Recent Supreme Court and NCLAT Judgments March 2025

1. Madhubala Chauhan Versus Phoenix Arc Pvt. Ltd., NCLAT

 Citation: Madhubala Chauhan v. Phoenix ARC Pvt. Ltd. and Anr., Company Appeal (AT) (Insolvency) No. 604 of 2024, National Company Law Appellate Tribunal (NCLAT), Principal Bench, New Delhi; Before Hon’ble Mr. Justice Ashok Bhushan (Chairperson) and Mr. Barun Mitra (Member Technical); Decided on 18.03.2025; 2025 SCC OnLine NCLAT 533; Arising out of Order dated 22.02.2024 passed by NCLT, Jaipur Bench in CP (IB) No. 057/JPR/2021.

 Ration: NCLAT upheld NCLT Jaipur order dated 22 February 2024 admitting Phoenix ARC’s Section 7 application against Karni Developers & Construction Pvt Ltd holding Adjudicating Authority’s role limited to verifying debt existence and default occurrence without deep adjudication into disputes limitation complexities or contract validity where financial creditor proves financial debt via documents like term loan agreements amendments recall notices demand notices and acknowledgments. NCLT correctly found debt and default established through TL-2 dated 7 February 2014 Rs 3.4 Cr declared NPA 31 March 2016 with repayment ending 31 December 2017 and Section 7 filed 9 January 2021 within limitation due to corporate debtor acknowledgments in letters dated 5 May 2017 and 11 December 2017 admitting liability distinguishing TL-1 TL-2 balance sheet FY 2019-20 explicitly noting Rs 3.4 Cr default and Suo Motu COVID extension. ARC permitted to restructure loans via fresh funding under RBI guidelines 22 April 2009 as reconstruction measure with TL-2 constituting new facility voluntarily agreed by debtor at 30% interest 36% penal pre-estimate of loss waiving usury defences. Omission of specific default date in Part IV non-fatal with ample Part V documents satisfying Innoventive test. No suppression or Section 65 misuse as facts distinguished from Pawan Kumar; rate of interest non-adjudicable at admission stage. Appeal dismissed CoC at liberty to consider Section 12A withdrawal if settlement reached.

2.IL&FS Financial Services Limited Vs. Adhunik Meghalaya Private Ltd.

 Citation: IL&FS Financial Services Limited Vs Adhunik Meghalaya Steels Private Limited (25.03.2025) MANU/NL/0247/2025, Company Appeal (AT) (Insolvency) No. 1379 of 2024: Decided by Ashok Bhushan (Chairperson) and Barun Mitra (Member (T)); Judgment delivered by Barun Mitra

 Ratio: NCLT held that entries in the corporate debtor’s duly approved balance sheets acknowledging outstanding dues constitute valid acknowledgment of liability under Section 18 Limitation Act extending limitation for Section 7 IBC application since signed financial statements adopted by board and shareholders represent conscious debt admissions rather than mere statutory compliance particularly absent any dispute qualification against creditor claim with fresh limitation commencing from each such pre-expiry acknowledgment date rendering application timely as balance sheet entries qualify as acknowledgment when board-approved without dispute qualification reflecting conscious liability admission while Section 7 petition admitted defeating time-bar defence.

3. Compuage Infocom Limited and Gajesh Labhchand Jain Vs. State, Singapore High Court

 Citation: Re Compuage Infocom Ltd and another SGHC 49, Originating Application No 1272 of 2024: Decided by Aidan Xu @ Aedit Abdullah J (General Division of the High Court of the Republic of Singapore), judgment dated 19 February 2025; Grounds of Decision released 24 March 2025

Ratio: Singapore High Court recognised the Indian corporate insolvency resolution process of Compuage Infocom Limited as a foreign main proceeding under the UNCITRAL Model Law on Cross-Border Insolvency as enacted in Part 11 of the Insolvency, Restructuring and Dissolution Act 2018. The court held that CIRP under the Indian Insolvency and Bankruptcy Code satisfies all elements of a foreign proceeding because it is a collective process affecting all creditors with public notice and a committee of creditors, conducted before the National Company Law Tribunal as a judicial authority, grounded in insolvency law, and subject to court supervision through moratorium, resolution professional control and plan approval focused on reorganisation rather than mere debt collection. The resolution professional appointed by NCLT Mumbai qualified as foreign representative as he was authorised to administer the reorganisation and manage assets. Centre of main interests was presumed and found to be in India based on the registered office, location of management, operations, employees and main creditor relationships with the Singapore branch controlled from India so the CIRP was recognised as a foreign main proceeding and relief granted over Singapore assets such as bank accounts and records. The court vested Singapore assets in the resolution professional for administration and realisation while withholding automatic repatriation to India without further leave in order to protect local creditors in line with modified universalism and Section 250(3)(c)(i) of the IRDA; no public policy objection under Article 6 was found and the recognition application under Section 252 and the Third Schedule succeeded save for the restriction on immediate remittance of proceeds

