Supreme Court Case Law Updates and Legal Analysis
Table of Contents
Supreme Court Case Law Updates on Corporate, Insolvency & Criminal Matters
1. Kotak Mahindra Bank Ltd. vs. Jaymony Debnath & Ors.
Citation: Kotak Mahindra Bank Limited vs. Jaymony Debnath & Others, EC/8/2022, In the High Court of Calcutta, decided by Hon’ble Justice Sabyasachi Bhattacharyya, dated 18.07.2024.
The Calcutta High Court held that the mere dismissal of a previous execution application for default does not bar the decree-holder or award-holder from filing a fresh execution petition on the same cause of action.
In this case, Kotak Mahindra Bank’s earlier execution petition was dismissed for non-prosecution, and the respondent argued that a subsequent petition was not maintainable. The Court clarified that unlike Order 9 of CPC, which governs suits, Order 21 Rules 105 and 106 CPC do not contain any provision barring a fresh execution petition after dismissal for default. The Court further held that minor errors in describing the earlier dismissal as a “withdrawal” rather than a “dismissal for default” were not fatal, as there was no intention to mislead and the record was clear. The Court also rejected the respondent’s objection regarding territorial jurisdiction, holding that an arbitral award can be executed anywhere the judgment-debtor resides or has assets, not just at the seat of arbitration
2. IFFCO Tokio General Insurance Co. Ltd. vs. Inder Travels Pvt. Ltd.
Citation: IFFCO Tokio General Insurance Company Limitd vs. Inder Travels Private Limited, CS (COMM) 166/2017, In the High Court of Delhi, decided by Hon’ble Justice Navin Chawla, dated 01.08.2024.
The Delhi High Court permitted IFFCO Tokio General Insurance Co. Ltd. to file additional documents in a commercial suit, even at a late stage of the proceedings. The Court emphasized that “procedure is the handmaid of justice,” and procedural rules should not be applied so rigidly as to defeat substantive justice. The defendant objected to the late filing, arguing potential prejudice, but the Court found that the documents were relevant, and their admission would not unfairly harm the defendant, especially since an opportunity to respond would be provided. The Court clarified that the Commercial Courts Act, 2015, while requiring strict adherence to timelines, does not bar the filing of additional documents if justified and if it serves the interests of justice.
This judgment is significant as it reinforces the judiciary’s flexible approach to procedural rules in commercial litigation, ensuring that the quest for truth and justice is not hampered by technical defaults.
3. M/S Trinity Consultants v. M/S Redefine Online Express Private Limited
Citation: M/S Trinity Consultants v. M/S Redefine Online Express Private Limited, RFA(COMM) 291/2023 and CM APPL. 64249/2023, High Court of Delhi, decided by Hon’ble Justice Vibhu Bakhru, dated 29.07.2024
https://www.linkedin.com/posts/phoenixlegal_order-activity-7226513448338178048-zadl?utm_source=share&utm_medium=member_desktopThe Delhi High Court, in this appeal, affirmed the commercial court’s decree in favour of respondent and dismissed the counterclaim filed. The dispute arose from a suit for recovery of money, where Redefine Online Express claimed outstanding dues for services rendered to Trinity Consultants. The commercial court, after evaluating the evidence, found in favour of Redefine Online Express, holding that Trinity Consultants had failed to establish any valid defence or substantiate its counterclaim. On appeal, the High Court upheld the lower court’s findings, noting that the appellant had not demonstrated any perversity or legal error in the impugned judgment. The Court reiterated that appellate interference is unwarranted when the trial court’s decision is based on proper appreciation of evidence and is in accordance with law.
This judgment reinforces the principle that appellate courts will not interfere with well-reasoned and evidence-based findings of trial courts in commercial disputes, unless there is a manifest error or perversity. It also highlights the importance of substantiating counterclaims with cogent evidence and the need for parties to present clear and credible defences in recovery suits.
4.Mr. Francis Zavier W v. M.M Mathew
Citation: Mr. Francis Zavier W v. M.M Mathew, Criminal revision petition no. 1414 OF 2021, High Court of Karnataka at Bengaluru, decided by Hon’ble Justice V Srishananda, dated 19.07.2024.
