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2026 (6) TMI 518 - BOMBAY HIGH COURT Indian Laws

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Foreign judgment conclusiveness and interim injunction require prima facie competence, fairness, and a reliable underlying claim
A foreign judgment can be treated as conclusive only if it survives the exceptions in Section 13 CPC, and the presumption under Section 14 is rebuttable. At the pre-trial stage, the court must be prima facie satisfied that the foreign court was competent and that no disqualifying defect exists before relying on the judgment for a money claim. Here, the arbitration agreement, prior participation in international arbitration over the same dispute, and objections based on the Russian proceedings created serious doubt about the foreign court's competence and fairness. Without a reliable prima facie foundation for the underlying claim, apprehension of asset dissipation in India did not justify interim injunction relief.

International law - Foreign judgment conclusiveness - Presumption of competent foreign jurisdiction - Rebuttable presumption of jurisdiction - Exclusive arbitration agreement and foreign court competence - Clean hands doctrine - Breach of natural justice in foreign proceedings - Interim injunction in money recovery suit - Principles of “uberrima fides” - Arbitration agreements between the parties and the plaintiff’s participation in the international arbitration proceedings pertaining to the same claim arising out of the same dispute Conclusiveness of foreign judgment - Presumption of competent foreign jurisdiction - Exclusive arbitration agreement and foreign court competence - Breach of natural justice in foreign proceedings - At the pre-trial stage, the Russian judgment could not be accepted as conclusive evidence of the defendant's liability, nor could the statutory presumption of competent jurisdiction be applied for grant of interim relief. - HELD THAT: - The Court held that under Sections 13 and 14 CPC, a certified copy of a foreign judgment ordinarily carries conclusiveness as to matters adjudicated and a rebuttable presumption of competence of the foreign court; however, at the pre-trial stage, those consequences cannot be treated as absolute where the record itself shows a substantial objection. Here, the parties had agreed to resolve disputes through ICC arbitration with English law governing the contracts, the same dispute was already the subject matter of ongoing international arbitration, and the plaintiff had participated in that arbitration for years. In that background, the effect of Article 248.1 of the Russian Procedure Code on the Moscow court's jurisdiction remained debatable and the competence of the foreign court was prima facie doubtful. The Court further noted serious objections under Section 13, including the plea that the foreign proceedings were conducted in breach of natural justice because voluminous amendments and expert material were introduced shortly before hearing without adequate opportunity to respond. Since the plaintiff relied on the Russian judgment alone as the basis of its money claim, its conclusiveness and the foreign court's competence had to be tested at trial and could not be treated as established for interim purposes. [Paras 18, 19, 20, 34, 35] The Russian judgment was held not capable of being treated, at this stage, as absolute and conclusive proof of the plaintiff's claim, and the presumption under Section 14 CPC was declined to be applied for interim relief. Interim injunction in money recovery suit - Balance of convenience - Suppression of material facts - HELD THAT: - The Court held that a mere apprehension that the defendant may transfer funds out of India is insufficient in a money recovery action unless the plaintiff first shows a prima facie case on the underlying claim. Since no prima facie case was established on the strength of the foreign judgment, the foundation for injunctive relief failed. The apprehension based on the assignment agreement was also weakened because injunctive protection in relation to that agreement had already been granted by the Russian court. The Court further found that the defendant had produced material showing that orders of the English court and the ongoing arbitration proceedings concerning substantially the same claim had not been fully placed on record by the plaintiff. In these circumstances, discretionary relief was refused; the Court found absence of prima facie case, no irreparable injury in favour of the plaintiff, and held that the balance of convenience lay with the defendant, who would suffer prejudice if an injunction were granted. [Paras 30, 34, 36, 37] The prayer for interim injunction was rejected and the interim application was dismissed. Principles of “uberrima fides”- meaning that a litigant has a strict legal duty to plead with complete honesty and transparency by voluntarily disclosing all the true and correct facts. Final Conclusion: The Court held that, at the interim stage, the Russian judgment could not be treated as conclusive proof of the plaintiff's money claim because serious objections existed as to the Moscow court's competence and the applicability of the exceptions under Section 13 CPC. In the absence of a prima facie case, and with the balance of convenience favouring the defendant, the interim application for injunction was dismissed.

2026 (6) TMI 699 - DELHI HIGH COURT Indian Laws

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Issues: (i) Whether the defendant had disclosed a bona fide defence or triable issue so as to merit leave to defend in the summary suit based on the signed confirmation of accounts. (ii) Whether the plaintiff was entitled to future interest at the claimed contractual rate or at any rate beyond the decree.

Issue (i): Whether the defendant had disclosed a bona fide defence or triable issue so as to merit leave to defend in the summary suit based on the signed confirmation of accounts.

Analysis: The bank transfers of Rs. 50 lakhs stood proved and were specifically reflected in the confirmation of accounts signed by both parties, including the defendant's endorsement confirming the balance and the agreed interest terms. The defence that the amount represented a cash loan allegedly arranged by the defendant was found unsupported by reliable material and was treated as a sham and moonshine defence. The signed confirmation was held to amount to a written acknowledgment and contract for the purposes of the summary suit, and no triable issue was found warranting leave to defend.

Conclusion: The refusal of leave to defend was upheld and the decree for the principal sum was sustained.

Issue (ii): Whether the plaintiff was entitled to future interest at the claimed contractual rate or at any rate beyond the decree.

Analysis: In a summary suit, pre-decree interest follows the contractual stipulation, but post-decree interest falls within the Court's discretion under Section 34 of the Code of Civil Procedure, 1908. The Court held that the reduction of pendente lite interest to 9% simple interest did not suffer from arbitrariness, but the complete denial of future interest required correction. Considering the money decree and the discretionary power under Section 34, future interest was held payable, though not at the claimed compounded rate.

Conclusion: The plaintiff succeeded in part and future interest at 9% simple interest per annum from the date of decree till payment was awarded.

Final Conclusion: The decree on the principal claim was affirmed, the challenge to the dismissal of leave to defend failed, and the decree was modified only to grant post-decree interest at 9% simple interest per annum.

Ratio Decidendi: A duly signed confirmation of accounts may constitute a written acknowledgment and contract supporting a summary suit, and post-decree interest under Section 34 of the Code of Civil Procedure, 1908 remains a matter of judicial discretion, even where pre-decree interest is contractually claimed.

Signed confirmation of accounts can defeat leave to defend, while post-decree interest remains discretionary under civil procedure law.
A signed confirmation of accounts can constitute a written acknowledgment and contract supporting a summary suit where bank transfers and the agreed balance are reflected in the document; a bare assertion of an alternative cash-loan arrangement, unsupported by reliable material, will not amount to a bona fide defence or triable issue. Post-decree interest remains within the court's discretion under Section 34 CPC: while contractual terms may govern pre-decree interest, future interest need not follow the claimed compounded rate. The principal decree was sustained, and future interest was awarded at 9% simple interest per annum from the date of decree until payment.

Summary suit on acknowledged loan liability - Confirmation of accounts as written contract and acknowledgement - bona fide defence or triable issue - Leave to defend - sham and moonshine defence - Pendente lite and future interest in money decree - Entitlement to future interest at the claimed contractual rate or at any rate beyond the decree Confirmation of accounts as written contract and acknowledgement - Maintainability of summary suit on acknowledged loan - Leave to defend - sham and moonshine defence - The signed confirmation of accounts recording the bank transfers as loan with interest constituted a written contract and acknowledgement sufficient to sustain a summary suit, and the defence that the transfers were only repayment of an earlier cash arrangement did not raise any triable issue. - HELD THAT: - Admittedly, the Plaintiff Company and the Defendant had a longstanding professional and personal relationship, since 2000. The Appellant/Defendant was not only a Chartered Accountant/Auditor for the Plaintiff Company, but had longstanding personal relationship. The simple case of the Plaintiff was that on the request of the Defendant/Appellant for urgent need of Rs. 50 lakhs Rs.30 lakhs were transferred through the bank on 24.09.2018 and Rs.20 lakhs on 28.09.2018 to the bank account of the Defendant/Appellant; a fact which is not denied by the Defendant/Appellant. The Court found it undisputed that the amounts were transferred through bank transactions to the defendant. The confirmation of accounts letter specifically recorded both transfers as loan transactions, mentioned the agreed interest at 15% per annum with quarterly compounding, reflected the interest entries, and was signed by both sides with the endorsement confirming the statement. On a fair reading, the document embodied the terms of the loan and amounted both to a written contract and to an acknowledgement of liability. The explanation that the defendant signed it only on assurance that it would not be acted upon was rejected as untenable. The defence that he had earlier arranged cash for the plaintiff and that the bank transfers were only refund of that amount was held to be unsupported, with no disclosed source or credible explanation, and therefore a sham and moonshine defence not entitling him to leave to defend. [Paras 54, 55, 57, 59, 60] The dismissal of the leave to defend application and the decree in the plaintiff's favour were upheld, and the defendant's appeal was dismissed. Pendente lite interest in summary suit - Future interest under Section 34 CPC - Discretion in award of post-suit interest - HELD THAT: - In the case of Clariant International Limited and another. Vs Securities & Exchange Board of India [2004 (8) TMI 390 - SUPREME COURT], it was held that interest can be awarded in terms of an Agreement or statutory provisions. It can also be awarded by reason of usage or trade having the force of law or on equitable considerations. Interest cannot be awarded by way of damages, except in cases where money due, is wrongfully withheld and there are equitable grounds thereof, for which a written demand is mandatory. In the absence of any agreement or statutory provision or a mercantile usage, interest payable can be only at the market rate. Such interest is payable upon establishment of totality of circumstances, justifying the exercise of such equitable jurisdiction. This judgment was endorsed in Rampur Fertiliser Limited vs. Vigyan Chemicals Industries [2009 (2) TMI 694 - SUPREME COURT]. The Court held that under Order 37 Rule 2(3) CPC the plaintiff in a summary suit is entitled to the specified rate of interest up to the date of decree. Thereafter, Section 34 CPC governs the matter, under which pendente lite and future interest are discretionary and must be awarded fairly and not arbitrarily. Since the trial court had already granted pre-suit interest at the agreed rate and had reduced pendente lite interest to 9% simple interest in exercise of discretion, and there was nothing to show that such exercise was arbitrary or contrary to commercial norms, no interference was warranted on that part. However, as no reason had been given for denying future interest altogether, the plaintiff was held entitled to future interest under Section 34 CPC at 9% simple interest per annum from the date of decree till payment. [Paras 66, 67, 71, 72, 73] The plaintiff's appeal was partly allowed by modifying the decree to grant future interest at 9% simple interest per annum from the date of decree till payment, while maintaining pendente lite interest at 9% simple interest. Final Conclusion: The defendant's appeal against refusal of leave to defend failed, the Court holding that the signed confirmation of accounts furnished a written contractual acknowledgement of the loan and that the defence set up was sham. The plaintiff's appeal succeeded only in part, by addition of future interest at 9% simple interest per annum from the date of decree till payment, while the reduced pendente lite interest was maintained.

2026 (7) TMI 320 - Supreme Court Indian Laws

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Right to travel abroad under Article 21 may yield to pending trial, speedy justice, and passport restrictions in criminal cases.
The right to travel abroad under Article 21 was treated as part of personal liberty, but it was held subject to a judicial balance with the accused's obligation to face trial and the prosecution's right to a speedy trial. Where criminal proceedings remained pending for years, interim protections had delayed the trial, and comparable medical facilities were available in India, the High Court's permission to travel abroad was found unsustainable. The direction requiring deposit of the passport was restored in effect, while the accused was left free to seek leave from the Sessions Court later if travel became necessary.

