconvenient or cause undue hardship to the accused person. Thus, the dictum in Harman Electronics [2008 (12) TMI 677 - SUPREME COURT] curtailed the wide jurisdictional empowerment expounded in Bhaskaran [1999 (9) TMI 941 - SUPREME COURT] to some extent. Since an offence under Section 138 could be said to be committed upon dishonour of cheque by the drawee bank, it was held that such offence would be localised at the place where the drawee bank is situated. Therefore, only the court within whose territorial jurisdiction the drawee bank is situated, is empowered to proceed against an accused person under Section 138. The language used in the Explanation may also create a legal fiction that would enable ‘any branch’ of the payee’s bank to be deemed as ‘the branch in which the payee maintains an account’ (the “home branch”). This construction of the Explanation would mean that by virtue of Section 142(2)(a), the court within whose local jurisdiction the home branch is situated, has an inherent power to try a complaint under Section 138 filed by the payee. However, the payee delivered the cheque for collection at another branch instead of the home branch. According to the dictum as laid in Yogesh Upadhyay [2023 (2) TMI 884 - SUPREME COURT], primacy has to be accorded to the action of the payee in “delivery of the cheque for collection” for the purpose of determining jurisdiction. The only understanding that we can obtain from the aforesaid is that the court exercising territorial jurisdiction over the home branch will have to share the inherent powers that it possesses under Section 142(2)(a), with the court in whose jurisdiction such other branch is situated, in which the payee delivered the cheque for collection. This Court considered the requirement of “maintaining of the account” implicit in “for collection through an account”. In other words, once it is identified that the cheque in question is an account payee cheque, the delivery must be to such branch in which the payee maintains the account as it is this branch of the bank that will receive the funds in the account maintained by the payee, from the drawee bank which will debit the drawer’s account to send such amount. However, the necessity of delivery of an account payee cheque to the home branch is only legal and not commercial. It is to address commercial exigencies that the legislature enacted the Explanation to Section 142(2)(a). The deeming fiction in the Explanation ensures that even if a cheque is delivered to a branch other than the home branch for commercial convenience, it shall be considered to have been delivered to the home branch for the legal purpose of determining jurisdiction. Thus, a case has been made out for transfer of the proceedings in question - petition allowed.

2025 (11) TMI 2046 - Supreme Court Indian Laws

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Pre-suit registered sales supported by valuable consideration remain protected from attachment before judgment absent proof of fraudulent intent.
Attachment before judgment protects only property belonging to the defendant when the suit is instituted and cannot determine whether an earlier transfer was fraudulent. Order XXXVIII Rule 8 read with Order XXI Rule 58 CPC permits adjudication of third-party claims, while Order XXXVIII Rule 10 preserves rights acquired before attachment. A creditor challenging a pre-suit sale under Section 53 of the Transfer of Property Act must prove an intent to defeat or delay creditors; suspicion, related-party dealings, financial difficulty, or partial cash payment is insufficient. A registered sale supported by antecedent dealings and valuable consideration, including adjustment of past liability, remains effective against a subsequent attachment absent cogent proof of collusion or fraudulent intent.

Attachment before judgment of property previously transferred - Fraudulent transfer - proof of intent to defeat creditors - Adjudication of third-party claim to attached property - Validity of attachment before judgment over property transferred under a registered sale deed before institution of the suit, where the creditor alleged that the transfer was fraudulent - HELD THAT: - Attachment before judgment is an ancillary protective measure and does not create a charge or proprietary interest in favour of the plaintiff; it cannot affect pre-existing rights of strangers. The property sought to be attached must belong to the defendant on the date of institution of the suit. Although a claim to an attachment is adjudicated under Order XXXVIII Rule 8 read with Order XXI Rule 58, that procedure cannot be enlarged into a substantive inquiry under Section 53 of the Transfer of Property Act into the validity of a prior sale. The creditor alleging fraudulent transfer bears the burden to establish an intent to defeat or delay creditors; suspicion, inadequate consideration, relationship between parties, or financial difficulties cannot substitute cogent proof. The registered sale, supported by antecedent dealings and valuable consideration, was not shown to be collusive or fraudulent. It is well settled that attachment before judgment cannot extend to properties which have already been alienated prior to the institution of the suit. In Vannarakkal Kallalathil Sreedharan v. Chandramaath Balakrishnan [1990 (3) TMI 371 - SUPREME COURT OF INDIA] Court held that an agreement for sale creates an obligation attached to the ownership of the property and an attaching creditor is entitled to attach only the right, title, and interest of the judgment debtor. If an agreement for sale is entered into before attachment, the attaching creditor cannot ignore such obligation and proceed to bring the property to sale as if it remained the absolute property of the judgment debtor. The rights of the attaching creditor cannot override the contractual obligation arising from the antecedent agreement. Accordingly, the sale would not be subject to the attachment and the purchaser would get good title despite attachment. The principle that attachment before judgment cannot override a prior completed transfer was categorically laid down in Hamda Ammal v. Avadiappan Pathar [1990 (11) TMI 414 - SUPREME COURT] [Paras 14, 15, 16, 17, 18, 20, 21] The prior registered sale deed was held valid; consequently, the subsequent attachment before judgment could not extend to the property and the purchaser's claim petition was sustainable. Final Conclusion: The appeal was allowed and the orders rejecting the purchaser's claim were set aside. The attachment before judgment was held inoperative against the property covered by the prior valid sale deed.

2025 (11) TMI 2042 - Supreme Court Indian Laws

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Issues: (i) Whether the High Court could review or recall its concluded order appointing an arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996; (ii) Whether Clause 25 constituted a valid and subsisting arbitration agreement despite its unilateral and exclusionary appointment mechanism; (iii) Whether joint applications for extension of the arbitral mandate constituted waiver under Sections 4 and 12(5) of the Arbitration and Conciliation Act, 1996.

Issue (i): Whether the High Court could review or recall its concluded order appointing an arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996.

Analysis: The Arbitration and Conciliation Act, 1996 is a self-contained code founded on minimal judicial intervention. The referral court's role under Section 11 is facilitative and limited to a prima facie examination of the arbitration agreement; questions of substantive validity and jurisdiction ordinarily fall to the arbitral tribunal under Section 16. Review in arbitration matters is confined to patent procedural errors or material facts overlooked, and cannot reopen an interpretation of law or an appointment order that has attained finality. The respondents neither challenged the appointment order nor raised a timely jurisdictional objection before the tribunal, but participated in the arbitration and sought extensions of mandate.

Conclusion: The High Court lacked jurisdiction to reopen and review its Section 11(6) appointment order on merits; its review of the concluded appointment was invalid.

Issue (ii): Whether Clause 25 constituted a valid and subsisting arbitration agreement despite its unilateral and exclusionary appointment mechanism.

Analysis: Clause 25 embodied an unequivocal agreement to refer contractual disputes to arbitration, and the parties' prior and continued conduct, including arbitral participation and pleadings, independently established their intention to arbitrate under Section 7. The unilateral appointment mechanism and the stipulation foreclosing arbitration if that mechanism failed offended neutrality, equality and the prohibition against unilateral arbitral appointments in public-private contracts. Those offending procedural terms were severable from the substantive promise to arbitrate. Their invalidity did not extinguish the arbitration agreement or prevent an independent appointment under Section 11(6).