The High Court of Karnataka dismissed the criminal revision petition, upholding the concurrent findings of the trial court and the appellate court, which had convicted petitioner under Section 138 of the Negotiable Instruments Act, 1881. The petitioner had issued a cheque to the respondent, which was dishonoured for insufficiency of funds. Lower courts found that the cheque was issued in discharge of a legally enforceable debt and that the statutory presumption under Section 139 of the NI Act had not been rebutted by the petitioner. The High Court, after reviewing the evidence and legal submissions, found no perversity or illegality in the lower courts’ judgments and confirmed the conviction and sentence imposed on the petitioner.The court emphasized the importance of ensuring fair trial rights and the necessity for a thorough examination of evidence before arriving at a verdict. It highlighted the role of the revisional court in correcting errors and ensuring justice is served. The ruling reinforced the principle that judicial scrutiny is essential in upholding the integrity of the legal process and protecting the rights of individuals in criminal matters.
(both the parties name are not mentioned in the judgement)
Citation: CS No. 220/2023, In the Saket Court, New Delhi, decided by Hon’ble Justice Sunil Beniwal, dated 29.07.2024.
The Saket District Court, New Delhi, awarded ₹15 lakhs as compensation for defamation in favour of the plaintiff, finding the defendant guilty of libel based on unchallenged electronic evidence. The defamatory statements were directed not only at the plaintiff but also at his family members and employer, causing significant harm to his professional reputation and mental well-being, even necessitating medical intervention. The court observed that the evidence was clear and uncontroverted, and found that the defendant’s conduct amounted to malicious misuse of legal processes and spreading of false information.
The court emphasized the importance of evidence and adherence to legal procedures in adjudicating the case. It underscored the necessity for clear documentation and substantiation of claims made by the parties involved. The ruling reinforced the principles of fairness and justice in civil litigation, ensuring that the rights of all parties are duly considered and protected throughout the legal process.
5.Chowgule and Company Pvt. Ltd. V. State of Goa and Others
Citation: Chowgule and Company Pvt. Ltd. V. State of Goa and Others, Criminal Writ Petition No. 618 of 2024 & Criminal Writ Petition No. 619 of 2024, High Court of Bombay at Goa, decided by Hon’ble Justice Bharat P. Deshpande, dated 02.08.2024.
The Bombay High Court held that investigations initiated under CrPC before 1st July 2024 must continue to be governed by the CrPC until the police file the final report under Section 173. The Court clarified that the newly enacted BNSS, 2023, will apply only to investigations and proceedings initiated after 1st July 2024. It further held that anticipatory bail applications filed after 1st July 2024 shall be governed by Section 482 of the BNSS, while interim bail granted under the CrPC before that date remains valid. The judgment relied on the transitional provisions under Section 531(2)(a) of the BNSS to ensure a smooth legal transition without disrupting ongoing investigations or procedural rights.
6. Ajay Kumar Bhalla & Ors V. Prakash Kumar dixit
Citation: Ajay Kumar Bhalla & others V. Prakash Kumar Dixit, CIVIL APPEAL NOS 8129-8130 OF 2024 (Arising out of SLP (C) Nos 16785-16786 of 2024), In the Hon’ble Supreme Court of India, decided by Hon’ble CJI D.Y Chandrachud, Hon’ble Justice J B Pardiwala, Hon’ble Justice Manoj Mishra, dated 29.07.2024.
The Supreme Court held that an appeal under Section 19 of the Contempt of Courts Act, 1971, is maintainable not only against orders imposing punishment but also against any order in contempt proceedings that affects the substantive rights of the parties, even if no punishment is imposed.
In this case, the Single Judge of the Delhi High Court had found the appellants guilty of contempt for not granting the respondent a notional promotion, but did not impose any punishment. The Division Bench dismissed the appeal, holding that an appeal under Section 19 was not maintainable in the absence of a punishment order. The Supreme Court, clarified that Section 19 permits appeals against any order in contempt proceedings that has the effect of adjudicating the merits of the dispute or affects the rights of the parties. The Court set aside the Division Bench’s order and remanded the matter for fresh consideration.