Right to travel abroad pending criminal proceedings - Balancing personal liberty with speedy trial and administration of criminal justice - Conditions regulating foreign travel of an accused - Return of passport and prior court permission - HELD THAT: - The Court found that, although delay in criminal proceedings cannot always be attributed exclusively to the accused, the chronology disclosed repeated recourse by the respondent no. 2 to proceedings before the High Court and the securing of interim protection which impeded progress of the case. The High Court's reliance on his previous appearances before the Magistrate, the asserted medical need, and his undertaking to return within a stated period was held insufficient in the facts of the case. The Court held that the right to travel abroad, though part of personal liberty under Article 21, is not absolute and must be balanced against the appellant's right to a speedy trial and the societal interest in effective administration of criminal justice. On that balance, the High Court had been unduly indulgent in allowing travel abroad. At the same time, the Court held that the Magistrate's order returning the passport did not require interference; instead of compulsory deposit of passport, the proper safeguard was that the respondent no. 2 should not leave the country without express permission of the Sessions Court after committal, and any such request could be considered on its own merits subject to appropriate conditions. [Paras 9, 10, 11, 13, 14] The High Court's order permitting travel abroad and the Sessions Judge's order directing deposit of passport were set aside; the respondent no. 2 may retain the passport but cannot leave the country without express permission of the Sessions Court after committal. Final Conclusion: The Court held that personal liberty, including the right to travel abroad, had to be balanced against the right to a speedy trial and the larger interest of criminal justice. The respondent no. 2 was not required to deposit his passport, but he was restrained from leaving the country without express permission of the Sessions Court, which may consider any future request on its own merits.

2026 (6) TMI 696 - Supreme Court Indian Laws

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Issues: (i) Whether bail in a commercial quantity NDPS could be sustained without considering the twin conditions under Section 37 of the NDPS Act; (ii) whether the respondent's period of custody warranted bail on the ground of prolonged incarceration under Article 21 of the Constitution of India.

Issue (i): Whether bail in a commercial quantity NDPS matter could be sustained without considering the twin conditions under Section 37 of the NDPS Act.

Analysis: The offences arose from recovery of commercial quantity contraband, attracting the statutory bar under Section 37. The High Court's order did not record satisfaction on the twin requirements that there are reasonable grounds for believing that the accused is not guilty and that he is not likely to commit an offence while on bail. In such cases, consideration of these conditions is mandatory and cannot be bypassed by a liberal approach to bail.

Conclusion: The bail order could not be sustained and was rightly interfered with, in favour of the appellant.

Issue (ii): Whether the respondent's period of custody warranted bail on the ground of prolonged incarceration under Article 21 of the Constitution of India.

Analysis: The respondent had undergone about 1 year and 7 months of custody in a case carrying a maximum sentence of twenty years, and the Court held that this period did not constitute such prolonged incarceration as to override the statutory restrictions applicable to the case. The existence of similar antecedents further weighed against satisfaction of the requirement that he was not likely to commit an offence while on bail.

Conclusion: No bail was warranted on the ground of prolonged incarceration, in favour of the appellant.

Final Conclusion: The appeal succeeded, the grant of regular bail was set aside, and the respondent was denied bail under the governing NDPS bail standard.

Ratio Decidendi: In cases involving commercial quantity under the NDPS Act, courts must strictly apply Section 37 and record satisfaction of the twin conditions before granting bail, and custody of a relatively short duration does not by itself justify release where those conditions are not met.

Commercial quantity NDPS bail requires strict twin-condition compliance; short custody alone does not override the statutory bar.
In commercial quantity NDPS matters, bail cannot be sustained unless the court records satisfaction of Section 37's twin conditions: reasonable grounds to believe the accused is not guilty and is not likely to reoffend on bail. The SC held that the High Court had bypassed this mandatory statutory bar, so the bail order was unsustainable and was set aside. The Court also held that about 1 year and 7 months of custody did not amount to prolonged incarceration sufficient to override the NDPS restrictions, especially where similar antecedents weighed against the likelihood-of-reoffending requirement. Bail was therefore refused.

Entitlement to be released on regular bail - Section 37 twin conditions for bail under the NDPS Act - Bail in offences involving commercial quantity of narcotic drugs - Prolonged incarceration as a ground for bail under special statutes - High Court's grant of regular bail in an NDPS case involving commercial quantity, without considering the mandatory conditions under Section 37 - HELD THAT: - The Court held that in cases involving commercial quantity, consideration of the twin conditions in Section 37 is mandatory, and a liberal approach ignoring that statutory requirement is impermissible. On examining the impugned order, the Court found that the High Court had not considered those conditions at all. The respondent's antecedents in offences of the same nature also negatived satisfaction that he was not likely to commit an offence while on bail. As to custody, the respondent had undergone only 1 year 7 months of incarceration, and since the offence carried a sentence extending up to twenty years, that period could not be treated as prolonged incarceration justifying release on bail on Article 21 considerations. In Tasleem Ahmed v. State Govt. of NCT of Delhi [2026 (6) TMI 695 - SUPREME COURT] has referred the question concerning the approach of constitutional Courts in bail matters under special statutes, where “Article 21, prolonged incarceration and statutory restrictions intersect”. The broader question regarding the approach to prolonged incarceration under special statutes was noted as pending consideration elsewhere and was not further examined. [Paras 16, 17, 18, 19, 22] The order granting bail was set aside, and no case for bail was found to be made out under Section 37 of the NDPS Act. Final Conclusion: The Supreme Court held that the High Court had granted bail in an NDPS case involving commercial quantity without adverting to the mandatory requirements of Section 37. Finding no satisfaction of the statutory conditions and no case of prolonged incarceration warranting release, the Court allowed the appeal and set aside the grant of bail.

2026 (6) TMI 314 - PUNJAB AND HARYANA HIGH COURT Indian Laws

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Issues: (i) Whether the petitioner was entitled to bail in a case alleging a large-scale economic fraud where the investigation was complete, custody had continued for about four months, and the evidence was primarily documentary; (ii) whether the dispute, including the plea of civil nature and territorial jurisdiction, weighed in favour of grant of bail.

Issue (i): Whether the petitioner was entitled to bail in a case alleging a large-scale economic fraud where the investigation was complete, custody had continued for about four months, and the evidence was primarily documentary.

Analysis: The allegations were examined against the settled principles governing bail, including the nature and gravity of the accusation, the stage of investigation, the length of custody, the absence of criminal antecedents, and the likelihood of tampering with evidence or influencing witnesses. The Court noted that the investigation had been completed, the challan had been filed, the material evidence was documentary in nature, and continued detention was unlikely to serve any further purpose. The Court also treated the right to speedy trial under Article 21 of the Constitution of India as a relevant consideration.

Conclusion: The petitioner was held entitled to bail on this issue.

Issue (ii): Whether the dispute, including the plea of civil nature and territorial jurisdiction, weighed in favour of grant of bail.

Analysis: The Court considered the contention that the controversy was substantially about recovery of money and that parallel proceedings under Section 138 of the Negotiable Instruments Act, 1881 had already been pursued. The Court also noticed the objection regarding territorial jurisdiction and found that these circumstances, along with the completion of investigation and the documentary character of the case, supported release on bail for the limited purpose of the petition.

Conclusion: These considerations were held to support grant of bail.

Final Conclusion: Bail was granted, with the petitioner to be released on furnishing bond and surety and to comply with the imposed conditions.

Ratio Decidendi: In a bail matter, where investigation is complete, custody is substantial, the evidence is largely documentary, and there is no shown risk of tampering or absconding, continued detention is unjustified and bail should ordinarily follow even in a serious economic offence.

Bail in economic fraud cases may follow when investigation is complete, custody is prolonged, and evidence is largely documentary.
In a bail matter arising from an alleged large-scale economic fraud, the Court treated completion of investigation, filing of the challan, four months' custody, and the largely documentary nature of the evidence as strong reasons against continued detention. It applied settled bail factors, including gravity of accusation, risk of tampering, criminal antecedents, and the relevance of Article 21 speedy-trial concerns, and found no further investigative purpose in keeping the petitioner in custody. The Court also noted that the dispute had civil recovery aspects, parallel proceedings under the Negotiable Instruments Act, and a territorial jurisdiction objection, all of which reinforced release. Bail was granted subject to bond, surety, and conditions.

Entitlement to regular bail in a prosecution alleging a large-scale financial fraud - Economic offences - Right to speedy trial - Documentary evidence and absence of apprehension of tampering - HELD THAT: - The principles of law laid down by the Hon’ble Supreme Court of India in the case of Sanjay Chandra [2011 (11) TMI 537 - SUPREME COURT] are relevant. In the abovementioned case, the accused was arrested in a serious economic offences relating loss to the State Exchequer. However, the Hon’ble Supreme Court of India accorded the benefit of bail to the abovenamed accused by observing that the investigation in the case was already complete and charge-sheet by the police had been filed. It has also been observed by the Hon’ble Supreme Court of India that when the under-trial prisons were detained in jail to an indefinite period, Article 21 of the Constitution of India stands violated. In the abovementioned case, the Hon’ble Supreme Court of India has further observed that it is not in the interest of justice that accused should be in jail for any indefinite period. According to Hon’ble Court, even if the offence is serious in terms of huge loss to the State exchequer, that, by itself, should not deter the Court from enlarging the appellant on bail, when there is no serious contention of the respondent that the accused, if released on bail, would interfere with the trial or tamper with the evidence. Similarly in the case of Dipak Shubhashchandra Mehta [2013 (6) TMI 105 - SUPREME COURT], the benefit of bail was accorded to accused against whom there were allegations of economic offences of huge magnitude involving crores of rupees. This Court is conscious of the basic and fundamental principle of law that right to speedy trial is a part of reasonable, fair and just procedure enshrined under Article 21 of the Constitution of India. This constitutional right cannot be denied to the accused as mandated by Hon’ble Apex court in Balwinder Singh versus State of Punjab and Anothe [2024 (9) TMI 1744 - SC ORDER]. The Court held that, notwithstanding the gravity of the financial allegations, bail was justified because the offences were triable by the Judicial Magistrate, the petitioner had remained in custody for about four months, investigation stood completed, and nothing remained to be recovered from him. The Court also treated it as significant that the petitioner had no criminal antecedents, the evidence was essentially documentary, and there was nothing on record to show any real likelihood of tampering with evidence, influencing witnesses, or evading trial. Relying on decisions dealing with bail in economic offences and the constitutional dimension of speedy trial, the Court further observed that prolonged pre-trial detention should not continue where trial was not likely to conclude in the near future. It additionally noticed that the dispute appeared to relate to payment of money, that remedies under Section 138 of the Negotiable Instruments Act had already been invoked, and that a serious question of territorial jurisdiction also arose, all of which weighed in favour of grant of bail. [Paras 34, 35, 36, 37, 38] Bail was granted subject to conditions restraining inducement or threat to witnesses, requiring disclosure of address changes, and prohibiting travel outside India without prior permission of the trial Court. Final Conclusion: The petition was allowed and the petitioner was ordered to be released on bail. The Court held that completion of investigation, absence of criminal antecedents, documentary nature of evidence, and the constitutional concern against unnecessary pre-trial incarceration outweighed the seriousness of the economic allegations, subject to appropriate conditions.