Conclusion: A valid and subsisting arbitration agreement existed; the unilateral and exclusionary portions of Clause 25 were void and severable, while the substantive agreement to arbitrate survived.

Issue (iii): Whether joint applications for extension of the arbitral mandate constituted waiver under Sections 4 and 12(5) of the Arbitration and Conciliation Act, 1996.

Analysis: Section 12(5) creates a mandatory ineligibility that can be waived only by an express written post-dispute agreement, whereas Section 4 governs waiver by informed conduct concerning other procedural non-compliance. A joint application under Section 29A signifies consent to continuation of the tribunal and amounts to waiver under Section 4, but cannot by itself cure a Seventh Schedule ineligibility under Section 12(5). No such statutory ineligibility attached to the appointed arbitrator in this case.

Conclusion: The joint applications constituted waiver by conduct under Section 4; they did not amount to an express written waiver under Section 12(5), which was not attracted on the facts.

Final Conclusion: The concluded arbitral process must be preserved through appointment of a substitute arbitrator, who is to continue from the stage at which the proceedings were interrupted rather than recommence them afresh.

Ratio Decidendi: Invalidity of a unilateral appointment procedure does not nullify a separable substantive agreement to arbitrate; courts must preserve that agreement through a neutral appointment while avoiding impermissible midstream review of a concluded Section 11 appointment.

Severable arbitration clauses preserve neutral dispute resolution despite invalid unilateral appointment mechanisms and bar merit review of concluded appointments.
A concluded arbitrator appointment under Section 11(6) cannot be reopened on merits through review, as the referral court performs only a limited prima facie examination and substantive jurisdictional issues ordinarily lie with the tribunal. A unilateral and exclusionary appointment procedure may violate neutrality and equality, but its invalid terms are severable where the clause otherwise contains a clear agreement to arbitrate; the substantive arbitration agreement survives for neutral appointment. Joint mandate-extension applications constitute waiver by conduct for procedural non-compliance under Section 4, but cannot waive mandatory arbitrator ineligibility under Section 12(5) without an express written post-dispute agreement. A substitute arbitrator should continue from the interrupted stage.

Review of order appointing arbitrator - Severability of unilateral arbitral appointment clause - Waiver of objections in arbitral proceedings - Competence-Competence - Doctrine of Severability - Express Written Waiver - Functus Officio Whether the High Court had jurisdiction to review its earlier order passed under Section 11(6) of the A&C Act, and whether such exercise of power was valid in law ? - HELD THAT: - In Bharat Sanchar Nigam Limited [2021 (3) TMI 447 - SUPREME COURT], this Court reiterated that “the legislative policy of the 1996 Act is to minimize the supervisory role of courts in the arbitral process and to ensure that arbitration proceedings are conducted expeditiously without unnecessary interference”. The insertion of Section 11(6-A) through the 2015 Amendment reaffirmed the limited nature of judicial scrutiny at the appointment stage, restoring the position that courts must confine themselves to a prima facie determination of the existence of an arbitration agreement, curtailing the wider inquiry recognized in SBP & Co. v. Patel Engineering Ltd.[2005 (10) TMI 495 - SUPREME COURT]. In the seven-Judge Bench decision in Interplay Between Arbitration Agreements under Arbitration and Conciliation Act, 1996 and Stamp Act, 1899, In [2023 (12) TMI 897 - SUPREME COURT (LB)], this Court reaffirmed that the role of the referral court under Section 11 is confined to a prima facie examination of the existence of an arbitration agreement. All other questions including validity, enforceability, and jurisdiction are matters for the arbitral tribunal under Section 16. The Court further emphasized that the Arbitration Act is a self-contained code governed by the principle that what is not expressly permitted under the Act is deemed prohibited. The Arbitration and Conciliation Act is a self-contained code which permits only limited judicial intervention. Although a High Court has a narrowly circumscribed procedural review power to correct a patent error or overlooked material fact, it cannot undertake a review on merits or reopen its interpretation of an arbitration agreement. The review was founded on a subsequent decision, was belated, and did not disclose an error apparent or suppression of a material fact. The respondents, having not challenged the appointment order or raised a timely jurisdictional objection before the tribunal and having participated in the proceedings and sought extensions of its mandate, could not reopen the concluded appointment through review. Where the appointed arbitrator became unable to continue, the proper course was substitution under Section 15(2), preserving the earlier proceedings. [Paras 11, 15, 16, 17] The High Court lacked jurisdiction to review and nullify its earlier appointment order; a substitute arbitrator was required to be appointed to continue the arbitration from the stage already reached. Existence of arbitration agreement - Severability of unilateral arbitral appointment clause - Neutrality in public-contract arbitration - HELD THAT: - Section 7 of the A&C Act defines an “arbitration agreement” and stipulates the manner in which it may be proved. While sub-section (3) mandates that such an agreement must be in writing, Section 7(4)(c) significantly widens the evidentiary scope by recognizing a valid arbitration agreement even where it is evidenced through an exchange of statements of claim and defence, provided that one party asserts the existence of such an agreement and the other does not deny it. In State of West Bengal v. Sarkar & Sarkar [2017 (4) TMI 1673 - SUPREME COURT], this Court reiterated that active participation in arbitral proceedings without objection may itself constitute sufficient evidence of a valid and subsisting arbitration agreement. Similarly, in Mahanagar Telephone Nigam Limited [2019 (8) TMI 576 - SUPREME COURT], it was held that even without a formally executed arbitration clause, a valid arbitration agreement can be inferred from the conduct of parties, including participation in arbitration and exchange of pleadings without denial. In Offshore Infrastructures Ltd. v. Bharat Petroleum Corporation Ltd. [2025 (10) TMI 1443 - SUPREME COURT], this Court held that even where a clause contains an otherwise defective unilateral appointment mechanism, the Court may sever the offending portion and exercise its power under Section 11(6) to appoint an independent arbitrator, thereby giving effect to the parties’ genuine intention to arbitrate. The parties' conduct, including their earlier resort to arbitration under the same contractual framework, active participation in the pending proceedings and exchange of pleadings, established their intention to arbitrate and satisfied the statutory requirement of an arbitration agreement. Clause 25 contained a substantive and unequivocal agreement to refer disputes to arbitration, distinct from its unilateral and exclusionary appointment procedure. A unilateral appointment mechanism in a public-private contract is contrary to equality, impartiality and neutrality; however, invalidity of that procedure does not extinguish the substantive arbitration agreement. The offending appointment and exclusionary parts were severable, enabling appointment of an independent arbitrator under Section 11(6). [Paras 12] Clause 25 constituted a valid and subsisting arbitration agreement, with its unilateral and exclusionary appointment mechanism severed as void and unenforceable. Waiver of objections in arbitral proceedings - Statutory ineligibility of arbitrator - Extension of arbitral mandate - HELD THAT: - Waiver is a foundational principle of arbitration, rooted in party autonomy and fairness in conduct. Arbitration, being adversarial in nature, inevitably results in a winning and a losing side. The legislative rationale in codifying waiver is to ensure that parties do not secure a second bite at the cherry after an unfavourable outcome. Parties are not permitted to sleep over their rights. This statutory policy is in harmony with the scheme of minimal judicial intervention, where the grounds for interference with an arbitral award are narrow, and waiver operates as a significant bar to belated objections. Though waiver, acquiescence, and estoppel are often discussed together in arbitral jurisprudence, they occupy distinct conceptual spaces. Waiver is the intentional relinquishment of a known right; acquiescence arises from passive acceptance or delay; and estoppel precludes a party from resiling from a representation on which the other has relied. In Bharat Broadband Network Ltd. [2019 (4) TMI 983 - SUPREME COURT], this Court held that once a person falls within the disqualifications of the Seventh Schedule, he becomes de jure ineligible to act as an arbitrator. The appointment is void ab initio and the mandate terminates automatically under Section 14(1) (a). The Court emphasized that such disqualification is absolute and capable of being waived only through an express post-dispute written agreement. This position was reiterated in Ellora Paper Mills Ltd [2022 (1) TMI 1513 - SUPREME COURT], where the Court held that mere participation in arbitration proceedings does not amount to waiver of statutory ineligibility. While these decisions do not directly address Section 29A, the legislative intent behind the phrase “express agreement in writing” remains unambiguous: implied waiver, acquiescence, or estoppel cannot cure Section 12(5) ineligibility. Section 12(5) creates a mandatory regime for Seventh Schedule ineligibility which can be waived only by an express written post-dispute agreement; participation, acquiescence or a joint application for extension cannot cure such ineligibility. Section 4, however, governs waiver by conduct in respect of procedural and other non-jurisdictional objections. A joint application for extension under Section 29A manifests consent to continuation of the tribunal and amounts to waiver under Section 4 where no Seventh Schedule disqualification is attracted. Since no such statutory disqualification was involved, the High Court wrongly invoked the rigours of Section 12(5). [Paras 13] The respondents' participation and joint applications for extension constituted waiver under Section 4, and did not justify reopening the arbitration. Final Conclusion: The appeal was allowed and the impugned judgment was set aside. The High Court was directed to appoint a substitute arbitrator, who would continue the proceedings from the stage at which they had been interrupted.