7. Santhosh Shet Vs. State of Karnataka and Ors
Citation: Santhosh Shet Vs. State of Karnataka and Ors., Writ Petition No. 18372 of 2024 (GM-RES), High court of Karnataka at Bengaluru, decided by Hon’ble Justice Maheshan Nagaprasanna, dated 06.08.24.
The Karnataka High Court held that the non-filing of a certificate under Section 65-B of the Indian Evidence Act at the time of production of electronic evidence does not vitiate court proceedings.
The petitioner, a teacher facing charges under the Protection of Children from Sexual Offences Act (POCSO), challenged the marking of a compact disc as evidence without an accompanying Section 65-B certificate. The Court, after referring to Supreme Court precedents, ruled that the absence of a Section 65-B certificate at the initial stage is a curable defect and such a certificate can be produced at any time during the trial. The Court emphasized that the prosecution’s subsequent production of the certificate, in response to the petitioner’s objection, was permissible and did not invalidate the proceedings. Accordingly, the petition was dismissed.
8. Lily Packers Private Limited Vs. Vaishnavi Vijay Umak & Ors
Citation: Lily Packers Private Limited Vs. Vaishnavi Vijay Umak and others, ARB.P. 1210, 1212 and 1213/2023, IN THE HIGH COURT OF DELHI, decided by Prathiba M. Singh, J., dated 11.07.2024.
The Delhi High Court held that a three-year lock-in clause in the employment agreements between Lily Packers Private Limited and the respondents was valid and enforceable. The Court found that such lock-in clauses, which bind employees to remain in service for a specified period, do not violate Article 19(1)(g) or Article 21 of the Constitution of India, nor are they hit by Section 27 of the Indian Contract Act, 1872, as long as they operate only during the term of employment and not post-termination. The Court further clarified that disputes regarding the enforcement of such lock-in clauses are arbitrable under the Arbitration and Conciliation Act, 1996 and appointed a sole arbitrator to adjudicate the disputes between the parties. The Court rejected the respondents’ argument that the clause was unconscionable or in restraint of trade, emphasizing that such negative covenants are permissible during the subsistence of the employment contract.
This judgment is significant as it affirms the validity of reasonable lock-in clauses in employment contracts, distinguishing them from post-termination non-compete clauses, which are generally unenforceable. It provides clarity that such clauses, when voluntarily agreed upon and limited to the period of employment, do not infringe fundamental rights or public policy. The ruling also reinforces the arbitrability of employment disputes involving contractual terms, offering guidance to employers and employees on the enforceability of similar clauses in future contracts.
9.M/s Kings Chariot v. Mr. Tarun Wadhwa
Citation: M/s Kings Chariot v. Mr. Tarun Wadhwa, ARB.P. 421/2024, IN THE HIGH COURT OF DELHI, decided by HON’BLE MS. JUSTICE NEENA BANSAL KRISHNA, dated 21.05.2024
The Delhi High Court dismissed the petition seeking appointment of an arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996, on the ground that the contract between the parties did not specify Delhi as the seat or venue of arbitration. The Court held that a general jurisdiction clause stating that disputes would be subject to the jurisdiction of Delhi courts does not, by itself, confer jurisdiction for arbitration matters unless the seat or venue is expressly stipulated.The court emphasized the importance of upholding the sanctity of arbitration as a method of dispute resolution. It examined the criteria for determining the validity of the arbitration agreement and the grounds for granting or denying relief in arbitration matters. The ruling reinforced the principle that arbitration should be encouraged as a means of resolving disputes efficiently and effectively, highlighting the judiciary’s role in facilitating this process.
10.Jalaluddin Khan v. Union of India
Citation: Jalaluddin Khan Vs. Union of India, Criminal Appeal No. 3173 of 2024, IN THE SUPREME COURT OF INDIA, decided by Hon’ble Justice Abhay Shreeniwas Oka and Hon’ble Justice Augustine George Masih, JJ., dated 13.08.2024.