2026 (7) TMI 1180 - KERALA HIGH COURT Indian Laws

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Issues: (i) Whether supervisory jurisdiction under Article 227 may be invoked against an arbitral order rejecting a jurisdictional objection under Section 16(2) of the Arbitration and Conciliation Act, 1996; (ii) Whether claims for restructuring companies, division of their assets and shares, and consequential corporate reliefs are arbitrable under a memorandum of understanding between individual parties.

Issue (i): Whether supervisory jurisdiction under Article 227 may be invoked against an arbitral order rejecting a jurisdictional objection under Section 16(2) of the Arbitration and Conciliation Act, 1996.

Analysis: An order rejecting a plea under Section 16(2) is not appealable under Section 37(2)(a). Although Section 5 restricts judicial intervention and ordinarily requires parties to await the award and pursue the statutory remedy under Section 34, supervisory review remains available in exceptional cases where the arbitral tribunal patently lacks inherent jurisdiction or the dispute is governed by an exclusive statutory mechanism.

Conclusion: The petition under Article 227 was maintainable because the jurisdictional objection concerned a claimed total absence of arbitral jurisdiction.

Issue (ii): Whether claims for restructuring companies, division of their assets and shares, and consequential corporate reliefs are arbitrable under a memorandum of understanding between individual parties.

Analysis: The claims sought division of corporate assets and liabilities, allotment or buy-out of shares, alteration of management, and sale of company assets. The companies were not parties to the memorandum of understanding, while the reliefs affected their functioning, minority shareholder rights and third-party interests. Such reliefs fall within the extensive statutory powers of the National Company Law Tribunal under Sections 241 and 242 of the Companies Act, 2013. The dispute was therefore an intra-company action in rem requiring centralised statutory adjudication, rather than a personal dispute capable of private arbitral resolution.

Conclusion: The corporate restructuring claims were non-arbitrable and fell within the exclusive jurisdiction of the National Company Law Tribunal; the arbitral tribunal lacked jurisdiction over those claims.

Final Conclusion: The jurisdictional order was set aside to the extent it retained arbitral jurisdiction over the claims concerning the three companies, and those arbitral proceedings were terminated while statutory remedies and any otherwise arbitrable proceedings remained open.

Ratio Decidendi: Supervisory jurisdiction may exceptionally be exercised to prevent arbitration of disputes that are non-arbitrable because they concern corporate restructuring and rights requiring exclusive adjudication by a statutory forum.

Corporate restructuring disputes requiring statutory adjudication are non-arbitrable, permitting exceptional supervisory review of an arbitral jurisdictional order.
Supervisory jurisdiction under Article 227 may exceptionally be invoked against an arbitral order rejecting a jurisdictional objection where the tribunal is alleged to lack inherent jurisdiction, despite the limited intervention framework of the Arbitration and Conciliation Act. Claims seeking corporate restructuring, division of company assets and liabilities, share allotment or buy-out, management changes, and asset sales were characterised as intra-company actions in rem. Because the companies were not parties to the memorandum and the reliefs affected minority shareholders and third-party interests, they required adjudication under the exclusive statutory jurisdiction of the National Company Law Tribunal. Arbitral proceedings concerning those corporate claims were terminated, without affecting statutory remedies or otherwise arbitrable proceedings.

Supervisory jurisdiction over arbitral jurisdictional orders - Non-arbitrability of company restructuring disputes - Exclusive jurisdiction of the National Company Law Tribunal - Kompetenz-Kompetenz - Limited Judicial Intervention - Supervisory Jurisdiction Maintainability of a petition under Article 227 against an arbitral order rejecting a jurisdictional objection under Section 16(2) of the Arbitration and Conciliation Act, 1996 - HELD THAT: - Sub-Section (5) of Section 16 of the Act provides that the Arbitral Tribunal shall decide on a plea referred to in Sub-Section (2) or Sub-Section (3) and, in case it rejects the plea under Sub-Section (2) or Sub-Section (3), proceed with the arbitration. Section 37 of the Act specifically deals with appealable orders. Sub-Section (2)(a) of Section 37 of the Act, states that an appeal shall lie to a court from an order of the Arbitral Tribunal, accepting the plea under Sub-Section (2) or Sub-Section (3) of Section 16 of the Act. In the present case, the Arbitrator had not accepted the plea of the petitioner under Sub-Section (2) of Section 16 of the Act. Therefore, it is beyond doubt that the order impugned in the original petition is not appealable under Section 37 of the Act, before the District Court. However, where the arbitral tribunal proceeds in respect of a dispute that is non-arbitrable or is governed by a separate statutory mechanism, the High Court may examine the jurisdictional objection under Articles 226 and 227 rather than require the party to await the final award. [Paras 7, 16] The petition under Article 227 was held maintainable. Non-arbitrability of company restructuring disputes - Exclusive jurisdiction of the National Company Law Tribunal - Actions in rem - HELD THAT: - It is evident from records that, the claim before the Arbitrator touches upon functioning and restructuring of the companies, which falls under the exclusive jurisdiction of the National Company Law Tribunal under Section 241 read with Section 242 of the Companies Act, 2013, it is inevitable for this Court to hold that process of restructuring and re-division of the assets of the companies is statutory in nature and cannot be the subject matter of the personal contract. This Courts finds that the dispute before the arbitrator qua the companies is essentially an intra-company dispute. Pertinently, the companies are not signatories to the MOU, whereas it is between two brothers. Moreover, the presence of a specialized statutory forum like National Company Law Tribunal which is given exclusive power to adjudicate on the dispute touching upon the restructuring of the companies and the rights of a minority shareholder, is a clear indication that the subject matter of the dispute is non- arbitrable. Further, it is undeniable that the disputes raised in the claim petition constitute an action in rem and not in personam. An arbitration clause in an MOU between two individuals cannot render arbitrable claims concerning restructuring and functioning of companies that were not parties to the MOU. The reliefs sought, including division of company assets, sale to third parties, changes in management and division of shares, fell within the extensive statutory powers of the National Company Law Tribunal in proceedings concerning oppression and company affairs. Such intra-company disputes affect third-party and minority-shareholder rights, constitute actions in rem, and require adjudication by the specialised statutory forum; they cannot be resolved through a personal contract. [Paras 25, 26, 27, 28] The arbitral order rejecting the jurisdictional objection was interfered with, and the arbitral proceedings were terminated insofar as they concerned the three companies; remedies before the National Company Law Tribunal were left open. Final Conclusion: The original petition was allowed in part. The arbitral proceedings were terminated only insofar as they concerned the three companies, without adjudication on the merits of the parties' inter se rights or statutory remedies.

2026 (6) TMI 393 - Supreme Court Indian Laws

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Issues: (i) whether Sheikh Mehmood and Ravinder Kumar Gupta were entitled to bail pending trial in a case involving allegations of conspiracy and participation in a homicidal assault; (ii) whether Parshotam Singh, Suraj Singh, Vikas Singh and Sandeep Charak were entitled to bail on the material then available.

Issue (i): whether Sheikh Mehmood and Ravinder Kumar Gupta were entitled to bail pending trial in a case involving allegations of conspiracy and participation in a homicidal assault.

Analysis: Bail was assessed on the settled balance between the rule of liberty and the seriousness of the accusation, with emphasis on the prima facie material, the gravity of the offence, the nature of the evidence, antecedents, age and health, and the risk of influencing witnesses or derailing the trial. As regards Sheikh Mehmood and Ravinder Kumar Gupta, the Court noted their advanced age, medical condition in the case of Sheikh Mehmood, and inconsistencies in the evidence to some extent against Ravinder Kumar Gupta.

Conclusion: Bail was granted to Sheikh Mehmood and Ravinder Kumar Gupta, subject to conditions to be imposed by the trial court, and the result was in their favour.

Issue (ii): whether Parshotam Singh, Suraj Singh, Vikas Singh and Sandeep Charak were entitled to bail on the material then available.

Analysis: The Court found that, on the material then available, the case against these appellants could not be treated as one lacking an overt homicidal act, a link between the death and the alleged conspiracy, or shared intention. The seriousness of the offence and the prima facie material were considered sufficient to refuse bail at that stage.

Conclusion: Bail was declined to Parshotam Singh, Suraj Singh, Vikas Singh and Sandeep Charak at that stage, and the result was against them.

Final Conclusion: The batch of appeals was disposed of by enlarging two appellants on bail and declining bail to the remaining appellants, with liberty to seek renewal of bail after further progress of the trial.

Ratio Decidendi: In serious offences involving homicide and conspiracy, bail turns on a cumulative assessment of the prima facie case, gravity of the offence, nature of evidence, antecedents, age, health, and the risk of witness interference, and may be granted selectively where these considerations justify differential treatment among accused persons.

Bail in homicide conspiracy cases turns on prima facie material, gravity, age, health and risk of witness interference.
Bail in a conspiracy-linked homicidal assault was assessed on the cumulative balance between liberty and the seriousness of the accusation, with focus on prima facie material, gravity of the offence, nature of evidence, antecedents, age, health, and the risk of witness interference or trial prejudice. On that basis, bail was granted to two accused because of advanced age, medical condition and some evidentiary inconsistencies, while bail was refused to four others because the material still disclosed a sufficient homicidal link, common intention and prima facie case at that stage. The appeals were thus disposed of by selective enlargement on bail and continued custody for the remaining accused, with liberty to renew bail later.

Entitlement to bail pending trial - conspiracy and participation in a homicidal assault - Balancing gravity of offence with age, health and evidentiary inconsistency - Differentiation of roles in bail adjudication - CCTV recording of the incident, recordings of calls exchanged by and between the accused persons, and accounts of various eyewitnesses. Bail in murder and conspiracy cases - Advanced age and medical condition in bail consideration - Evidentiary inconsistency at bail stage - Bail of the septuagenarian accused charged with murder and conspiracy was to be considered separately despite the seriousness of the offences. - HELD THAT: - The Court held that though the governing principle is that bail is the rule and jail the exception, in grave offences such as murder and conspiracy that principle must be balanced against the prima facie case, gravity of the offence, nature of evidence, antecedents, role attributed, likelihood of influencing witnesses, possibility of absconding, age and medical grounds. On the material then available, the Court was not persuaded that there was no overt act, no material linking the homicidal death with the conspiracy, or no shared intention. Even so, in the case of Sheikh Mehmood and Ravinder Kumar Gupta, the Court found that their advanced age warranted distinct treatment; additionally, one was stated to be in poor health requiring regular care and the evidence against the other was, to some extent, prevaricating and inconsistent. Those circumstances justified release on bail subject to conditions ensuring an unhindered trial. [Paras 34, 35, 36, 37, 38] Sheikh Mehmood and Ravinder Kumar Gupta were directed to be released on bail on terms and conditions to be fixed by the trial court, with liberty to cancel bail in case of breach. Prima facie case in bail matters - Shared intention and conspiracy at bail stage - Renewal of bail prayer on progress of trial - Bail of the remaining accused was liable to be refused at the present stage in view of the prima facie material and the nature of the accusations. - HELD THAT: - Applying the same bail principles, the Court found prima facie material on record indicating an overt act connected with the homicidal death, material linking the incident with the alleged conspiracy, and shared intention. In that view, and having regard to the seriousness of the allegations, rejection of bail for the remaining appellants followed. The Court, however, directed expedition of the trial and permitted those appellants to renew their prayer for bail before the appropriate court after substantial progress in recording prosecution evidence. [Paras 31, 32, 33, 40, 41] The prayers for bail of Parshotam Singh, Suraj Singh, Vikas Singh and Sandeep Charak were rejected at that stage, with liberty to seek bail again after further progress of the trial. Final Conclusion: The appeals were disposed of by granting bail to Sheikh Mehmood and Ravinder Kumar Gupta on conditions, while refusing bail to the other four appellants at that stage. The trial court was requested to expedite the trial, and the remaining appellants were left free to renew their bail request after further progress in the prosecution evidence.