2025 (12) TMI 214 - DELHI HIGH COURT Indian Laws

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Issues: (i) whether there was novation of contract under Section 62 of the Indian Contract Act, 1872 and consequent extinguishment of the legally enforceable debt or other liability so as to negate the complaints under Section 138 of the Negotiable Instruments Act; (ii) whether the complaints contained sufficient averments to fasten vicarious liability upon the individual directors under Section 141 of the Negotiable Instruments Act.

Issue (i): whether there was novation of contract under Section 62 of the Indian Contract Act, 1872 and consequent extinguishment of the legally enforceable debt or other liability so as to negate the complaints under Section 138 of the Negotiable Instruments Act

Analysis: The correspondence showed only a proposal by the borrower for conversion of bridge debt into term debt and a response by the lender that the proposal would merely be considered, subject to payment of outstanding dues and approval of the competent authority. There was no concluded agreement substituting the earlier arrangement, nor any clear offer and acceptance creating a new contract. Payment of overdue dues did not by itself extinguish the existing amended bridge loan arrangement or the liability secured by the post-dated cheques. The later reference to earlier notices becoming redundant was confined to past defaults and did not amount to novation.

Conclusion: No novation was made out, the legally enforceable debt continued, and the complaints under Section 138 of the Negotiable Instruments Act were maintainable.

Issue (ii): whether the complaints contained sufficient averments to fasten vicarious liability upon the individual directors under Section 141 of the Negotiable Instruments Act

Analysis: Section 141 requires averments showing that the accused directors were in charge of and responsible for the conduct of the business of the company at the relevant time, while a mere assertion of directorship is insufficient. The complaints contained the requisite assertions against the directors who were signatories to the cheques and described their role in the affairs of the company. In contrast, the non-executive director against whom no specific role or cheque-signing involvement was pleaded was not shown to be liable on the same footing.

Conclusion: The complaints were sufficient to proceed against the directors with pleaded involvement, but not against the non-executive director lacking specific averments; the petitions were therefore dismissed in part and allowed in part.

Final Conclusion: The challenge to the dishonour complaints failed on the issue of novation, while the challenge based on vicarious liability succeeded only in respect of the director against whom no adequate averments were made.

Ratio Decidendi: Novation under Section 62 requires a clear and concluded substitution of the original contract by a new one, and vicarious liability under Section 141 of the Negotiable Instruments Act arises only where the complaint contains specific averments showing the accused person's responsibility for the company's conduct of business.

Novation and vicarious liability in cheque dishonour cases require clear substitution of contract and specific director averments.
Novation under Section 62 of the Indian Contract Act requires a clear, concluded substitution of the original contract by a new agreement; a mere proposal to restructure debt, subject to approval and payment of dues, does not by itself extinguish the existing legally enforceable liability. In that situation, the debt continues and dishonour complaints under Section 138 of the Negotiable Instruments Act remain maintainable. For vicarious liability under Section 141, the complaint must contain specific averments that the accused directors were in charge of and responsible for the company's business at the relevant time. Directors with pleaded involvement, including cheque-signing role, may be proceeded against, while a non-executive director lacking such averments is not similarly liable.