The Supreme Court granted bail to Jalaluddin Khan, who was accused under various sections of the IPC and the Unlawful Activities (Prevention) Act (UAPA), on the principle that “bail is the rule and jail is the exception,” even under special statutes like the UAPA. The Court found that there was no prima facie material to show that the appellant was involved in unlawful activities or was associated with the Popular Front of India (PFI) beyond merely renting out a property to a co-accused. The Court held that the prosecution failed to demonstrate any active role or intent on the part of the appellant to further the unlawful objectives of the PFI. The Supreme Court also noted that the High Court had erred in denying bail to the appellant while granting it to a similarly placed co-accused, and emphasized that bail decisions under the UAPA require a prima facie assessment of the accused’s specific role, not a blanket denial based on association.
The court examined the grounds for appeal concerning the legality of detention and the adherence to due process. It emphasized the importance of providing individuals with adequate opportunities to contest their detention and the need for judicial oversight in such matters. The ruling reinforced the judiciary’s commitment to protecting individual rights and ensuring that state actions comply with legal standards, thereby upholding the rule of law in criminal proceedings.
11.Chemco Plastic Industries Pvt. Ltd. Vs. Chemco Plast
Citation: Chemco Plastic Industries Pvt. Ltd. Vs. Chemco Plast, Interim Application (Lodging) No. 10014 of 2024 and Interim Application (Lodging) No. 23077 of 2023 in Commercial IP Suit No. 80 of 2024, IN THE HIGH COURT OF BOMBAY, decided by Hon’ble Justice Manish Pitale, J., dated 10.06.2024.
The court emphasized the necessity for protecting trademark rights and the importance of preventing confusion in the marketplace. It considered the merits of the interim applications, highlighting the criteria for granting interim relief, such as the likelihood of success on the merits and the potential for irreparable harm. The ruling reinforced the judiciary’s role in safeguarding intellectual property while balancing the rights of parties involved in commercial litigation.
12.Rakesh Gupta and Ors. Vs. Mahesh Bansal Erstwhile Resolution Professional of Gupta Marriage Halls Pvt. Ltd.
Citation: Rakesh Gupta and Ors. Vs. Mahesh Bansal Erstwhile Resolution Professional of Gupta Marriage Halls Pvt. Ltd., Company Appeal At Insolvency No. 401 of 2022, IN THE NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI, decided by Anant Bijay Singh, J. and Naresh Salecha, Member (T), dated 19.10.2024.
The NCLAT set aside the NCLT’s order imposing a fine of ₹5 lakhs on the appellants, who were suspended directors of Gupta Marriage Halls Pvt. Ltd., for alleged non-cooperation during the Corporate Insolvency Resolution Process (CIRP) and liquidation. The Tribunal held that the NCLT does not have the jurisdiction to impose fines or penalties under Sections 70 and 236 of the Insolvency and Bankruptcy Code, 2016, as such penalties can only be imposed by Special Courts established under the Companies Act, 2013. The NCLAT clarified that the NCLT’s authority is limited to awarding costs under Rule 149 of the NCLT Rules, 2016, and that the imposition of punitive fines is outside its powers. The Tribunal remanded the matter to the NCLT for fresh consideration in accordance with law.
The tribunal emphasized the importance of adhering to the provisions of the Insolvency and Bankruptcy Code, particularly regarding the duties of the resolution professional and the need for transparency in the process. The ruling highlighted that stakeholders must be given a fair opportunity to present their claims and interests, reinforcing the principles of equity and justice in insolvency matters.
13.Mongia Steel Limited Vs. Saluja Steel & Power Private Limited
Citation: Mongia Steel Limited v. Saluja Steel & Power Private Limited, Commercial Appeal No. 08 of 2023, In the High Court of Jharkhand at Ranchi, decided by Hon’ble Chief Justice B.R. Sarangi and Hon’ble Mr. Justice Sujit Narayan Prasad, decided on 19.07.2024.