2026 (6) TMI 580 - Supreme Court Indian Laws

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Issues: (i) Whether the Right of Children to Free and Compulsory Education Act, 2009 and its 2017 amendment operate retrospectively so as to require in-service teachers appointed earlier to qualify the Teacher Eligibility Test; (ii) whether the first proviso to section 12A of the National Council for Teacher Education Act, 1993 protects such teachers from the TET requirement; (iii) whether insisting on TET amounts to an impermissible change in service conditions; and (iv) whether the time earlier granted for acquiring TET required extension.

Issue (i): Whether the Right of Children to Free and Compulsory Education Act, 2009 and its 2017 amendment operate retrospectively so as to require in-service teachers appointed earlier to qualify the Teacher Eligibility Test.

Analysis: Section 23 of the RTE Act distinguishes between future appointments and teachers already in service. The words used in the provision show that the minimum qualification is prospective for new appointments, while the provisos expressly preserve the position of existing teachers by granting time to obtain the qualification. The 2017 amendment further extended the compliance window for teachers already appointed or continuing in service. The statutory scheme therefore recognizes existing appointments while still requiring eventual compliance with minimum standards.

Conclusion: The RTE Act and the 2017 amendment are not retrospectively invalidating, and in-service teachers remain bound to acquire TET within the statutory period.

Issue (ii): Whether the first proviso to section 12A of the National Council for Teacher Education Act, 1993 protects such teachers from the TET requirement.

Analysis: The first proviso preserves continuance of persons recruited before the commencement of the NCTE Amendment Act, 2011, but the second proviso makes the minimum qualifications applicable within the period specified under the RTE Act. The two provisos must be read together, and the protection against adverse effect does not eliminate the statutory obligation to acquire the prescribed qualifications within time.

Conclusion: The NCTE Act does not exempt in-service teachers from acquiring TET within the time fixed by the RTE regime.

Issue (iii): Whether insisting on TET amounts to an impermissible change in service conditions.

Analysis: The requirement is not a newly imposed adverse service condition but a statutory qualification designed to secure educational standards for children. The provision allows time for compliance and does not immediately terminate existing service. The challenge based on change in conditions of service therefore does not succeed.

Conclusion: Requiring TET is not an unlawful change in service conditions.

Issue (iv): Whether the time earlier granted for acquiring TET required extension.

Analysis: While the challenge to the underlying legal position failed, the Court took note of the practical impact on teachers and continuity of elementary education. Exercising powers under Article 142 of the Constitution of India, the Court extended the earlier period for obtaining TET from two years to three years and directed periodic conduct of the examination, preferably twice a year.

Conclusion: The time for acquiring TET was extended to 31 August 2028.

Final Conclusion: The review petitions failed on the merits of the challenge to the TET mandate, but limited equitable relief was granted by enlarging the compliance period for in-service teachers.

Ratio Decidendi: A statutory requirement designed to maintain educational standards may validly apply to in-service teachers through a prospective compliance window, and a review will not lie absent error apparent on the face of the record, though equitable time relief may be granted under Article 142 where necessary.

Teacher Eligibility Test compliance for in-service teachers upheld with a prospective statutory window and extended time for qualification.
Section 23 of the Right of Children to Free and Compulsory Education Act, 2009 is described as prospective for new appointments, while preserving in-service teachers through a statutory compliance window to obtain the Teacher Eligibility Test. The first proviso to section 12A of the National Council for Teacher Education Act, 1993 is read with the RTE framework and does not exempt existing teachers from eventual compliance. Requiring TET is characterised as a statutory qualification, not an impermissible change in service conditions. The text also notes that the compliance period was extended under Article 142 to 31 August 2028, with periodic conduct of the examination.

Review jurisdiction - Error apparent on the face of the record - Right of Children to Free and Compulsory Education Act, 2009 [RTE Act] - retrospective application of the RTE Act - Teacher Eligibility Test for in-service teachers - Minimum qualifications under the Right to Education regime - Extension of compliance time under Article 142 - NCTE Act VIS-À-VIS RTE Act - Scope of first proviso to section 12A of the National Council for Teacher Education Act, 1993 (NCTE) - future appointments and teachers already in service under section 23 of the RTE Act - Audi alteram partem - Pragmatic approach - Child-centric legislation In-service teachers imparting lessons to students recruited prior to enactment of the RTE Act, and having more than 5 (five) years to retire on superannuation, were held to be under an obligation to qualify the TET within 2 (two) years from 1 st September, 2025 Review jurisdiction - Teacher Eligibility Test for in-service teachers - Prospective operation of minimum qualification requirement - HELD THAT: - The Court held that Section 23 of the RTE Act itself makes a clear distinction between future appointees and teachers already in service. While sub-section (1) speaks of "any person" eligible for appointment, the provisos to sub-section (2) specifically refer to "a teacher" and "every teacher" in position at the relevant dates, thereby showing a legislative intent that existing teachers must also acquire the prescribed minimum qualifications within the time allowed. The 2017 amendment was treated not as retrospective disqualification, but as a further statutory window recognising existing appointments and extending time for compliance. The Court further held that subordinate legislation or notifications could not override the parent statute, and that the provisos to Section 12A of the NCTE Act, when read together, reinforced rather than displaced the obligation to acquire the minimum qualifications within the period specified under the RTE framework. On that construction, the TET requirement was not regarded as an impermissible alteration of service conditions but as part of the statutory scheme meant to secure quality elementary education. Since the earlier judgment had correctly interpreted the statutory framework, no ground for review was made out. [Paras 22, 23, 25, 28, 29] The review challenge to the applicability of TET to in-service teachers was rejected, and the earlier interpretation was affirmed as free from error apparent on the face of the record. Extension of compliance time under Article 142 - Continuity of elementary education - Pragmatic relief - Although no error warranting review was established, the time earlier granted to in-service teachers to acquire TET was extended in order to protect continuity in elementary education and mitigate practical disruption. - HELD THAT: - The Court held that the statutory requirement of TET could not be diluted, particularly because the legislation is child-centric and the educational future of children could not be subordinated to continuance of unqualified teachers. At the same time, bearing in mind the practical repercussions of a large number of in-service teachers becoming vulnerable within a short period, the Court considered it appropriate to mould relief pragmatically. Exercising power under Article 142, it extended the compliance period from two years to three years and expected the competent authorities to conduct the TET periodically so that eligible teachers have a reasonable opportunity to qualify. The Court also made clear that no further extension would be entertained. [Paras 31, 32, 33, 34, 35] The earlier timeline was modified by extending the period for acquiring TET from two years to three years, with no scope for any further extension. Final Conclusion: The Court found no error apparent in the earlier ruling that in-service teachers must acquire TET as part of the statutory minimum qualifications under the RTE regime. However, in exercise of Article 142, it extended the time for compliance from two years to three years and, subject to that modification, dismissed all the review petitions.

2026 (6) TMI 106 - DELHI HIGH COURT Indian Laws

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Privity of contract and necessary party test: a forwarding agent was properly deleted where liability lay against the principal buyer.
Where the plaint disclosed that the supply contract was with the principal buyer and that the first defendant was only a forwarding agent in the transportation arrangement, the Delhi HC held that no privity of contract existed between the appellant and the agent. On that footing, the agent could not be made liable for the buyer's default and was properly deleted from the array of parties as a non-necessary and improper party under Order I Rule 10(2) CPC. The Court treated the dispute as one lying, if at all, against the contracting principal, and found that further discussion on limitation or rejection of plaint was unnecessary once deletion was the real issue.

Suit for Recovery - Necessary and proper party - Cause of action - liability to remain on the array of parties despite being an agent of the intermediary in the transportation arrangement - Deletion of party under Order I Rule 10 - Partial rejection of plaint Necessary and proper party - Deletion of party under Order I Rule 10 - Privity of contract - HELD THAT: - The Court held that, on the plaint averments themselves, the plaintiff's contract for supply of goods was with Defendant No. 3, while transportation was arranged through Defendant No. 2, who in turn engaged Defendant No. 1 as forwarding agent. There was thus no direct contractual relationship between the plaintiff and Defendant No. 1. The Court further noted that Defendant No. 2 had already been deleted from the array of parties, and once that was so, nothing survived against Defendant No. 1, who was only the agent engaged for transportation. On that basis, deletion of Defendant No. 1 from the suit was justified. [Paras 43, 44, 45, 48] The deletion of Defendant No. 1 from the array of parties was upheld. Partial rejection of plaint - Order VII Rule 11 - Deletion of party under Order I Rule 10 - HELD THAT: - The Court accepted that a suit cannot be rejected piecemeal. It clarified, however, that the present matter was not one of partial rejection of the suit but of deletion of a party who was not necessary or proper. Since the controversy concerning Defendant No. 1 stood resolved on that basis, the trial court's discussion on limitation and cause of action under Order VII Rule 11 was unnecessary and erroneous. Even so, that error did not affect the correctness of the deletion of Defendant No. 1. [Paras 46, 47, 48] The order was sustained as one deleting Defendant No. 1 under Order I Rule 10, and not as a valid rejection of the plaint under Order VII Rule 11. Final Conclusion: The appeal was dismissed. The Court upheld the deletion of Defendant No. 1 from the array of parties on the ground that it was not a necessary or proper party, while clarifying that the matter was not one for rejection of the plaint under Order VII Rule 11.

2026 (6) TMI 56 - Supreme Court Indian Laws

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Rebuttable presumption of legally enforceable debt under the Negotiable Instruments Act, with settlement ending the review proceedings.
Section 139 of the Negotiable Instruments Act creates a rebuttable presumption that a cheque was issued for a legally enforceable debt or liability, and the accused bears the burden of rebutting that reverse-onus presumption in a prosecution under Section 138. In view of the settlement between the parties, the Supreme Court set aside the impugned order, withdrew the subsequent orders, and disposed of the review petitions.

2026 (6) TMI 2 - Supreme Court Indian Laws

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Quashing of criminal prosecution after full banking settlement: Supreme Court applied abuse-of-process principles to end the case.
Criminal prosecution for cheating and use of forged documents may be quashed where a banking dispute has been fully and finally settled through an approved compromise, the settlement amount has been paid, a no dues certificate issued, and the Debts Recovery Tribunal has recorded withdrawal of recovery proceedings. The Supreme Court applied the Section 482 CrPC principle that interference is justified when the dispute is overwhelmingly civil, the prospect of conviction is remote, and continuation of prosecution would be an abuse of process. On those facts, the belated chargesheet and charge-framing order were quashed.

