May 2025 Legal Case Law Update: Important Supreme Court and NCLAT Judgments

1.Devika Resources Pvt Ltd Vs MAA Manasha Devi Alloys Pvt Ltd

 Citation: Devika Resources Pvt Ltd (formerly Kalinga Enterprises Pvt Ltd) Vs MAA Manasha Devi Alloys Pvt Ltd (14.05.2025 – NCLAT New Delhi); Comp App (AT) (Ins) No 938 of 2024 and IA No 3418 3419 of 2024; Decided by Hon’ble Members Rakesh Kumar Jain (Judicial) and Naresh Salecha (Technical)

Ratio: NCLAT held the Rs 1 crore threshold under Section 4 IBC is determined at the Section 9 application filing date not at admission. Suo moto payments made by corporate debtor during pendency fail to reduce default below Rs 1 Cr and cannot render the petition non-maintainable. The tribunal restored the remanded insolvency petition after the NCLT’s dismissal on 6th March 2024, following the NCLAT’s remand order on 19th October 2023.​ Devika’s 20th May 2022

petition claimed Rs 1.16 Cr operational debt for iron ore supplies after 4th April 2022 demand notice. The petition was admitted on 31st October 2022 commencing CIRP but set aside for hearing denial. Default exceeded Rs 1 Cr at filing as per Rajahmundry Manish Kumar and Hyline Mediconz, despite the respondent’s unauthorised Rs 20 Lakh deposit, which reduced the quantum during proceedings.​ Unwilling creditor payments remain ineffective. Maintainability crystallises at filing, preserving the insolvency initiation date under Section 5(11). Admission marks insolvency commencement under Section 5(12). Proceedings cannot be abused for the purpose of recovery. No observations made on merits. Parties directed to appear on 28th May 2025.​

 2. Rajputana Constructions Pvt Ltd Vs Rajasthan Land Holdings Ltd and Ors

 Citation: Rajputana Constructions Pvt Ltd Vs Rajasthan Land Holdings Ltd and Ors 2025 SCC OnLine NCLAT 921 Company Appeal (AT) (Insolvency) No 853 of 2023 with Company Appeal (AT) (Insolvency) No 785 of 2023: Decided by Ashok Bhushan Chairperson Barun Mitra Arun Baroka Members (Technical); Judgment by Barun Mitra Member (Technical) on 16 May 2025​

Ratio: NCLAT held Resolution Professional entitled to fees during CIRP stay period as statutory duties continue despite suspension. NCLAT can examine CoC actions for commercial wisdom violation but cannot substitute own views. CIRP costs, including RP fees, form estate liability payable as operational debt under Section 5(21) regardless of the final resolution outcome.​ RP fees calculated per IBBI fee guidelines accrue from the admission date, even during an appellate stay. CoC decision rejecting RP fee claim set aside for arbitrariness, lacking reasoned application of mind. Pendency payments or interim orders do not absolve CIRP cost liability. Proceedings restored for compliance with NCLAT directions on fee payment and cost adjudication.​ Maintainability preserved under Section 60(5) NCLAT jurisdiction. No abuse for recovery established. Merits observations reserved. Parties directed to appear for further proceedings.

 3.R. Suresh Vs R. Poornima and Ors

Citation: K.R. Suresh Vs R. Poornima and Ors 2025 SCC OnLine SC 1014 Civil Appeal No 5822 of 2025 arising SLP(C) No 5630 of 2023; Decided by Justices J.B. Pardiwala and R. Mahadevan on 02.05.2025​

Ratio: The Supreme Court held that advance money in a sale agreement is treated as earnest money when it guarantees contract performance. The seller can forfeit the full earnest money if the buyer defaults. This forfeiture is valid and does not attract penalty limits under Section 74 of the Indian Contract Act.​ In this case the agreement dated 25th July 2007 was for a site worth Rs 55.50 lakh with Rs 20 lakh paid as advance. The agreement clearly stated the advance would be forfeited if the buyer failed to pay the balance Rs 35.50 lakh within 4 months. Time was essential because sellers needed urgent funds to settle their bank loans.​ The buyer defaulted on payment and could not prove he had funds ready. He filed suit only after the sellers sold to innocent third-party buyers. Courts found buyer lacked readiness and willingness. The explicit forfeiture clause was upheld following precedents like Shree Hanuman Cotton Mills and Satish Batra. No probate was needed for the unregistered will.​ Buyer sought a refund but failed to make a specific prayer under Section 22 of the Specific Relief Act. General prayer for other reliefs is insufficient. Supreme Court dismissed the appeal and upheld the forfeiture of the Rs 20 lakh advance.

 4.R. Suresh Vs R. Poornima and Ors

 Citation: Vijaya Bank and Anr Vs Prashant B Narnaware 2025 SCC OnLine SC 1107 Civil Appeal No 11708 of 2016 with Civil Appeal No 11499 of 2016; Decided by Justices P.S. Narasimha and Joymalya Bagchi on 14.05.2025​

 Ratio: The Supreme Court held that employment bonds requiring minimum service tenure with liquidated damages for early exit are valid during the employment term. They do not violate Section 27 Contract Act as a restraint of trade or Section 23 as against public policy if reasonable fair and tied to recruitment costs.​ Clause 11(k) in the appointment letter and the Rs 2 lakh indemnity bond mandated a 3-year service post-promotion to Senior Manager-Cost Accountant. Employee resigned after almost 2 years (17.07.2009 from 28.09.2007 joining) paid under protest joined IDBI. High Court quashed as unconstitutional following BEML Ltd., but SC reversed per Golikari Superintendence Co. restraints operative during contract valid unless unconscionable.​ No unequal bargaining abuse, unjust enrichment, Rs 2 lakh reasonable for PSB’s recruitment expenses, attrition losses in a competitive market. Not a post-termination non-compete, but rather a mere service perpetuation/recovery safeguard. Appeal allowed, bond enforced, and refund denied.