The court held that the law of limitation under the Commercial Courts Act, 2015 must be strictly enforced, and condonation of delay should be granted only in exceptional circumstances where the party demonstrates sufficient cause and due diligence. The High Court emphasized that the object of the Act is to ensure speedy disposal of commercial disputes and that the provision for condonation of delay under Section 5 of the Limitation Act is not a matter of right but is to be exercised sparingly.
The case arose from a commercial dispute between Mongia Steel Limited and Saluja Steel & Power Private Limited, where the appellant sought to challenge the rejection of its commercial suit and subsequent appeal. The court found that the appellant had acted negligently by not annexing relevant documents and pleadings in the earlier round, despite being granted liberty, and therefore, the appeal was dismissed as barred by limitation.
14.MS Klr Group Enterprises vs Madhu H V
M/S KLR Group Enterprises v. Madhu H V, Commercial Appeal No. 56 of 2024 in COM.A. A 3 of 2024, In the High Court of Karnataka at Bengaluru, decided by Hon’ble Justice Anu Sivaraman and Hon’ble Justice Anant Ramanath Hegde, dated 19.07.2024.
The Karnataka High Court held that an order refusing ex-parte interim measures under Section 9 of the Arbitration and Conciliation Act, 1996, is appealable under Section 37(1)(b) of the Act. However, the Court clarified that appellate courts must exercise restraint and interfere only in exceptional cases where the refusal causes irreparable harm or where the lower court’s decision is manifestly erroneous. The Bench emphasised that the appellate court’s role is limited to examining whether the lower court’s discretion was exercised judiciously, and not to re-adjudicate the merits of the interim relief sought.
The case arose from a dispute over property possession and development rights, where the appellant (KLR Group) sought ex-parte interim relief under Section 9 to restrain the respondents from interfering with its activities. The Commercial Court denied the relief, prompting the appeal. The High Court’s ruling underscores the procedural nuances in arbitration-related interim measures, clarifying that while such orders are appealable, courts must balance the urgency of ex-parte relief with the need to avoid frivolous litigation. This judgment is significant for commercial arbitration practice, as it provides guidance on the scope of appellate intervention and reinforces the principle of limited judicial interference in arbitration proceedings under the 1996 Act.
15. Greenshift Initiatives Private Limited V. Sonu Gupta
Citation: Greenshift Initiatives Private Limited v. Sonu Gupta, I.A. 331 of 2024 in C.P.(IB) No. 1122/MB/2021, National Company Law Tribunal Mumbai Bench, decided by Hon’ble Justice Reeta Kohli and Hon’ble Madhu Sinha, Member (Technical), dated 13.08.2024.
The NCLT, Mumbai Bench, held that a financial creditor who has assigned its debt during the CIRP ceases to be a “financial creditor” and loses its right to participate in the Committee of creditors. The Tribunal clarified that once the assignment of debt is validly made, the assignee steps into the shoes of the original financial creditor, and the assignor is no longer entitled to any rights or claims in the CIRP, including voting or participation in the CoC. The Tribunal further noted that the assignor cannot subsequently seek to join the CoC or challenge the assignee’s participation.
The case arose from Greenshift Initiatives Private Limited (the original financial creditor) assigning its debt to another entity during the CIRP of Rolta BI Big Data Analytics Private Limited. The assignor later sought to remain as a member of the CoC, which was opposed by the Resolution Professional. The Tribunal’s decision clarifies the legal position on debt assignment and its consequences in insolvency proceedings, reinforcing the principle that upon valid assignment, the assignee alone is entitled to participate in the CIRP as the financial creditor
16. Mangoo Singh and Ors. Vs. Ram Autar
Mangoo Singh and Ors. v. Ram Autar, Second Appeal No. 1035 of 1996, In the High Court of Allahabad, decided by Hon’ble Justice Kshitij Shailendra, dated 21.08.2024.