Quashing of criminal proceedings after bank loan compromise - Commercial transactions with predominantly civil flavour - Abuse of process of courtQuashing of criminal proceedings after bank loan compromise - Commercial transactions with predominantly civil flavour - Abuse of process of court - Criminal prosecution for cheating and use of forged documents arising out of a bank loan transaction could not be allowed to continue after the loan account had been settled under an approved compromise which was placed before and acted upon by the Debts Recovery Tribunal. - HELD THAT: - The Court held that the dispute arose out of banking transactions of a commercial nature and had an overwhelming civil flavour. The settlement was negotiated between the borrower and the Bank, approved by the Bank's competent authority, placed before the Debts Recovery Tribunal, fully performed by payment of the settlement amount, followed by issuance of a no dues certificate, and thereafter the Bank withdrew its recovery proceedings. In that setting, the later criminal complaint, lodged more than two years after closure of the DRT proceedings, was treated as an afterthought. The Court found the Bank's conduct lacking in good faith, particularly because the Bank itself had recorded in the compromise proposal that there were no lapses in documentation or irregularity as per legal audit, and had certified the settlement as consistent with RBI policy and not below the distress sale value of the securities. Applying the principles governing exercise of inherent power to quash in cases of compromise involving transactions with a predominantly civil character, and holding the case to be squarely covered by K. Bharthi Devi, the Court concluded that the possibility of conviction was remote and bleak, continuation of the prosecution would cause oppression and prejudice, and such prosecution would amount to an abuse of the process of court. The Court further held that permitting prosecution after a settlement endorsed by the DRT would undermine the sanctity of such judicially recognised settlements in commercial disputes. [Paras 24, 25, 26, 27, 28]The criminal proceedings were quashed, including the chargesheet and the order framing charges.Final Conclusion: The appeal was allowed. The Court held that, in the facts of the case, continuance of the prosecution after full and final settlement of the loan account under a compromise approved by the Bank and acted upon before the Debts Recovery Tribunal would be oppressive and an abuse of process, and accordingly quashed the chargesheet and the charge-framing order.

2026 (6) TMI 1 - DELHI HIGH COURT Indian Laws

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Issues: (i) Whether the inordinate delay in filing the revision petitions deserved condonation. (ii) Whether the appellate court's one-line dismissal of the criminal appeals, without appointing amicus curiae or examining the merits, was sustainable, and whether the appeals were liable to be revived for fresh hearing.

Issue (i): Whether the inordinate delay in filing the revision petitions deserved condonation.

Analysis: The revision petitions were filed after an unexplained delay of more than 2100 days. The accused had not appeared either at the time of sentence or before the appellate court, had not disclosed their whereabouts for years, and had remained outside the process of law after conviction. The explanation offered for the delay was found wholly insufficient, and discretionary relief was held to be unavailable to litigants who had shown disregard for the judicial process.

Conclusion: The delay was not condoned.

Issue (ii): Whether the appellate court's one-line dismissal of the criminal appeals, without appointing amicus curiae or examining the merits, was sustainable, and whether the appeals were liable to be revived for fresh hearing.

Analysis: A criminal appeal cannot be dismissed for non-prosecution simpliciter and must be decided on merits after scrutiny of the record. Where the accused does not appear, the Court ought to appoint amicus curiae before proceeding with the hearing. The appellate court, despite noting the grounds of appeal, dismissed the matter without any real discussion, without testing the trial court's reasoning against the record, and without securing assistance through amicus curiae. That approach was held to be vague, unspecific, and contrary to the governing principles of criminal appellate adjudication.

Conclusion: The appellate orders were set aside and the appeals were revived for fresh hearing on merits.

Final Conclusion: The revision petitions resulted in revival of the criminal appeals and a direction for de novo appellate consideration, while the request for condonation of the extraordinary delay was rejected. Ancillary directions for deposit and costs were also imposed, and the matter was disposed of accordingly.

Ratio Decidendi: A criminal appeal cannot be terminated for want of appearance without a merits-based scrutiny of the record, and where the accused is absent, the appellate court should appoint amicus curiae before deciding the appeal.

Criminal appeal must be decided on merits; one-line dismissal without amicus curiae was set aside and revived.
An unexplained delay of more than 2100 days in filing the revision petitions was not condoned because the accused had remained outside the process of law and offered an insufficient explanation. A criminal appeal cannot be dismissed for non-prosecution simpliciter; it must be decided on merits after scrutiny of the record, and where the accused is absent the court should appoint amicus curiae before hearing the matter. The appellate court's one-line dismissal without such assistance or merits-based examination was set aside, and the criminal appeals were revived for fresh hearing on merits.

Criminal appeal in absence of appellant - Appointment of amicus curiae - Reasoned appellate scrutiny - Condonation of inordinate delay - Revisional interference to prevent failure of justiceCondonation of inordinate delay - Absconding convict - The delay of more than 2100 days in filing the revision petitions was not liable to be condoned. - HELD THAT: - The Court found that there was no explanation, much less a plausible one, for the prolonged delay. The revisionists had neither appeared before the Trial Court at the stage of sentence nor before the Appellate Court, had been declared proclaimed offenders, and had not disclosed their whereabouts during the intervening years. Mere pendency of numerous other cases was held insufficient to justify such prolonged inaction, and discretionary relief of condonation was held unavailable to litigants who had absconded after conviction and shown disregard for the process of the Court. [Paras 25, 26, 27, 28, 29]The prayer for condonation of delay did not merit acceptance.Criminal appeal in absence of appellant - Appointment of amicus curiae - Reasoned appellate scrutiny - Non-speaking appellate order - Revisional interference to prevent failure of justice - The appellate judgments dismissing the criminal appeals were unsustainable because the appeals were disposed of in the appellants' absence, without appointment of an amicus curiae, and without any real scrutiny of the grounds or the record. - HELD THAT: - The Court held that, although a criminal appeal is not to be dismissed for non-prosecution, disposal on merits in the absence of the appellant must still conform to the standard stated in Bani Singh, namely a proper scrutiny of the record and the trial court reasoning. Here, the Appellate Court merely noted the grounds and dismissed the appeals by a one-line conclusion that no illegality or irregularity existed, which did not reflect the comprehensive examination required in law. The Court further held, following K. Muruganandam and Others vs. State, Mohd. Sukur Ali vs. State of Assam and Jyoti Dubey vs. State & Anr., that where the accused does not appear and the appellate court nevertheless proceeds with the appeal, it should do so only after appointing an amicus curiae. Since the appellants had already been declared proclaimed offenders and the matter was governed by the Code of Criminal Procedure, the Appellate Court ought not to have hurriedly decided the appeals in their absence without such assistance. In view of this grave illegality affecting the appellants' sole statutory appeal and their liberty, the revisional court held that it could not allow the defective appellate orders to stand even though the delay in invoking revision was not condonable. [Paras 61, 62, 64, 65, 67]The impugned appellate judgments were set aside, the appeals were revived for rehearing on merits, and such rehearing was made conditional upon deposit of 25% of the fine amount in each complaint and payment of costs to the complainants.Final Conclusion: Though the inordinate delay in filing the revisions was held unexplained and not deserving of condonation, the Court set aside the non-speaking appellate judgments on the ground that the criminal appeals had been disposed of contrary to law. The appeals were revived for fresh hearing on merits, subject to deposit of part of the fine amount and payment of costs to the complainants.

2026 (5) TMI 1852 - Supreme Court Indian Laws

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Issues: (i) Whether persistent delay in pronouncing reserved High Court judgments requires binding uniform safeguards; (ii) Whether delayed uploading of reasoned judgments after pronouncement of operative orders requires binding timelines and transparency measures.

Issue (i): Whether persistent delay in pronouncing reserved High Court judgments requires binding uniform safeguards.

Analysis: Delay after final hearing leaves litigants, particularly persons in custody, without a decision affecting their liberty and remedies. The protection of life and personal liberty under Article 21 extends to every stage of judicial proceedings, including timely pronouncement of reserved judgments. Existing directions did not sufficiently address widespread and prolonged delays. Exercising jurisdiction under Article 142, a comprehensive framework was formulated for prompt pronouncement, enhanced priority for matters of personal liberty, administrative monitoring, reassignment after continued default, and remedies enabling litigants to seek early judgment or transfer for fresh hearing.

Conclusion: Binding directions were issued requiring High Courts to endeavour to pronounce reasoned reserved judgments within three months, with specified accountability measures and litigant remedies where delay persists.

Issue (ii): Whether delayed uploading of reasoned judgments after pronouncement of operative orders requires binding timelines and transparency measures.

Analysis: Pronouncement of only an operative part without timely availability of reasons undermines transparency and may affect parties whose rights or status are immediately altered. A reasoned judgment ordinarily must be uploaded within 24 hours of open-court pronouncement; where urgent circumstances warrant an operative order, reasons must be uploaded within seven days, extendable to fifteen days for practical difficulty. The framework also requires website status updates, automated communication to advocates, administrative escalation, and a remedy for parties if reasons remain unavailable.

Conclusion: High Courts must ensure prompt uploading and transparent disclosure of reasoned judgments, with mandatory monitoring and corrective measures where reasons are not uploaded within the prescribed period.

Final Conclusion: A nationwide, enforceable framework was established to secure timely, reasoned, and transparent High Court adjudication while preserving the deliberative quality of judicial decision-making.

Ratio Decidendi: The guarantee of life and personal liberty includes protection against unreasonable delay in pronouncement of reserved judgments, justifying binding procedural safeguards for timely delivery and publication of reasoned decisions.

Timely judgment delivery: binding safeguards require prompt pronouncement, publication of reasons, monitoring, and litigant remedies.
Article 21 protection of life and personal liberty extends to timely pronouncement of reserved High Court judgments, particularly where custody or urgent remedies are involved. A nationwide framework under Article 142 requires High Courts to endeavour to deliver reasoned reserved judgments within three months, supported by priority treatment, administrative monitoring, reassignment after continued default, and remedies for early pronouncement or transfer for fresh hearing. Reasoned judgments should ordinarily be uploaded within 24 hours of open-court pronouncement; urgent operative orders require reasons within seven days, extendable to fifteen days for practical difficulty. Status updates, advocate communication, escalation, and corrective measures promote transparency.

Right to speedy justice under Article 21 - Timely pronouncement of reserved judgments - Uploading of reasoned judgments after operative orders Delay in pronouncing reserved judgments by High Courts, particularly in matters involving personal liberty - HELD THAT: - The right to life and personal liberty extends to every stage of judicial proceedings and is infringed where a reserved judgment remains unpronounced without justification. Delay also affects the quality of adjudication and undermines public confidence in the justice-delivery system. In the absence of statutory outer limits applicable to High Courts, a uniform and enforceable framework was required. [Paras 9, 11, 16] Binding directions were issued requiring High Courts to endeavour to pronounce reasoned judgments within three months of reservation, with greater promptitude in personal-liberty matters. The directions provide administrative monitoring, intervention by the Chief Justice after expiry of the prescribed period, reassignment for rehearing where delay persists, and remedies enabling parties to seek early pronouncement or transfer of the matter for fresh hearing. Uploading of reasoned judgments after operative orders - Transparency in judicial pronouncements - Delay in uploading reasoned judgments after pronouncement of the operative part of an order - HELD THAT: - Where immediate relief is necessary, the operative part may be pronounced, but the reasons must follow within a defined period so that the outcome remains transparent and capable of effective implementation. Case-status information and certified copies must disclose the relevant stages of reservation, pronouncement and uploading. [Paras 13, 16] Where only the operative part is pronounced, the reasoned judgment must be uploaded within seven days and, where practical difficulty exists, within a maximum of fifteen days. Reasoned judgments pronounced in open court must be uploaded within twenty-four hours, subject to the prescribed accountability measures and remedies for delayed uploading. Final Conclusion: The writ petitions were disposed of by issuing binding, nationwide directions governing prompt pronouncement and uploading of High Court judgments, together with monitoring mechanisms and litigant remedies.