Dishonour of cheque - novation of the contract within the scope of Section 62 Indian Contract Act - extinguishment of a legally enforceable debt or other liability - fastening of vicarious liability upon the individual Directors (the Petitioners) under Section 141 of the N.I. Act - Seeking quashing of the criminal proceedings and the impugned Summoning orders - misinterpretation of preliminary negotiations, while ignoring the binding terms of the executed Contracts. Novation of the Contract - Legally Enforceable Debt - whether a legally enforceable debt existed at the time of presentation of the cheques in question, for encashment or was it extinguished by a subsequent understanding between the parties, leading to novation of the contract? - HELD THAT:- There was only a proposal for conversion of the Bridge Loan into a Term Loan and there was no final concluded Agreement. NNPIL cleared the past dues as part of its ongoing obligations, but PFS did not commit to any conversion of the Bridge loan into a Term Loan, beyond mere consideration - the contention of the Petitioners that there was novation of the contract is clearly not made out from the communication exchanged through various letters and from the circumstances as narrated herein. The Respondent’s central argument is that the discussion around conversion was merely a “proposal” or, at best, an “agreement to agree,” which never culminated in a formally executed Term Loan agreement. They contend that in the absence of a new signed contract, the original amended Bridge Loan Agreement remained in full force, and the cheques remained valid - This argument is well-founded, as it correctly interprets the nature of novation. A novation does not occur without a clear offer; it cannot be inferred from vague or conditional communications that lack the certainty of an enforceable promise. Once no novation took place, the original amended Bridge Loan Agreement, and its corresponding repayment schedule, remained in effect. The security cheques, which were provided specifically to secure the instalments under that schedule, remained valid for an existing liability which accrued after October 2015. They were valid and enforceable - This Court thus, finds that no novation of the contract occurred. The original Agreement remained in force and the security cheques represented a legally enforceable debt. The cheques issued as security for the original Bridge Loan Agreement remained valid instruments for that debt. The subsequent presentation for encashment was towards a liability which was legally enforceable at the time of presentation of Cheques - Complaints under S.138 NI Act are maintainable. Vicarious Liability of the Directors under Section 141 N.I. Act - HELD THAT:- For a prosecution to be sustained under Section 141(1), the Complaint must contain specific averments that the accused Director was, in fact, responsible for the company's day-to-day affairs. A mere statement that a person is a Director is insufficient. The Complainant must plead how and in what manner the director was responsible for the conduct of the business - Accused No. 2/Mandava Rao Prabhalkara, however, as per FORM DIR-12 is categorised as a “Professional Director” which is the class of “Non-Executive Directors”. He is neither a signatory to the Cheque nor is there any averment from where his involvement and control over the affairs of the Company can be established. In the judgment of Apex Court in Pooja Ravinder Devidasani vs. State of Maharashtra [2014 (12) TMI 1070 - SUPREME COURT] it was observed that “while taking into consideration that a non-executive director plays a governance role and are not involved in the daily operations or financial management of the Company, held that to attract liability under section 141 of the NI Act, the accused must have been actively in-charge of the company’s business at the relevant time. Mere directorship does not create automatic liability under the Act. The law has consistently held that only those who are responsible for the day-to-day conduct of business can be held accountable.” Therefore, in the absence of any averments defining his role in the Complaint, it cannot be said that he was in-charge or responsible for the day-to-day working of the Accused Company and is entitled to be discharged. Petition dismissed.

2025 (11) TMI 2047 - MADRAS HIGH COURT Indian Laws

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Issues: (i) Whether cognizance and summons in a private complaint could validly be issued without first providing the proposed accused a meaningful pre-cognizance hearing under Section 223 of the Bharatiya Nagarik Suraksha Sanhita, 2023; (ii) Whether the Magistrate was required to undertake scrutiny under Section 225 of the Bharatiya Nagarik Suraksha Sanhita, 2023 where the proposed accused resided outside territorial jurisdiction and parallel proceedings were asserted; (iii) Whether the constitutional protection for political criticism of official action required exacting observance of threshold safeguards before initiating criminal defamation process.

Issue (i): Whether cognizance and summons in a private complaint could validly be issued without first providing the proposed accused a meaningful pre-cognizance hearing under Section 223 of the Bharatiya Nagarik Suraksha Sanhita, 2023.

Analysis: The first proviso to Section 223 creates a mandatory antecedent safeguard: the proposed accused must receive a real opportunity to respond before the Magistrate reaches the decision to proceed. The proper sequence is examination of the complainant and witnesses, supply of the complaint, annexures and sworn materials to the proposed accused, consideration of objections, and only thereafter a decision on cognizance and issuance of process. A notice for pre-cognizance hearing is distinct from a summons, which is coercive process issued after the decision to proceed. Recording sworn evidence, issuing summons, and subsequently entertaining objections inverted this statutory sequence; the subsequent hearing could not cure the defect or validate cognizance taken twice.

Conclusion: The cognizance order and summons were invalid for non-compliance with the mandatory pre-cognizance hearing requirement under Section 223 of the Bharatiya Nagarik Suraksha Sanhita, 2023.

Issue (ii): Whether the Magistrate was required to undertake scrutiny under Section 225 of the Bharatiya Nagarik Suraksha Sanhita, 2023 where the proposed accused resided outside territorial jurisdiction and parallel proceedings were asserted.

Analysis: Although consequence-based jurisdiction may be available where publication or reputational consequences arise within the local jurisdiction, Section 225 requires postponement of process and an appropriate inquiry where the proposed accused resides beyond the Magistrate's jurisdiction. The inquiry must assess the jurisdictional foundation, alleged places of publication and consequence, and the effect of parallel proceedings so as to screen forum shopping, duplication and frivolous invocation of criminal process. The impugned order disclosed no calibrated screening on these matters.

Conclusion: The failure to conduct the required Section 225 scrutiny reinforced the invalidity of the order issuing process.

Issue (iii): Whether the constitutional protection for political criticism of official action required exacting observance of threshold safeguards before initiating criminal defamation process.

Analysis: Political speech concerning official action and public questions receives broad protection under Article 19(1)(a) of the Constitution of India, subject to narrowly applied lawful restrictions. While statutory defamation exceptions and the merits of the alleged imputation remain matters open for determination in appropriate proceedings, criminal process must not be deployed in a manner that chills legitimate political criticism. Where a serving public official invokes criminal process against a political opponent, statutory pre-cognizance safeguards and jurisdictional filters require heightened procedural rigor.

Conclusion: The constitutional sensitivity of political speech required strict compliance with the threshold safeguards before criminal process could be initiated; no finding was made on the merits of the defamation allegation or available defences.

Final Conclusion: The defective cognizance and consequential coercive process were nullified, while preserving the complainant's liberty to institute proceedings afresh in conformity with the prescribed pre-cognizance procedure, jurisdictional scrutiny and constitutional safeguards.

Ratio Decidendi: In a private complaint under Section 223 of the Bharatiya Nagarik Suraksha Sanhita, 2023, meaningful prior hearing with access to the relevant complaint materials is mandatory before cognizance and coercive process; subsequent consideration of objections after summons cannot cure that defect, particularly where Section 225 inquiry is required.

Pre-cognizance hearing safeguards require notice, material disclosure and jurisdictional inquiry before criminal defamation process against political criticism.
Section 223 of the Bharatiya Nagarik Suraksha Sanhita, 2023 is described as requiring a meaningful pre-cognizance opportunity for a proposed accused in a private complaint, including access to complaint materials and consideration of objections before process is issued. The text distinguishes this notice from post-cognizance summons and states that later objections cannot cure a reversed sequence. Where the proposed accused resides outside territorial jurisdiction, Section 225 is presented as requiring postponement of process and inquiry into jurisdiction, publication, consequences and parallel proceedings. It also highlights strict procedural safeguards where criminal defamation concerns political criticism of official action, while leaving merits and defences open.