The Allahabad High Court held that a suit for cancellation of a will before a civil court is maintainable even if the will has not yet been acted upon or has not been probated. The Court clarified that the mere fact that a will exists does not bar a civil court from entertaining a challenge to its validity and that the civil court has jurisdiction to adjudicate on the genuineness, execution, and validity of the will. The Court further observed that the plaintiff does not have to wait for the will to be probated before seeking its cancellation, and that the civil court can grant relief if it is satisfied that the will is not genuine or legally valid.
The case arose from a dispute over the validity of a will executed by the late grandfather of the parties, with the defendant claiming inheritance based on the will. The plaintiffs, who were the legal heirs, challenged the will in the civil court seeking its cancellation. The High Court’s decision clarifies that civil courts have the authority to examine and adjudicate upon the validity of a will, irrespective of whether it has been probated or acted upon. This judgment is significant for inheritance and succession law, as it provides clarity on the jurisdiction of civil courts in will-related disputes and ensures that aggrieved parties have a remedy to challenge suspicious or fraudulent wills before they are acted upon.
17. Nikhil Jain and Ors. Vs. Anil Goel, Liquidator of Birla Cotsyn (India) Ltd. and Ors.
Citation: Nikhil Jain and Others v. Anil Goel, Liquidator of Birla Cotsyn (India) Limited and Others, Company Appeal (AT) No. 148 of 2024, In the National Company Law Appellate Tribunal, New Delhi, decided by Hon’ble Justice Yogesh Khanna and Hon’ble Member (Technical) Ajai Das Mehrotra, dated 20.08.2024.
https://ibclaw.in/case-name/nikhil-jain-and-ors-v-anil-goel-liquidator-and-anr/
NCLAT held that stakeholders in liquidation proceedings cannot challenge the liquidator’s decisions on vague or unsubstantiated grounds, and the liquidator’s commercial wisdom in rejecting claims must be respected unless proven to be arbitrary or mala fide. The Tribunal emphasized that the liquidator’s role under the Insolvency and Bankruptcy Code, is to maximize asset realization for creditors, and courts should not interfere unless there is a manifest error or violation of law. The NCLAT further clarified that stakeholders must provide concrete evidence to support their claims and cannot rely on mere assertions to challenge the liquidator’s actions.
The case arose from the liquidation of Birla Cotsyn (India) Limited, where the appellants challenged the liquidator’s rejection of their claims as financial creditors. The Tribunal dismissed the appeal, noting that the appellants failed to provide valid documentation or evidence to substantiate their claims. This judgment reinforces the autonomy of liquidators in managing liquidation proceedings and underscores the importance of adhering to procedural requirements under the IBC.
18. Phonographic performance Limited & ors. V. state of Goa
Phonographic Performance Limited & Others v. State of Goa and Others, Writ Petition Nos. 253 of 2024 and 254 of 2024, In the High Court of Bombay at Goa, decided by Hon’ble Justice M.S. Karnik and Hon’ble Justice Valmiki Sa Menezes
The Bombay High Court quashed a circular issued by the State of Goa exempting the use of sound recordings at wedding functions from copyright infringement under Section 52(1)(za) of the Copyright Act, 1957. The Court held that the State’s circular was ultra vires (beyond its authority), as copyright law falls under the Union List of the Constitution, and states cannot issue such exemptions. The Bench emphasized that playing copyrighted music in public, including at weddings, constitutes a “public performance” requiring a license, and the State cannot carve out exceptions that conflict with central legislation. The Court clarified that Section 52(1)(za) allows only “fair use” exemptions for religious ceremonies, which do not extend to wedding functions, as they are social events. The case arose from a challenge by music copyright societies against a Goa government circular that permitted playing copyrighted music at weddings without licenses, citing “social and cultural” reasons. The High Court’s decision reinforces the supremacy of central copyright laws and clarifies that states cannot dilute statutory rights of copyright holders through executive orders.
19. Insolvency and Bankruptcy Board of India Vs. Satyanarayan Bankatlal Malu and Ors.
Citation: Insolvency and Bankruptcy Board of India Vs. Satyanarayan Bankatlal Malu and Others, Criminal Appeal No. 3851 of 2023, IN THE SUPREME COURT OF INDIA, decided by Hon’ble Justice B.R. Gavai and Hon’ble Justice Sandeep Mehta, dated 19.04.2024.