2026 (5) TMI 1834 - Supreme Court Indian Laws

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Issues: (i) Whether deletion of clauses (ii) and (iv) of the Explanation to Section 21(1) affects the landlord's right to seek rent enhancement under the proviso to Section 21(8); (ii) Whether the High Court could, in exercise of supervisory jurisdiction under Article 227, itself determine and enhance rent without supporting material on record.

Issue (i): Whether deletion of clauses (ii) and (iv) of the Explanation to Section 21(1) affects the landlord's right to seek rent enhancement under the proviso to Section 21(8).

Analysis: Section 21(8) excludes the bona fide requirement ground against specified public tenants, while its proviso provides an independent mechanism for enhancement of rent. Following the omission of the two exceptional grounds formerly contained in the Explanation, the landlord cannot seek release on those grounds; however, the statutory rent-enhancement remedy remains operative. Construing the proviso as inoperative would leave the landlord without either a means of recovery of possession or financial recompense.

Conclusion: Deletion of clauses (ii) and (iv) does not affect the operation of the proviso to Section 21(8), and an application for enhancement of rent under that proviso is maintainable.

Issue (ii): Whether the High Court could, in exercise of supervisory jurisdiction under Article 227, itself determine and enhance rent without supporting material on record.

Analysis: Supervisory jurisdiction may be exercised in exceptional rent-control matters to correct jurisdictional excess, failure to exercise jurisdiction, or grave injustice, but it is not appellate power and cannot ordinarily substitute the High Court's determination for that of the statutory authority. The enhanced rate adopted by the High Court rested on an unsubstantiated assertion regarding rent of adjoining premises, without material establishing that rate.

Conclusion: The High Court could exercise Article 227 jurisdiction only exceptionally, but its enhancement of rent on the material available was unsustainable; the rent determination requires fresh adjudication by the Rent Control Authority.

Final Conclusion: The statutory remedy for rent enhancement remains available to the landlord, while the quantum of rent must be determined afresh by the competent authority on an evidentiary basis, with effect from the original application date.

Ratio Decidendi: Omission of statutory exceptions concerning release of premises does not impliedly extinguish an independent proviso authorising rent enhancement, and Article 227 cannot be used to supplant a statutory authority's fact-dependent determination without evidentiary foundation.

Independent rent-enhancement remedy survives deletion of release grounds, while supervisory review cannot set rent without evidence.
Deletion of the former exceptional release grounds in the Explanation to Section 21(1) does not extinguish the independent rent-enhancement mechanism in the proviso to Section 21(8). Although landlords can no longer seek release on the omitted grounds, applications to enhance rent against specified public tenants remain maintainable. Supervisory jurisdiction under Article 227 is exceptional and confined to correcting jurisdictional error, failure to exercise jurisdiction, or grave injustice; it is not a substitute for the statutory authority's fact-based assessment. Rent cannot be enhanced on an unsupported assertion about adjoining premises, and the competent Rent Control Authority must determine the quantum afresh on evidence from the original application date.

Rent enhancement for Government-tenanted buildings - Supervisory jurisdiction under Article 227 in rent-control matters - Scope of deletion of clauses (ii) and (iv) of the Explanation to Section 21(1) - landlord's right to seek rent enhancement under the proviso to Section 21(8) - Special Rent Control Legislation Maintainability of an application for enhancement of rent in respect of a building let to the State Government after omission of the clauses referred to in Section 21(8) of the Act - HELD THAT: - It is important to note that sub-section 7 and 8 of Section 21 of the Act were brought in through the very same amendment that removed clause (ii) and (iv) of explanation of sub-section (1) The reason and logic for the same is incomprehensible. The conclusion is that the proviso is the only recourse available to the landlord and bonafide requirement as a ground stands completely extinguished. No bonafide requirement; no enhancement of rent: means no way for the landlord to reclaim his own property either physically or financially. No provision can be read so restrictively only because on the other side of the equation, is the Government itself which would defeat the very purpose of the landlord-tenant relationship. The omission of the two exceptional situations formerly incorporated by reference in Section 21(8) extinguished bona fide requirement as a ground for seeking release of premises let to the specified public tenants, but did not affect the independent operation of the proviso authorising rent enhancement. A construction denying both recovery of possession on bona fide need and enhancement of rent would unduly deprive the landlord of any effective proprietary recourse. [Paras 8, 11] An application for enhancement of rent under the proviso to Section 21(8) is permissible and maintainable. Supervisory jurisdiction under Article 227 in rent-control matters - Rent enhancement without supporting material - HELD THAT: - Supervisory jurisdiction in matters under special rent-control legislation is available only exceptionally, to correct jurisdictional excess, failure to exercise jurisdiction, transgression of jurisdiction, abuse of power, dereliction of duty or grave injustice; it is not appellate jurisdiction enabling substitution of the High Court's decision for that of the statutory authority. The enhancement ordered by the High Court rested only on counsel's statement concerning rent of adjoining premises, without supporting material on record or acceptance by the tenants. [Paras 9, 10, 11, 12] The High Court's enhancement order was set aside, and the matter was remanded to the Rent Control Authority for fresh determination of rent and the matters identified by the appellate authority, within the stipulated period; the order so made is to operate from institution of the original application. Final Conclusion: The appeals were allowed to the extent of setting aside the High Court's rent-enhancement order. The Rent Control Authority was directed to determine the rent afresh, with the resulting order operating from institution of the original application.

2026 (6) TMI 1004 - Supreme Court Indian Laws

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Criminal negligence in bus accident cases requires proof of rash or negligent driving, not mere passenger fall while alighting.
Moving a bus after passengers had alighted, on the conductor's signal, did not amount to rash or negligent driving under Sections 279 and 304A IPC on these facts. The conductor's evidence showed the bus was stationary, passengers got down, and the driver moved only after receiving instructions. The Court found no basis to infer criminal negligence merely because the deceased fell while descending from the bus, and held that the ingredients of the charged offences were not satisfied. The conviction and sentence were therefore unsustainable, and the appellant was entitled to acquittal.

Criminal negligence in bus accident - Act of moving the bus while passengers were alighting - Driver acting on conductor's signal - Rash and negligent driving - Causing death by negligence - Rash and negligent driving - Recklessness - Res ipsa loquitur - Benefit of doubt - Conviction and sentence under Sections 279 and 304A IPC - HELD THAT: - “Recklessness” is perhaps a higher degree of “carelessness”. One acts reckless when one conducts himself regardless or heedless of the possible harmful consequences of one’s act. The recklessness covers a whole range of state of mind from failing to give any thought to what is to be acted upon. Recklessness presupposes that no thought was given in the matter by the doer before he did the act. The Court treated the conductor's evidence as determinative. That evidence showed that the conductor signalled the bus to stop, the bus was stopped, the passengers got down, and only thereafter the conductor asked the driver to move the bus. In the ordinary functioning of a passenger bus, the driver is entitled to regulate stoppage and movement on the conductor's signal and is not expected to turn back and personally verify whether every passenger has fully alighted. In such circumstances, the driver's act of moving the bus on the conductor's indication could not, by itself, be characterised as rash, reckless, or negligent. Applying the principles stated in Ravi Kapur vs. State of Rajasthan [2012 (8) TMI 1250 - SUPREME COURT] and State of Karnataka vs. Satish [1996 (3) TMI 581 - SUPREME COURT] the Court held that criminal negligence under Sections 279 and 304A IPC must be established from the attendant facts and cannot be presumed. The deceased might have slipped while alighting from the bus because of her own movement being less than careful at the time of getting down. The appellant-driver acted as per the conductor’s indicative instructions in moving the bus. The appellant deserves to be exonerated from the charge of acting negligently. The evidence did not establish the requisite culpable negligence with definitiveness, and the possibility that the deceased slipped while alighting could not be ruled out. [Paras 5, 6, 7, 8] The conviction and sentence under Sections 279 and 304A IPC were held unsustainable, and the appellant was entitled to acquittal. Final Conclusion: The Court held that the evidence did not prove rash or criminally negligent driving on the part of the appellant, who had acted on the conductor's signal in moving the bus. The conviction and sentence were set aside and the appellant was acquitted of the offences under Sections 279 and 304A IPC.

2026 (6) TMI 794 - SC Order Indian Laws

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Trade dress injunction modified for existing third-party stock, while empty cartons with the disputed packaging were ordered destroyed.
Temporary injunction in a trade dress dispute was varied only to the limited extent of allowing sale of existing stock already held by distributors, franchisees and retailers, because the goods were no longer in the appellant's custody and no post-injunction production was shown; the stock had to be marketed in packaging that was not red or otherwise similar to the respondent's packaging. The restraint remained in force for empty cartons bearing the impugned trade dress, as they were capable of continued misuse, and their destruction and non-use were directed.

Seeking Modification of Injunction - Temporary injunction in trade dress dispute - Sale of existing stock through third-party distributors and retailers - Destruction of infringing packaging material - Empty cartons found to carry the disputed trade dress - Preservation of evidence - principal-to-principal basis Temporary injunction in trade dress dispute - Sale of existing stock through third-party distributors and retailers - HELD THAT: - The Court accepted the affidavit stating that the impugned products lying with distributors, franchisees and retailers were no longer in the custody or control of the appellant, having already been sold on a principal-to-principal basis, and that no production had taken place after the injunction was affirmed, the last manufacture being prior thereto. On that factual basis, the temporary injunction was modified to permit sale of such existing stock by those third parties to customers, while making it clear that the order was confined to the interlocutory controversy and would not affect the merits of the suit. [Paras 8, 9, 12] The temporary injunction was modified to permit sale of the existing stock already lying with third-party distributors, franchisees and retailers. Destruction of infringing packaging material - Existing stock with appellant - HELD THAT: - The Court held that the appellant's existing stock could be marketed only in packaging that was not red in colour and not similar to the respondent's packaging. As regards the empty cartons carrying the impugned trade dress, the Court directed their destruction and continued the temporary injunction in relation to those cartons. [Paras 6] The appellant was permitted to market the existing stock only in dissimilar packaging, while the empty cartons bearing the impugned packaging were directed to be destroyed and remained subject to the injunction. Final Conclusion: The appeal was allowed in part by modifying the temporary injunction to permit sale of the existing stock already with third-party distributors, franchisees and retailers, while requiring the appellant's own remaining stock to be marketed only in dissimilar packaging and directing destruction of the empty cartons bearing the impugned trade dress. The order was confined to the interlocutory stage and left the merits of the suit unaffected.

2026 (5) TMI 1821 - Supreme Court Indian Laws

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Issues: (i) Whether Entry 34 of List II authorises the State Legislature to regulate or prohibit betting on games of skill, and whether the expression "betting and gambling" is confined to betting on gambling activities; (ii) whether the impugned Tamil Nadu and Karnataka enactments were correctly tested against the settled distinction between games of skill and games of chance, and whether they were arbitrary or disproportionate; (iii) whether the State Legislatures could also sustain the impugned laws under other State List entries, including public order.

Issue (i): Whether Entry 34 of List II authorises the State Legislature to regulate or prohibit betting on games of skill, and whether the expression "betting and gambling" is confined to betting on gambling activities.