Pre-cognizance hearing in private complaints - Postponement of process against accused residing outside jurisdiction - Meaningful opportunity of hearing before cognizance - Distinction between notice and summons Compliance with the mandatory pre-cognizance hearing under the first proviso to Section 223 BNSS in a private defamation complaint - HELD THAT: - Section 223 BNSS creates an antecedent and effective safeguard requiring the proposed accused to be heard before the Magistrate decides to proceed. After examination on oath of the complainant and witnesses, the proposed accused must receive notice with the complaint, annexures and sworn materials, and be afforded a meaningful opportunity to raise objections. A summons is coercive post-cognizance process and cannot substitute the pre-cognizance notice. Recording sworn statements, issuing summons and only thereafter entertaining objections inverted the statutory sequence; a subsequent hearing could not cure the defect. [Paras 26, 27, 28, 39, 40] The cognizance order and consequential summons were set aside for non-compliance with Section 223 BNSS, with liberty to reinstitute the complaint in accordance with the prescribed procedure. Inquiry before process against out-of-jurisdiction accused - Screening against forum shopping and duplicate criminal process - Need for inquiry under Section 225 BNSS where the proposed accused resides outside the Magistrate's territorial jurisdiction and parallel proceedings on the same substratum are asserted - HELD THAT: - Though consequence-based territorial jurisdiction may be available, Section 225 BNSS obliges the Magistrate to undertake a calibrated inquiry before issuing process against an accused residing beyond territorial jurisdiction. The inquiry must address the jurisdictional basis, including the places of publication and consequence, and screen concerns of forum shopping and overlapping criminal proceedings. The absence of such scrutiny reinforced the finding of non-application of mind at the proper stage. [Paras 41] Any reinstituted complaint must be preceded by a reasoned Section 225 BNSS inquiry addressing territorial jurisdiction and abuse-prevention concerns. Final Conclusion: The criminal revision was allowed, and the cognizance order and summons were quashed for procedural non-compliance with Sections 223 and 225 BNSS. The complainant was granted liberty to reinstitute proceedings subject to strict observance of the statutory safeguards; the merits of the alleged defamation and substantive defences were left open.

2026 (1) TMI 150 - KARNATAKA HIGH COURT Indian Laws

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Retrospective ICU tax exemption clarified the original luxury tax levy and excluded ICU charges for earlier periods.
A clarificatory amendment and notification excluding ICU charges from luxury tax under the Karnataka Tax on Luxuries Act were treated as retrospective because they explained the pre-existing scope of the levy rather than imposing a new burden. Applying the principle that declaratory or explanatory provisions ordinarily operate retrospectively, the court read the pre- and post-amendment texts together and treated the ICU exclusion as part of the original charging framework. ICU charges were therefore not exigible to luxury tax for the relevant earlier assessment years.

Constitutional Validity of Sections 3-E(1) and 2(1-C) of the Karnataka Tax on Luxuries Act, 1979 - exemption from luxury tax for charges collected towards facilities provided in an Intensive Care Unit (ICU), introduced through the State Government Notification dated 20.01.2016 - clarificatory or declaratory in nature? - HELD THAT:- Any registration / amendment if clarificatory, elucidatory or declaratory would be retrospective / retroactive in nature and application. In this context, it is relevant to state that originally that prior to amendment, charging Section i.e. Section 3-E of the said Act 1979, specifically provided for payment of luxury tax on charges collected for luxuries provided in a hospital in a room including accommodation, air conditioning, telephone, telephone calls, etc., where charges are more than Rs. 1000/- per room. However, pursuant to the Notification dated 20.01.2016 and the amendment to Section 3-E of the said Act of 1979, the said charging provision, which directed levy of luxury tax on charges collected from the hospital towards accommodation, air condition, etc., has been clarified by stating that the charges collected from patients admitted in ICU would be exempt; it follows there from while originally / free amendment, all facilities attached to a room / accommodation in hospital would be available to payment of luxury tax come on the amendment, merely clarifies / declares that the said liability to pay luxury tax would not apply to the patients admitted to ICU and charges collected in this regard by the hospitals. It is also relevant to state that by way of an amendment, the phrase "other than facilities provided in intensive care unit (ICU)" has been inserted by way of clarification / declarations / elucidation by making it clear that all charges towards accommodation rooms in hospital except ICU charges facilities provided in ICU accommodation would be available to luxury tax. In this context also, it is significant to note that amendment which has been inserted to clarify an existing provision is sufficient to come to the conclusion that it relates back to the date of the original provision and the same cannot be treated or construed as prospective as wrongly held by the respondents and averment in this regard is also made in the petitions. The Notification dated 20.01.2016 and the amendment to Section 3-E of the said Act, 1979, specifically declaring, clarifying and elucidating that luxury tax on charges received / collected from patients admitted to in ICUs, would be exempt from payment of luxury tax since the said provision would not apply to such charges is clear from the said amendment. Under these circumstances, having regard to the Notification dated 20.01.2016 and the amendment to Section 3-E of the said Act, 1979, which should operate and apply retrospectively / retroactively to previous assessment years including the subject assessment years, the impugned order deserves to be quashed. The impugned assessment order and demand notices are hereby set aside - petition allowed.

2025 (12) TMI 445 - Supreme Court Indian Laws

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Issues: (i) whether the bail granted to the accused should be cancelled; (ii) whether the condition restricting the accused to the city of Kolkata after release on bail should be modified; (iii) whether delay in presenting the modification application should be condoned.

Issue (i): whether the bail granted to the accused should be cancelled.

Analysis: Cancellation of bail requires a demonstrated breach of bail conditions or circumstances showing that continued liberty would imperil the trial. The application was founded mainly on apprehensions of influence over witnesses and alleged hostility in the prosecution evidence, but no conclusive material established that the accused had breached the terms of bail or that cancellation had become necessary at the then stage of trial. The Court also noted the progress already made in the trial.

Conclusion: The prayer for cancellation of bail was rejected.

Issue (ii): whether the condition restricting the accused to the city of Kolkata after release on bail should be modified.

Analysis: A condition imposed while granting bail can be altered only on a substantial change in circumstances or where the restraint is shown to be unjustified. The Court held that the restrictive condition was part of the careful balance struck while enlarging the accused on bail, and no significant fresh circumstance had been shown to justify relaxation. The Court also accepted that the condition continued to serve the concern of witness protection and the integrity of the trial.

Conclusion: The prayer for modification of the bail condition was rejected.

Issue (iii): whether delay in presenting the modification application should be condoned.

Analysis: The delay related only to the presentation of the modification application and no prejudice was shown from condoning it.

Conclusion: The delay was condoned.

Final Conclusion: The criminal applications were finally disposed of by declining cancellation of bail and refusal to relax the bail restraint, while granting condonation of delay in the modification matter and leaving the trial court free to proceed in accordance with law.

Bail cancellation and relaxation of bail conditions require material breach or changed circumstances; both requests were rejected.
Cancellation of bail requires proof of breach of bail conditions or material showing that continued liberty would jeopardise the trial; on the facts, no such conclusive material was shown, so the request to cancel bail was rejected. A restrictive bail condition limiting the accused to Kolkata could be modified only on a substantial change in circumstances or a demonstrated unjustified restraint; as no fresh justification was established and the condition continued to support witness protection and trial integrity, modification was refused. Delay in presenting the modification application, being limited to filing and causing no shown prejudice, was condoned.

2025 (12) TMI 444 - DELHI HIGH COURT Indian Laws

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1. ISSUES PRESENTED AND CONSIDERED

1.1 Whether 18% GST is applicable on the services forming the subject-matter of the tender and, if so, how that affects bid evaluation.