The Supreme Court held that Special Courts presided by a Sessions Judge or Additional Sessions Judge have jurisdiction to try offences under IBC, rejecting the argument that only Magistrates could adjudicate such cases. The Court clarified that Section 236 of the IBC incorporates the provisions of the Companies Act, 2013, as they existed when the IBC was enacted, making it a case of “legislation by incorporation” rather than “legislation by reference.” Consequently, subsequent amendments to the Companies Act (e.g., the 2018 amendment creating two classes of Special Courts) do not affect the IBC’s jurisdictional framework. The Court emphasized that the IBC is a self-contained code, and its reference to Special Courts under the Companies Act was frozen as of the IBC’s enactment, preserving the Sessions Court’s jurisdiction.
The case arose from a dispute where the NCLT initiated CIRP against a corporate debtor, later allowing withdrawal based on a One Time Settlement. When the respondents failed to comply with the OTS, the NCLT directed prosecution. IBBI filed a complaint before the Sessions Court, which the High Court quashed, citing jurisdictional errors. The Supreme Court reversed the High Court’s decision, underscoring that jurisdictional clarity is vital for enforcing the IBC’s punitive provisions.
20. Ashish Verma Vs. Parmod Kumar
Citation: Ashish Verma v. Parmod Kumar, Crl. M.C. 2332/2021 and Crl. M.A. 15497/2021, In the High Court of Delhi, decided by Hon’ble Justice Anoop Kumar Mendiratta, dated 02.08.2024
The Delhi High Court held that Section 141 of the Negotiable Instruments Act, 1881, which deals with the liability of persons associated with companies for offences committed by the company, is not applicable to a proprietary concern. The Court clarified that a proprietary concern is not a separate legal entity but is merely an extension of the proprietor, and therefore, only the proprietor can be prosecuted for dishonour of cheques issued by the concern. The Court emphasized that the legislative intent behind Section 141 is to cover companies and firms, and not proprietary concerns, as the latter do not have a distinct legal identity apart from the proprietor.
The case arose from a complaint under Section 138 of the Negotiable Instruments Act, 1881, for the dishonour of a cheque issued by a proprietary concern. The petitioner, who was not the proprietor but was allegedly managing the concern, sought quashing of proceedings against him, contending that he was not the drawer of the cheque. The High Court allowed the petition, quashing the proceedings against the petitioner, and clarified that only the proprietor can be held liable for the acts of the proprietary concern. This judgment is significant for banking and commercial transactions, as it provides clarity on the liability of persons associated with proprietary concerns and prevents the misuse of criminal proceedings against non-proprietors.
21. BURGER KING CORPORATION.BURGER KING CORPORATION 1BURGER KING CORPORATION. M/S ANAHITA IRANI & Ors.
Burger King Corporation v. M/s Anahita Irani and Others, Reg. Civil Suit No. 02/2011, In the Court of District Judge at Pune, decided by Hon’ble Justice Sunil G. Vedpathak, dated 16.07.2024.
The Pune District Court dismissed Burger King Corporation’s (BKC) trademark infringement suit, ruling that the defendants (Anahita Irani and Shapoor Irani) had prior and continuous use of the “Burger King” name in Pune since 1992, establishing significant local goodwill and brand identity. The Court held that BKC failed to prove infringement or passing off, as the defendants’ use predated BKC’s entry into India (2014) and there was no evidence of public confusion or actual damages. The Court also rejected BKC’s evidence due to non-compliance with Order 19 Rule 3 of the CPC (improper affidavit verification) and dismissed the defendants’ counterclaim seeking to restrain BKC from operating in Pune.
The case arose from BKC’s global expansion into India, where it sought to enforce its registered “Burger King” trademark against a local Pune restaurant operating under the same name since 1992. The defendants argued they had built independent brand equity over decades, with no intent to exploit BKC’s reputation. The judgment underscores the importance of prior use in trademark disputes and highlights procedural rigor in evidence submission. It is significant for intellectual property law, as it prioritizes local goodwill over global registrations in the absence of proven confusion or mala fide intent, while clarifying evidentiary standards under the CPC.