Analysis: The expression "betting and gambling" was held to be a composite constitutional phrase that cannot be rewritten as "betting on gambling". The Court reasoned that the words in the Seventh Schedule must receive a broad and liberal construction, and that the earlier decisions in RMDC-I, RMDC-II, and K.R. Lakshmanan did not decide that betting on games of skill lies outside Entry 34. Those cases were distinguished as dealing with different factual settings and with statutory exemptions for games of skill, not with the constitutional power to regulate staking on uncertain outcomes. The Court further held that staking money on the uncertain outcome of a game, even if the underlying game involves skill, is itself betting and therefore falls within Entry 34.

Conclusion: The State Legislature's power under Entry 34 extends to betting on games of skill, and the impugned laws were not beyond legislative competence on that ground.

Issue (ii): Whether the impugned Tamil Nadu and Karnataka enactments were correctly tested against the settled distinction between games of skill and games of chance, and whether they were arbitrary or disproportionate.

Analysis: The Court held that the impugned laws did not unlawfully obliterate the skill-chance distinction merely because they targeted staking on online games. It reasoned that once money is risked on an uncertain outcome, the activity assumes the character of betting and gambling, regardless of whether the underlying game is one of skill. On that basis, the Court rejected the challenge founded on Article 14 and Article 19, and held that the measures were not manifestly arbitrary or disproportionate. The Court also accepted the legislative concern that online money gaming had caused addiction, financial losses, suicides, and wider social harm.

Conclusion: The impugned enactments were not manifestly arbitrary or disproportionate and did not fail on the Article 14 or Article 19 challenge.

Issue (iii): Whether the State Legislatures could also sustain the impugned laws under other State List entries, including public order.

Analysis: The Court held that public order has a wide constitutional amplitude and includes activities that disturb the even tempo of community life, public tranquillity, public health, and social order. It found a proximate nexus between rampant online money gaming and harms such as addiction, debt, and suicides, and concluded that these consequences could justify State action under Entry 1 of List II. The Court treated the legislative measures as supported by empirical material and as aimed at restoring public tranquillity and protecting the public at large.

Conclusion: The impugned laws were also supported by the State's public order power under Entry 1 of List II.

Final Conclusion: The common judgment of the High Courts was set aside, and the State appeals were allowed. The impugned State enactments were upheld as intra vires the Constitution.

Ratio Decidendi: Betting or wagering on the uncertain outcome of a game remains betting and falls within the State's regulatory power under Entry 34 of List II even if the underlying game is one of skill; such legislation may also be sustained where the activity threatens public order and public tranquillity.

Betting on games of skill falls within State power, and online gaming laws were upheld as valid.
Betting or wagering on the uncertain outcome of a game remains "betting and gambling" within Entry 34 of List II, even where the underlying game involves skill, and the phrase is a composite constitutional expression rather than "betting on gambling". The Court held that the Tamil Nadu and Karnataka online gaming laws did not unlawfully destroy the skill-chance distinction, and were not manifestly arbitrary or disproportionate under Articles 14 and 19 because they targeted staking money on uncertain outcomes. It also held that the measures were supported by the State's public order power under Entry 1 of List II. The High Courts' common judgment was set aside and the State enactments were upheld.

Legislative competence over betting on games of skill - Interpretation of betting and gambling - Res extra commercium - Manifest arbitrariness - Public order - Nomen juris Interpretation of betting and gambling - Legislative competence over betting on games of skill - Games of skill played with stakes - Entry 34 of List II is not confined to betting on games of chance, and betting on the uncertain outcome of games of skill also falls within the State Legislature's competence. - HELD THAT: - The Court held that the High Courts erred in reading the expression "betting and gambling" as "betting on gambling". Entries in the Seventh Schedule must receive a broad and liberal construction, and the Constitution does not warrant rewriting the text by confining "betting" to gambling alone. The Constituent Assembly Debates showed that the framers intended the States to have power to regulate and even prohibit betting and gambling, including play of rummy for money. The decisions in State of Bombay v. R.M.D. Chamarbaugwala, R.M.D. Chamarbaugwala v. Union of India and Dr. K.R. Lakshmanan v. State of Tamil Nadu & Anr. were held not to have decided the scope of the word "betting" in Entry 34. Those cases distinguished skill-based competitions from gambling in their own statutory settings, but did not lay down that betting on games of skill is outside Entry 34. The Court held that once money is staked on an uncertain outcome with the hope of gain, the activity answers the description of betting and gambling irrespective of whether the underlying game is one of skill or chance. The protection available to games of skill cannot be extended to betting on such games unless the statute itself creates such an exception. [Paras 288, 289, 290, 376, 377] The State legislatures were competent under Entry 34 of List II to regulate and prohibit betting and wagering on online games even where the underlying game involves skill. Manifest arbitrariness - Res extra commercium - Proportionality - The impugned Tamil Nadu and Karnataka enactments are neither manifestly arbitrary nor disproportionate. - HELD THAT: - The Court held that, once staking on uncertain outcomes is treated as betting and gambling, the distinction between games of skill and games of chance ceases to be constitutionally decisive for testing the legislation under Article 14. The classification adopted by the States had a rational nexus with the object of curbing addiction, monetary loss and the social consequences of online money gaming. The Court further held that activities falling within betting and gambling are res extra commercium; therefore, no fundamental right can be claimed to carry on such activity, and the occasion for a proportionality inquiry does not arise. The legislations were held to have merely brought all forms of betting and gambling within their scope and not to suffer from any so-called sweeping or artificial definition. The Court also accepted that the Tamil Nadu legislation was supported by material including the Justice Chandru Committee report, surveys and other empirical inputs regarding addiction, mental harm, financial distress and suicides linked to online gaming. [Paras 322, 323, 324, 376, 377] The challenge based on arbitrariness, Article 19 protection and proportionality failed. Nomen juris - Statutory definition of gaming - The expression "gaming" has not acquired the status of a nomen juris confined to games of chance, and the Legislature may define it for the statutory purpose. - HELD THAT: - Rejecting the view accepted by the High Courts, the Court held that the Constitution uses the expression "betting and gambling" in Entry 34 and not "gaming". The term "gaming" is a statutory expression whose content varies across enactments and States, and its meaning is therefore fluid rather than fixed. It cannot be treated as a settled legal term restricted to games of chance alone. For the same reason, the inclusion of betting on games of skill within the statutory definition of gaming was held not to be the creation of an impermissible legal fiction or a mere Midas touch. The Legislature was entitled to frame the definition in a manner suited to the object of curbing online betting and gambling. [Paras 328, 329, 331, 376, 377] The plea that gaming is a nomen juris excluding games of skill was rejected. Public order - Legislative competence - Online money gaming - Apart from Entry 34, the impugned enactments were also supportable on the State's power over public order. - HELD THAT: - The Court held that "public order" in Entry 1 of List II has wide connotation and includes preservation of public tranquility, public safety, public health-related harm, and social or economic disorder having community-wide impact. Applying those principles, the Court found that online money gaming, through its normalization of betting, large-scale public participation, addiction, financial losses, depression and suicides, affects the community at large and disturbs the even tempo of life. The Statements of Objects and Reasons and the material relied upon by the States showed a proximate nexus between the legislation and the mischief sought to be remedied. The online medium had converted mobile phones into virtual gaming spaces, making the problem pervasive and accessible to the public at large. The Court therefore held that the States could invoke public order, in addition to Entry 34, to sustain the challenged enactments. [Paras 373, 374, 375, 376, 377] The impugned legislations were also within the States' competence under Entry 1 of List II on the ground of public order. Final Conclusion: The Supreme Court allowed the appeals, set aside the Madras and Karnataka High Court judgments, and upheld Part II of the 2021 Tamil Nadu Amendment Act, the challenged provisions and Schedule of the Tamil Nadu Online Gambling Act 2022/23, and the challenged provisions of the 2021 Karnataka Amendment Act as intra vires. It held that betting on games of skill is within State competence and that the impugned enactments are not arbitrary or disproportionate.

2026 (5) TMI 1732 - Supreme Court Indian Laws

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Section 138 cheque dishonour proceedings and IBC moratorium scope referred for reconsideration by a three-Judge Bench.
Section 138 of the Negotiable Instruments Act is examined as raising distinct criminal and compensatory facets, including whether such proceedings are prosecution or recovery actions and whether the moratorium under Part III of the Insolvency and Bankruptcy Code extends to them. The analysis also addresses directors' vicarious liability under Section 141 and whether personal insolvency or bankruptcy shields them from compensatory recovery. After considering the statutory scheme, including Sections 96, 101, 124 and 128 of the Code, the questions were found to require reconsideration by a larger Bench. The appeals were therefore directed to be placed before the Chief Justice of India for constitution of an appropriate three-Judge Bench.

Negotiable Instruments Act - Dishonour of cheque - existence of a legally enforceable debt or other liability - criminal prosecution or recovery proceedings - Reference to larger Bench - Moratorium under Part III of the IBC - liability of directors under Section 141 - vicarious liability - benefit of moratorium in respect of compensatory liability - effect of personal insolvency or bankruptcy on recovery of compensation - meaning of the term “any debt” appearing in Sections 96 and 101 of the IBC. Whether the proceedings under Section 138 of the NI Act are in the nature of legal action for recovery of money? - HELD THAT:- The discussion on the predominantly criminal nature and objective of Section 138 of the NI Act was not brought to the attention of the three-Judge Bench of this Court in P. Mohanraj [2021 (3) TMI 94 - SUPREME COURT]. We have held that though proceedings under Section 138 of the NI Act are quasi-criminal, yet the predominant nature of such proceedings is criminal. We have said so after a perusal of the reasons on the strength of which the judgment in P. Mohanraj (supra) described Section 138 as a “civil sheep in criminal wolf’s clothing”. In our considered opinion the three-Judge Bench described Section 138 proceeding inherently civil in nature primarily on the basis of the procedure stipulated under Chapter XVII of the NI Act. On a plain reading of Section 138 of the NI Act, it is limpid that the offence is the act of cheque dishonour which has been saddled with criminal consequences. The non-payment of the debt to the extent of the cheque amount is the injury caused due to commission of the offence. The principal object of Section 138 is to deter persons from using cheques when they have insufficient balance. The provision of punishment is a measure of deterrence. Therefore, the provision was not intended to be used as a recovery of debt mechanism. Upon examination of the nature and dual objectives of Section 138, we found it prudent to treat the legal action taken under Section 138 as tiered proceedings. Tier I of the proceeding under Section 138 is without any doubt, criminal and culminates into punishment of either imprisonment, fine or both, if the drawer of the cheque is convicted. Tier I is mandatory in nature unlike Tier II which is dependent upon the discretion of the courts to order compensation. Tier II is the compensatory aspect of Section 138 which causes an inevitable overlap between criminal and civil actions. Whether the proceedings under Section 138 of the NI Act are protected during the moratorium period provided under Part-III of the IBC? - HELD THAT:- It is imperative to balance between the objectives sought to be achieved by both the legislations. We have attempted to balance the provisions of both the NI Act and the IBC by bifurcating the offence of cheque dishonour into (i) criminal aspect of the offence (Tier I), and (ii) compensatory aspect of the Section 138 proceedings (Tier II). The criminal aspect of Section 138 proceedings results in punishment including imprisonment, fine or both. This makes it sufficiently clear that moratorium provisions under Part III of the IBC cannot be made applicable on the criminal impact of Section 138 of the NI Act. We have said so because Section 79(15) of the IBC which defines “excluded debts” has excluded the ‘liability to pay fine’ from debts in respect of which legal actions and proceedings are stayed by the operation of moratorium under Part III of the IBC. We are of the view that allowing Section 138 proceedings to enjoy the benefit of moratorium, especially in light of such express exclusion of criminal liability, is not a good law. The compensatory aspect of Section 138 proceedings and have taken the view that the same is in the nature of a civil remedy that would result in the depletion of the assets of the individual debtor if not stayed. Therefore, we are of the view that the moratorium provisions under Part III of the IBC must be made applicable in respect of recovery of compensation in Section 138 proceedings. Therefore, operation of moratorium depends upon the stage of the Section 138 proceeding. Whether director(s) liable under Section 141 of the NI Act would enjoy the benefit of moratorium in respect of Section 138 proceedings, while undergoing personal insolvency? - HELD THAT:- The pecuniary liability of payment of compensation is assumed by the director(s) of the company in the absence of the latter due to a legal impediment. In such a scenario, if the director himself is undergoing insolvency or bankruptcy, depriving him of the benefit of moratorium on the sole ground that the compensatory liability was not his personal obligation, would be detrimental to his interests as well as the interests of the creditors who would benefit from minimal depletion of the debtor’s assets. The term “any debt” appearing in Sections 96 and 101 of the IBC respectively and made a comparison with the expression “any of his debts” appearing in Section 124 of the IBC. The contra-distinction between the scope and subject matter of the moratorium under different provisions in Part III is necessary as different stages require differential protection standards. The extension of the benefit of moratorium under Sections 96 and 101 of the IBC respectively to “any debt” irrespective of whether it is the debtor’s personal debt or not is because, at the stage of insolvency proceedings, the objective of staying legal actions and proceedings in respect of any debt is to protect the individual debtor from the enforcement of existing debts. Thus, the moratorium under Sections 96 and 101 of the IBC respectively is applicable on the director(s) who are saddled with the liability to discharge the compensatory obligation of the company by virtue of the use of the words “any debt” therein. Further, the moratorium under Sections 124 and 128 of the IBC respectively would also stay any suit or legal proceedings against the properties of the debtor, instituted with the purpose of enforcement of the bankruptcy debt. The matters were referred for consideration by a three-Judge Bench on the questions framed by the Court. Final Conclusion: The Bench did not finally settle the controversy. Holding that the questions concerning the nature of Section 138 proceedings and the extent to which the moratorium under Part III of the IBC operates upon them required an authoritative pronouncement after considering all aspects, it directed the matters to be placed before the Chief Justice of India for constitution of an appropriate three-Judge Bench.