1.2 Whether the tendering authority violated the tender conditions, particularly Annexure 9, Clause 6 and the "Method of Tender Evaluation and Price Comparison", by treating the successful bidder's quoted price as inclusive of GST and accepting an indemnity bond.

1.3 Whether the tender process and award decision were arbitrary, unfair, mala fide or otherwise vitiated, warranting interference in judicial review despite the limited scope of intervention in tender matters.

1.4 Whether, assuming infirmities in the tender process, the Court ought to set aside the award considering the stage of contract performance and public interest.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1 - Applicability of 18% GST on the tendered services and its relevance

Interpretation and reasoning

2.1 The Court noted that the tendering authority sought a specific clarification from the GST Department by letter dated 21.03.2025 on applicability of GST to the services in question.

2.2 The GST Department, by letter dated 25.03.2025, clarified that under Notification No. 11/2017 (Central Tax Rate) dated 28.06.2017, 18% GST is chargeable on "Human Health & Social Care Services".

2.3 The Court held that the services under the tender, being NAT testing and related services, fall within "Human Health and Social Care Services" and therefore attract GST at 18%.

2.4 The contrary position urged on the basis of Notification No. 12/2017 - Central Tax (Rate) dated 28.06.2017 was not examined substantively, as the Court relied on the contemporaneous departmental clarification from the GST authority and was not called upon to adjudicate upon the correctness of that notification or the clarification itself.

Conclusions

2.5 The Court concluded that 18% GST is applicable to the services forming the subject of the tender, and answered the issue of chargeability of GST in the affirmative.

Issue 2 - Whether the tendering authority violated tender conditions by treating the successful bidder's price as inclusive of GST and accepting an indemnity bond

Legal framework discussed

2.6 Annexure 9 (Price Bid) required bidders to indicate: (a) "Rate per reportable test (without GST)" (Column D), (b) "% GST" (Column E), (c) "Final reportable test (including GST) in Rs." (Column F), and (d) "Total amount during contract (including GST)" (Column G = C × F). The note specified that L1 would be selected on the basis of the grand total of Column G.

2.7 Clause II (Taxes & Duties) of the tender provided that prices "shall be inclusive of all taxes & duties leviable including GST and Entry tax etc. and the Purchaser shall not be liable for the same" [sub-clause (ii)], and that if tax rates change during performance, an equitable adjustment to the contract price would be made [sub-clause (iv)].

2.8 Clause IV(xvi) (Price Negotiation) of the General Terms and Conditions permitted negotiations with the lowest quoted technically qualified bidder (L1) in exceptional circumstances, with prior approval of the competent authority.

Interpretation and reasoning

2.9 The Court accepted that Annexure 9 is an integral and relevant part of the tender, and that all fields (including indication of GST) are material for price comparison.

2.10 It was undisputed that the successful bidder did not specify, in Annexure 9, whether Rs. 945/- CPRT was with or without GST, and indicated 0% GST, whereas the other bidder quoted CPRT, GST at 18% and the corresponding total.

2.11 The Court observed that at the time of tender issuance, the tendering authority itself was evidently uncertain about the GST position, which led to divergent stands by the two bidders on applicability of GST and to the subsequent reference to the GST Department.

2.12 On harmonising Annexure 9 with Clause II, the Court held that while Annexure 9 requires separate disclosure of CPRT without and with GST, Clause II(ii) clearly mandates that quoted prices are to be "inclusive of all taxes & duties including GST" and that the purchaser has no liability for such taxes.

2.13 The Court reasoned that Clause II(ii) must be given its plain and natural meaning; otherwise, it would be rendered otiose. Reading the tender conditions harmoniously, the Court held that the tendering authority was entitled to treat quoted prices as inclusive of GST and to evaluate bids on that basis.

2.14 In this light, the tendering authority's decision to treat the successful bidder's quoted CPRT of Rs. 945/- as inclusive of GST at 18% and to protect itself by obtaining an indemnity bond was considered to be within the contractual framework and commercial discretion of the authority.

2.15 The Court recognised that the indemnity bond was likely sought to safeguard the purchaser in view of Clause II and the GST clarification, and held that calling for such a bond did not, by itself, render the process arbitrary or perverse.

Conclusions

2.16 The Court held that, although Annexure 9 required explicit indication of GST, the overriding stipulation in Clause II(ii) permitting consideration of prices inclusive of GST justified the tendering authority's approach.

2.17 The award of the contract to the successful bidder on the footing that its quoted price was inclusive of 18% GST, coupled with an indemnity bond, was not found to be in violation of the tender conditions so as to warrant judicial interference.

Issue 3 - Alleged arbitrariness/unfairness in the tender process and scope of judicial review

Legal framework discussed

2.18 The Court referred to principles laid down in decisions on judicial review of tenders, including that: (a) tender processes are primarily commercial decisions of the State; (b) interference is limited to cases of arbitrariness, irrationality, mala fides, bias or violation of mandatory norms; and (c) there is no absolute obligation to accept the lowest bid, provided the decision is fair and reasonable.

2.19 The Court reiterated the tests from prior judgments that judicial review is confined to examining whether the process adopted or decision made is mala fide, intended to favour someone, or so arbitrary and irrational that no responsible authority could have reached it, and whether public interest is adversely affected.

Interpretation and reasoning

2.20 The Court noted the existence of multiple committees (pre-bid clarification, prequalification, technical evaluation, and price bid evaluation) as indicative of an institutional process, but did not treat this alone as conclusively negating arbitrariness.

2.21 The Court accepted that once the GST Department clarified that 18% GST was applicable, the tendering authority knew that both bidders would be subject to GST at the same rate. In such circumstances, fairness required that both bidders be treated even-handedly, including in any further clarification or price negotiation.

2.22 The Court held that the tendering authority, after receiving the GST clarification, ought to have called both bidders for further clarification or negotiations, especially in view of Clause IV(xvi) providing for negotiations with the L1 bidder in exceptional circumstances. Restricting the indemnity arrangement to only one bidder without extending a comparable opportunity to the other was viewed as falling short of ideal fairness and transparency.

2.23 The Court regarded Annexure 9 as materially relevant, and noted as a "disturbing feature" that the successful bidder had not clearly stated whether its quote was inclusive of GST, yet its bid was regularised through the indemnity mechanism without parallel engagement with the other bidder.

2.24 The Court also took serious note of the incorrect instructions furnished to the Court earlier, where it was represented that services at both hospitals had commenced on 30.03.2025, while the record showed that installation and commencement at one hospital occurred only at the end of April 2025. The Court characterised this as falling within the doctrine of "suppressio veri suggestio falsi" and expressly deprecated such conduct, though it stopped short of initiating contempt proceedings.

2.25 At the same time, the Court found no conclusive material to hold that the process was tainted by mala fides or that the decision to award the contract to the successful bidder was so irrational or arbitrary as to be unsustainable in law.

Conclusions

2.26 The Court held that while the tendering authority's conduct displayed procedural lapses and lack of ideal fairness (particularly in not engaging both bidders equally post-GST clarification and in furnishing incorrect instructions to the Court), these did not cumulatively establish mala fides, bias, or such arbitrariness as would vitiate the entire tender process under the limited scope of judicial review.