4. Citicorp Finance (India) Ltd. Vs. Snehasis Nanda

 Citation: Citicorp Finance (India) Limited Vs Snehasis Nanda (March 20, 2025) 2025 SCC OnLine SC 594, Civil Appeal No. 14157 of 2024: Decided by Sudhanshu Dhulia and Ahsanuddin Amanullah JJ.; Judgment delivered by Ahsanuddin Amanullah J

 Ratio: Supreme Court set aside the NCDRC order dated 19 January 2023 in Consumer Complaint 919 of 2018, directing Citicorp Finance to refund Rs 13.2 lakhs with 12% interest and Rs 1 lakh costs to the seller-complainant Snehasis Nanda. Respondent-seller lacks consumer status under Section 2(1)(d) Consumer Protection Act 1986 against appellant-financier absent privity of contract or service since sale transaction existed solely between seller and buyer via MoU and Agreement for Sale dated 9 February 2008 and 12 February 2008 while loan agreement bound only financier and buyer for Rs 23.4 lakhs dated 28 February 2008 with Rs 17.8 lakhs disbursed to seller’s ICICI account per buyer’s instruction solely for loan foreclosure. Supreme Court 2019 order merely restored matter for merits on prima facie material without conclusively determining consumer status. The onus rests on averrers to prove the alleged Tripartite Agreement, which the complainant failed to substantiate through an unsigned, unstamped, and incomplete document, warranting an adverse inference against the non-producing signatory. No liability extends beyond sanctioned loan or quantified foreclosure dues of Rs 17.87 lakhs maximum. Buyer constituted necessary party as sole link across all agreements essential for effective adjudication per Udit Narain Singh Malpaharia principle. Complaint time-barred under Section 24A filed 16 April 2018 beyond two years from April-May 2008 cause absent sufficient cause or reasoned condonation despite prior RBI Ombudsman and Orissa High Court proceedings. Arbitration clause in alleged Tripartite Agreement non-binding on consumer forums as special beneficial public remedy elective by consumer over private arbitration unless both parties expressly opt per M Hemalatha Devi v B Udayasri and Emaar MGF v Aftab Singh with no privity between complainant and opposite party rendering opposite party non-liable and contract obligation sine qua non for consumer claim success per Janpriya Buildestate v Amit Soni para 25. Appeal allowed NCDRC order set aside without costs due to errors in presuming Tripartite Agreement drawing adverse inference against financier shifting onus and lacking reasoning on consumer status limitation and necessary party with liberty reserved for seller-buyer proceedings without limitation extension.

5. National Restaurant Association of India Vs. Union of India

 Citation: National Restaurant Association of India Vs Union of India 2025 SCC OnLine Del 1975 : (2025) 2 CPJ 1 : (2025) 318 DLT 163, W.P.(C) 10683/2022 & W.P.(C) 10867/2022: Decided by Prathiba M Singh J; Judgment dt.28.03.2025 (Reserved 13.12.2024)

 Ratio: Delhi High Court dismissed writ petitions by National Restaurant Association of India and Federation of Hotel and Restaurant Associations of India challenging CCPA Guidelines dated 4 July 2022 issued under Section 18(2)(l) Consumer Protection Act 2019 prohibiting mandatory service charge collection by restaurants and hotels. Automatic default levy constitutes unfair trade practice under Section 2(47) and restrictive trade practice under Section 2(41) as service inheres within menu-displayed prices where order placement equals consumer consent solely to listed price plus taxes with extra mandatory charge lacking express post-service consent akin to voluntary tip or gratuity. Term “service charge” or “levy” misleads evoking sovereign government imposition without statutory authority since establishments cannot usurp levy power sovereign function per Assistant Collector of Central Excise v National Tobacco Co. Entry into premises or order placement implies no hidden extraordinary burden decided only after meal quality evaluation. CCPA holds jurisdiction under Section 10 mandate to regulate consumer detriment violations of rights, unfair practices, and misleading conduct, post-stakeholder consultations, including NRAI, FHRAI representations, acknowledging service charge as voluntary tip prerogative, despite inconsistent later stands. Article 19(1)(g) rights reasonably restricted in the general public interest through proportionality, as consumer class protection prevails over establishments, with freedom retained to transparently price offerings sans hidden extras. FHRAI members (3327 listed 80% mandatory) rebranded to “staff contribution” capped 10% maximum with no further tipping while NRAI (1100 members) resisted terminology change lacking labour settlement proof. Guidelines statutorily backed enforceable unlike mere executive instructions with prior 2017 advisories consultations press releases and DM enforcement via Sections 16-17 addressing class complaints from National Consumer Helpline (10491 grievances). No natural justice violation as consultations preceded issuance and prior advisories unchallenged. Petitions dismissed, guidelines upheld, establishments price freely without hidden mandatory charges, voluntary contributions permitted if clearly displayed, non-obligatory.