2026 (5) TMI 1654 - Supreme Court Indian Laws

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Issues: (i) Whether the acquittal recorded by the High Court called for interference in appeal; (ii) Whether the prosecution proved the essential ingredients of demand, acceptance and criminal conspiracy so as to sustain the conviction under the corruption and conspiracy charges; (iii) Whether withholding of material evidence warranted an adverse inference against the prosecution.

Issue (i): Whether the acquittal recorded by the High Court called for interference in appeal.

Analysis: The order of acquittal was based on a fresh appraisal of the evidence and the view taken by the High Court was found to be a plausible one. In an appeal against acquittal, interference is justified only where the findings are perverse, manifestly illegal, or result in miscarriage of justice. The record did not disclose any such exceptional circumstance.

Conclusion: Interference with the acquittal was not warranted.

Issue (ii): Whether the prosecution proved the essential ingredients of demand, acceptance and criminal conspiracy so as to sustain the conviction under the corruption and conspiracy charges.

Analysis: Proof of demand of illegal gratification is the gravamen of the offences under Section 7 and Section 13 of the Prevention of Corruption Act, 1988, and mere recovery of money, without proof of demand and voluntary acceptance, is insufficient. The prosecution evidence was found unreliable, material witnesses did not support the case, and there was no satisfactory material showing a meeting of minds or prior agreement to establish criminal conspiracy under Section 120B of the Indian Penal Code, 1860. The statutory presumption under Section 20 of the Prevention of Corruption Act, 1988, could not be invoked in the absence of foundational proof of demand.

Conclusion: The prosecution failed to prove the charges beyond reasonable doubt.

Issue (iii): Whether withholding of material evidence warranted an adverse inference against the prosecution.

Analysis: The alleged tape-recorded conversation was treated as best evidence on the issue of demand and the identity of participants, yet it was not produced or explained. In such circumstances, an adverse inference against the prosecution was justified.

Conclusion: Adverse inference was rightly drawn against the prosecution.

Final Conclusion: The acquittal of the accused was affirmed, as the prosecution evidence was insufficient to establish the corruption and conspiracy charges and the appellate court found no reason to disturb the High Court's view.

Ratio Decidendi: In a corruption prosecution, proof of demand of illegal gratification is essential, and mere recovery or suspicion cannot sustain conviction; where the acquittal is a plausible view supported by the evidence, appellate interference is unwarranted.

Demand of illegal gratification is essential in corruption cases; mere recovery and weak evidence cannot sustain conviction.
In a corruption prosecution, proof of demand and voluntary acceptance of illegal gratification was essential, and mere recovery of money was insufficient without reliable foundational evidence. The prosecution evidence was found untrustworthy, material witnesses did not support the case, and no satisfactory material established a criminal conspiracy or the prerequisites for invoking the statutory presumption. Withholding the alleged tape-recorded conversation, treated as the best evidence on demand and identity, justified an adverse inference. The High Court's acquittal was a plausible view based on a fresh appraisal of evidence, so appellate interference was not warranted and the acquittal was affirmed.

Demand of illegal gratification - Recovery of tainted money - Criminal conspiracy - Withholding of best evidence - Appeal against acquittal Demand of illegal gratification - Recovery of tainted money - Presumption under Section 20 - Conviction under the Prevention of Corruption Act could not be sustained in the absence of reliable proof of demand and acceptance of illegal gratification by the respondents. - HELD THAT: - The Court held that proof of demand is the gravamen of the offences under Sections 7 and 13 of the Prevention of Corruption Act, and mere recovery of tainted money, divorced from reliable evidence of demand and voluntary acceptance, is insufficient. On the evidence as reappreciated by the High Court, the prosecution failed to establish even the foundational facts of demand and acceptance, material witnesses did not support the prosecution version in material particulars, and the evidence was found doubtful and unreliable. In such circumstances, the statutory presumption could not be invoked against the respondents. [Paras 11, 13, 16, 17, 18] The finding of acquittal on the bribery charges was upheld, as the essential ingredients of demand and acceptance were not proved beyond reasonable doubt. Criminal conspiracy - Meeting of minds - Benefit of doubt - The charge of criminal conspiracy against the respondents failed for want of cogent evidence showing any prior agreement or meeting of minds with the principal accused. - HELD THAT: - The Court reiterated that conspiracy cannot be inferred from mere suspicion, presence, or association, and requires satisfactory evidence showing a meeting of minds to commit an illegal act or a legal act by illegal means. In the present case, apart from alleging the respondents' presence at certain places, the prosecution produced no substantive material showing prior concert or shared criminal intent. The principal allegation of demand was against the principal accused alone, and no independent material showed active participation by the respondents in that demand or any agreement to further it. [Paras 19, 21, 22, 23] The High Court was right in holding that the conspiracy charge under Section 120-B IPC was not established. Withholding of best evidence - Adverse inference - Material electronic evidence - The prosecution's failure to produce the alleged tape-recorded conversation justified an adverse inference against it. - HELD THAT: - The Court accepted the significance of the High Court's finding that the prosecution withheld the best available evidence. The complainant's own case was that a tape recorder had been used to record the conversation relating to demand, yet that material was neither seized nor produced, and no explanation was offered for its non-production. Since that evidence could have conclusively shown the participants in the conversation and its content, its withholding assumed substantial importance and warranted an adverse inference against the prosecution. [Paras 24, 25, 27] Non-production of the alleged recorded conversation further weakened the prosecution case and supported the acquittal. Appeal against acquittal - Possible view - Presumption of innocence - No interference was warranted with the High Court's acquittal, as its view was a plausible one based on the evidence and was neither perverse nor manifestly illegal. - HELD THAT: - The Court applied the settled principle that interference with an acquittal is limited, particularly where the acquittal is founded on a plausible appreciation of the evidence. The presumption of innocence stands reinforced by an order of acquittal, and unless the findings are perverse, wholly unreasonable, or productive of miscarriage of justice, interference under Article 136 is unwarranted. Here, the High Court had meticulously reappreciated the evidence, assigned cogent reasons, and extended benefit of doubt on a view that was reasonably possible on the record. [Paras 33, 34, 35, 36, 37] The acquittal recorded by the High Court did not call for interference. Final Conclusion: The Supreme Court declined to interfere with the High Court's acquittal. It held that the prosecution had failed to prove beyond reasonable doubt the essential ingredients of demand, acceptance and conspiracy, and that the High Court's view was a plausible one supported by the record.

2026 (5) TMI 1850 - Supreme Court Indian Laws

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Condonation of delay applies to externment appeals where the special law neither expressly nor impliedly excludes it.
Section 5 of the Limitation Act, 1963 applies to appeals under Section 9 of the Chhattisgarh Rajya Suraksha Adhiniyam, 1990. Under Section 29(2), provisions on limitation, including condonation of delay, apply to special or local laws prescribing distinct limitation periods unless expressly or necessarily excluded. The thirty-day appeal period contains no bar on extension, no outer limit for condonation, and no self-contained limitation scheme. Exclusion of time for obtaining a certified copy further indicates that general limitation principles are not wholly displaced. Delay may therefore be condoned upon sufficient cause, preserving the appellate remedy against externment orders.

Condonation of delay in statutory appeals - Application of Section 5 of the Limitation Act to special-law appeals Applicability of Section 5 of the Limitation Act to an appeal against an externment order u/s 9 of the Chhattisgarh Rajya Suraksha Adhiniyam, 1990 - HELD THAT: - Where a special law prescribes a limitation period different from that under the Limitation Act, Sections 4 to 24 apply by virtue of Section 29(2) unless excluded expressly or by necessary implication. Section 9 merely prescribes a thirty-day period for appeal and contains neither prohibitive language nor an outer limit for condonation; nor does the Adhiniyam establish a self-contained limitation regime. Its provision for exclusion of time taken to obtain a certified copy further indicates that the general law of limitation is not wholly excluded. Having regard also to the serious consequences of externment and the appellate remedy as a safeguard of fair procedure, Section 5 remains applicable. Thus, we conclude as follows: a. Section 9 of the Adhiniyam does not bar the application of Section 5 of the Limitation Act. b. No application under Section 5 of the Limitation Act seeking condonation of delay being before the State Government, the application for directions filed by the appellant before this Court is taken on record and is allowed. The delay in filing the appeal is condoned. c. Accordingly, the appeal before the State Government under Section 9 of the Adhiniyam stands restored and shall be decided on its own merits and in accordance with law as expeditiously as possible and at any rate on or before 15.06.2026. The appellant shall appear before the State Government on 01.06.2026. d. Resultantly, the Impugned Judgment passed by the High Court of Chhattisgarh at Bilaspur [2025 (10) TMI 1457 - CHHATTISGARH HIGH COURT] is set aside. [Paras 23, 24, 25, 26] The delay in filing the statutory appeal was condoned; the appeal was restored to the State Government for decision on merits, and the impugned High Court judgment was set aside. Final Conclusion: The appeal was disposed of by holding that Section 5 of the Limitation Act applies to appeals under Section 9 of the Adhiniyam. The delayed appeal against the externment order was restored for merits adjudication.

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