2.27 Consequently, the tender award was not set aside on grounds of arbitrariness or unfairness, though the Court admonished the authority's conduct and emphasised the binding necessity of fairness and transparency in public tenders.

Issue 4 - Whether the contract should be quashed despite identified infirmities, in light of public interest and stage of performance

Interpretation and reasoning

2.28 The Court was informed that the contract period was one year, that services under the tender had been performed by the successful bidder since April 2025, and that the contract was due to end around March-April 2026.

2.29 The Court recognised that setting aside the award at that stage would cause significant disruption to ongoing NAT testing services in public hospitals and adversely affect public interest, which is of paramount importance in matters involving essential health services.

2.30 The Court also considered that the price difference between the two bidders was marginal in overall terms and that there was no challenge to the technical capability or performance standards of the successful bidder.

Conclusions

2.31 Weighing the identified procedural shortcomings against the advanced stage of contract performance and the potential disruption to public health services, the Court declined to interdict the contract.

2.32 The writ petition was dismissed, without costs, and the contract in favour of the successful bidder was allowed to continue until its natural expiry, with the Court's admonition to the tendering authority to adhere strictly to fairness, transparency and accuracy in future tender processes.

Tender award upheld as 18% GST applies to human health and social care services; challenge dismissed in public interest
HC upheld the tender award to respondent no. 2, holding that 18% GST is chargeable on the "Human Health and Social Care Services" forming the subject of the tender, based on the clarification obtained by DSHM from the GST Department, treated as contemporanea expositio. The court found no infraction of tender conditions or arbitrariness in DSHM evaluating bids on a GST-inclusive basis and requiring an indemnity bond from respondent no. 2. The authority's decision to consider prices inclusive of GST fell within its overriding powers and was not perverse. Considering that services were already being rendered and public interest, the HC declined to interfere. Petition dismissed.

Seeking quashing of the award of the category/rank from L1-L2 by way of the Price Bid Report - applicability of GST for the services sought by DSHM - infraction or violation of any condition of the subject tender by awarding the contract to respondent no. 2 ignoring the mandate provided in Annexure 9 read with Clause 6 and the “Method of Tender Evaluation and Price Comparison” of the tender document or not. Applicability or otherwise of GST - HELD THAT:- Since a pointed query was sent to the GST Department by DSHM, it is apparent that the response thereto by the said department puts the controversy beyond the pale of doubt. In that, 18% GST is indeed chargeable on Human Health and Social Care Services. Undoubtedly, the services sought by DSHM and offered by both the petitioner as also the respondent no. 2 are squarely covered under the “Human Health and Social Care Services” on which 18% GST appears to be chargeable. In that context, so far as the Notification No. 12/2017 – Central Tax (Rate) dated 28.06.2017 issued by the Department of Revenue, Ministry of Finance and relied upon by the respondent no. 2 is concerned, having regard to the latest clarification tendered by the GST Department itself affirming 18% GST chargeable on the services sought, it is impelled to rely on the said clarification being “contemporanea expositio”. Moreover, it is not called upon to decide the correctness of the Notification or the clarificatory letter issued by the same department. Ergo, the issue as to whether the 18% GST is chargeable or not is answered in the affirmative. That said, now it is required to consider as to whether for the purposes of selecting the L-1 bidder, the CPRT without GST is essential or whether price with GST inclusive would be relevant. Whether the DSHM has award the contract to respondent no. 2 vide letter dated 30.03.2025 without violating the terms of the subject tender? - HELD THAT:- At the stage of notification of the tender document, it appears that the DSHM was not aware as to the extent to which GST would be chargeable on such services as sought. It is only subsequently when it had two bidders, i.e., the petitioner quoting its CPRT with and without GST while respondent no. 2 quoted its price indicating that no GST is chargeable at all, that the conundrum arose. Both parties were completely at variance with each other in so far as chargeability of GST is concerned. On the one hand, petitioner was of the opinion that 18% GST is chargeable on such services while respondent no. 2, relying upon the Notification No. 12/2017 – Central Tax (Rate) dated 28/6/2017 was clearly of the opinion that no GST is applicable at all for the same services. It was this controversy which led the DSHM to seek clarification from the GST Department. As observed above, by the letter dated 25.03.2025, the GST Department clarified that for the services sought under the tender document, 18% GST was chargeable. In all probability it appears that the indemnity bond was asked to be furnished by respondent no. 2 in the above context. Thus, the argument that the financial bid in the subject tender ought to have been considered only on the basis of CPRT, though may be a relevant consideration, yet the overriding power of the DSHM to consider the prices inclusive of GST and requiring a bidder to furnish an indemnity bond in that context cannot be said to be a perverse or an arbitrary exercise. In that view of the matter, we are of the considered opinion that the award of contract to respondent no. 2 by DSHM considering the same as inclusive of GST@18% may not be amenable to interference or interdiction. It is informed that services sought under the tender are being executed by respondent no. 2 since April 2025 and the award of contract is for a period of 1 year and would be over in March-April 2026. Having regard thereto, the tender or the contract issued is not interdicted in favour of respondent no. 2 at this belated stage lest it may cause significant disruptions to the services being offered and would surely disturb the public services, which are paramount to any tender. Petition dismissed.

2025 (12) TMI 213 - DELHI HIGH COURT Indian Laws

AI TextQuick Glance (AI)Headnote

Issues: (i) whether the petitioners rebutted the presumptions under Sections 118 and 139 of the Negotiable Instruments Act, 1881 and established that the cheque was not issued in discharge of a legally enforceable debt or liability; (ii) whether non-service of the statutory legal notice vitiated the complaint under Section 138 of the Negotiable Instruments Act, 1881.

Issue (i): whether the petitioners rebutted the presumptions under Sections 118 and 139 of the Negotiable Instruments Act, 1881 and established that the cheque was not issued in discharge of a legally enforceable debt or liability.

Analysis: Once execution and signature on the cheque were admitted, the statutory presumptions as to consideration and discharge of debt or liability arose. The defence that defective goods were returned was examined on the evidence led by the petitioners, including the delivery challan and the testimony of the alleged witnesses. The evidence did not support the defence: one witness denied knowledge of the transaction or return of goods, the other did not prove employment or preparation of the challan, and there was no reliable documentary proof that the goods were defective or that a valid return was made. The circumstances, including the timing and contents of the challan, also did not corroborate the defence.

Conclusion: The petitioners failed to rebut the presumptions under Sections 118 and 139 of the Negotiable Instruments Act, 1881, and the cheque was treated as issued towards a legally enforceable liability.

Issue (ii): whether non-service of the statutory legal notice vitiated the complaint under Section 138 of the Negotiable Instruments Act, 1881.

Analysis: The notice was sent to the address used by the petitioners, dispatch was proved by postal receipt and tracking material, and the address itself was not disputed. A notice properly addressed and sent by registered post is deemed served, and service of summons also cures any alleged defect in notice service.

Conclusion: The plea of non-service of legal notice was rejected and service of notice was treated as duly proved.

Final Conclusion: The revisional court found no infirmity in the concurrent conviction and sentence, and no ground for interference was made out.

Ratio Decidendi: Where execution of a cheque is admitted, the presumptions under Sections 118 and 139 of the Negotiable Instruments Act, 1881 operate, and they can be displaced only by credible rebuttal showing non-existence of debt or liability on a preponderance of probabilities; duly addressed and dispatched statutory notice is deemed served.

Cheque presumptions and deemed service of notice under the Negotiable Instruments Act require credible rebuttal and proof.
Where execution and signature on a cheque are admitted, the presumptions under Sections 118 and 139 of the Negotiable Instruments Act, 1881 operate in favour of consideration and legally enforceable liability, and the accused can rebut them only by credible evidence on a preponderance of probabilities. A defence that goods were defective and returned failed because the supporting witnesses and documents did not reliably prove the alleged transaction, defect, or return. A statutory notice properly addressed and dispatched by registered post is deemed served, and service of summons may cure any alleged defect in notice service.

Presumption under Sections 118 and 139 of the Negotiable Instruments Act - Offence under Section 138 of the Negotiable Instruments Act - Rebuttal of presumption and evidential burden on accused - Service of legal notice by registered post deemed service - Scope of revisional jurisdiction of the High CourtOffence under Section 138 of the Negotiable Instruments Act - Presumption under Sections 118 and 139 of the Negotiable Instruments Act - Conviction under Section 138 of the NI Act was sustainable because the cheque and signature were admitted and the petitioners failed to rebut statutory presumptions. - HELD THAT: - The petitioners admitted signature and issuance of the cheque; once execution was admitted, statutory presumptions under Sections 118 and 139 arise and shift the evidential burden on the accused. The court applied settled authority that, after activation of the presumption, inquiry shifts to whether the accused discharged his onus. The petitioners' primary defence - that the cheque did not represent a legally enforceable debt because goods were returned - was examined and found unsupported by reliable documentary or oral evidence. In the absence of successful rebuttal, the courts below were justified in convicting under Section 138. [Paras 22, 23, 24, 34, 35]Conviction under Section 138 NI Act upheld as the petitioners failed to rebut the presumptions arising from admitted cheque execution.Rebuttal of presumption and evidential burden on accused - Presumption under Sections 118 and 139 of the Negotiable Instruments Act - The plea that defective goods were returned and thereby extinguished liability was not proved and did not rebut the presumptions under Sections 118 and 139. - HELD THAT: - Petitioners relied on a delivery challan dated after issuance of the cheque and called witnesses who did not support the return-of-goods defence. The summoned witness denied knowledge of the transaction; the delivery person failed to establish employment or preparation/delivery of the challan; and no evidence showed that goods were returned because of defects. The delivery challan itself did not record return due to defects and was dated after the cheque. Given lack of documentary and oral proof, the defence failed to discharge the evidential burden required to rebut statutory presumptions. [Paras 29, 30, 31, 32, 34]Defence of return of goods held unproven and inadequate to rebut presumptions under Sections 118 and 139.Service of legal notice by registered post deemed service - Service of the statutory notice was duly proved and the petitioners' plea of non-receipt was untenable. - HELD THAT: - Although petitioners claimed non-receipt of the legal notice, they did not dispute the address used. The complainant proved dispatch by postal receipt and tracking report. The court noted the well-settled rule that a notice properly addressed and sent by registered post is deemed served; additionally, service of court summons cures any defect in service of notice. On the material before it, the court found service established. [Paras 33, 34]Service of legal notice held to be established and petitioners' non-receipt plea rejected.Scope of revisional jurisdiction of the High Court - High Court will not reappreciate evidence or substitute its view for concurrent findings unless the impugned orders are wholly unreasonable or entail a gross miscarriage of justice. - HELD THAT: - The court observed that, in revisional proceedings, its role is supervisory and not appellate; it must assess correctness, legality and propriety of impugned orders but should exercise restraint and avoid reappreciation of evidence where concurrent findings by magistrate and appellate court exist, unless there is a glaring feature amounting to miscarriage of justice. Applying that principle, no such infirmity was found in the concurrent findings. [Paras 17, 18, 19, 20]No interference was warranted with concurrent findings of fact; revisional jurisdiction exercised with restraint.Final Conclusion: The revision petition challenging the concurrent conviction and sentence under Section 138 NI Act is dismissed; the High Court finds no infirmity in the impugned judgments as the petitioners failed to rebut statutory presumptions and service of notice was proved.

2025 (12) TMI 1 - CHHATTISGARH HIGH COURT Indian Laws

AI TextQuick Glance (AI)Headnote

Prima facie evidence defeats bail where impersonation, bribery conspiracy, and CCTV-supported presence are shown.
Bail was refused in a case alleging impersonation of a public servant, conspiracy to demand illegal gratification, and participation in a trap incident. The court relied on prima facie material in the charge-sheet and supplementary charge-sheet, including CCTV footage, identification by the complainant and other witnesses, and voice comparison evidence, which indicated that the applicant posed as the Commissioner of CGST under the name of Mishraji and was present at the meeting place. The court also noted conduct suggesting evasion of investigation and non-bailable process. On that material, it found no basis to enlarge the applicant on bail.

Seeking grant of bail - offences under Sections 61(2) of the Bharatiya Nyaya Sanhita, 2023 and Sections 7, 7A of the Prevention of Corruption Act, 1988 - demand of bribe/illegal gratification - applicant is alleged to have impersonated himself as the Commissioner of CGST and even changed his name as Mishraji and hatched a conspiracy alongwith two other - HELD THAT:- The investigation in the matter has been concluded and charge sheet and supplementary charge sheet have also been filed. The prosecution has prima facie been successful in establishing the guilt of the applicant. The applicant impersonated himself as Commissioner of CGST and hatched a conspiracy against the complainant to extort illegal gratification. The presence of the applicant in the Starbucks Coffee Shop is apparent from the video footage and he has been identified by the complainant alongwith various other witnesses as is evident from the return filed by the respondents. His voice sample has also been identified by the witnesses and there remains no manner of doubt that the applicant was present at that place. From the materials available on record, it transpires that the applicant is the prime conspirator as he introduced himself as Commissioner of the CGST and on his instructions, the other two co-accused assisted in commission of the crime in question. Further, the conduct of the applicant is also not acceptable as he had tried to abscond despite repeated notices issued by CBI under Section 35(3) BNSS at multiple addresses on 28.02. 2025, 04.03.2025 and 10.03.2025, and has evaded execution of the non-bailable warrant issued by the learned trial Court. When the applicant has been identified by the complainant and other witnesses, his presence has been established at the Starbucks Coffee shop where the negotiations for bribe took place and there is evidence in the form of CCTV footage, the rejection of the bail to the co-accused which having affirmed by the Apex Court, we are of the considered opinion that this is not a fit case where the applicant should be enlarged on bail. The bail application filed by the applicant/accused for the offences under Sections 61(2) of the BNS and Sections 7, 7A of the Prevention of Corruption Act, 1988 (as amended in 2018), is rejected.

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