22. Prabhudas Jesangbhai Patel Vs. Vinodbhai Mohanbhai Togadiya
Citation: Prabhudas Jesangbhai Patel v. Vinodbhai Mohanbhai Togadiya, Civil Application No. 1 of 2023 in R/Special Civil Application No. 9673 of 2023, In the High Court of Gujarat at Ahmedabad, decided by Hon’ble Justice J.C. Doshi, dated 08.08.2024.
The Gujarat High Court held that a party waives its right to invoke arbitration under Section 8 of Arbitration and Conciliation Act, 1996, if it submits its first statement on the substance of the dispute in court proceedings without asserting the arbitration clause. The Court emphasized that the application under Section 8 must be filed before submitting the first substantive statement, & any delay constitutes acquiescence to the court’s jurisdiction. The Bench noted that the respondent, after filing a detailed written statement and participating in proceedings for months, could not later seek arbitration, as this contradicted the statutory mandate of Section 8. The Supreme Court subsequently dismissed the SLP against this judgment, affirming the High Court’s reasoning.
The case arose from disputes over property transactions and partnership agreements, where the petitioner sought cancellation of legal instruments executed by the respondent. The respondent initially contested the suit by filing a written statement but later invoked an arbitration clause in the partnership deed. The High Court ruled that the respondent’s conduct—filing a substantive defense without raising the arbitration clause—amounted to waiver. This judgment is pivotal for arbitration law, as it clarifies procedural timelines for invoking arbitration and reinforces that parties cannot opportunistically switch forums after actively engaging in litigation. It underscores the importance of timely assertion of arbitration rights to prevent abuse of judicial processes.
23. VISHAL CHELANI & ORS. V. DEBASHIS NANDA
Citation: VISHAL CHELANI & others V. DEBASHIS NANDA, Civil Appeal No. 3806 of 2023, IN THE SUPREME COURT OF INDIA, decided by Hon’ble Justice S. Ravindra Bhat and Hon’ble Justice Aravind Kumar, dated 16.10.2023.
The Supreme Court held that homebuyers who obtained decrees under the Real Estate (Regulation and Development) Act, 2016 cannot be treated differently from other homebuyers in a resolution plan under the Insolvency and Bankruptcy Code. The Court ruled that all homebuyers, irrespective of whether they approached RERA, constitute a single class of financial creditors under Section 5(8)(f) of the IBC. The distinction made in the resolution plan—granting better terms to homebuyers who did not seek RERA remedies—was deemed ultra vires and violative of Article 14 of the Constitution. The Court emphasized that Section 238 of the IBC, which contains a non-obstante clause, ensures primacy of the IBC over RERA, and no “hyper-classification” is permissible among financial creditors of the same class.
The case arose from a resolution plan for Bulland Buildtech Pvt. Ltd., where homebuyers who secured RERA decrees for refunds were offered inferior terms compared to others. The appellants challenged this discrimination, arguing that the IBC does not permit such differentiation. The Supreme Court’s decision reinforces the uniform treatment of homebuyers as financial creditors under the IBC, ensuring equitable participation in resolution processes. This judgment is pivotal for insolvency law, as it safeguards homebuyers’ rights and curbs arbitrary distinctions in resolution plans, upholding the IBC’s objective of maximizing value for all stakeholders.
24. Radheyshyam & Ors. V. State of Rajasthan & Ors.
Citation: Radheyshyam & Ors. v. State of Rajasthan & Ors., Criminal Appeal No. 3020 of 2024 (@ SLP (Crl.) No. 13675 of 2023), In the Supreme Court of India, decided by Hon’ble Justice Vikram Nath and Hon’ble Justice Prasanna Bhalakrishna Varale, dated 22.07.2024.
The Supreme Court quashed criminal proceedings under Sections 420 (cheating) and 406 (criminal breach of trust) IPC, ruling that mere non-performance of an agreement to sell property does not constitute criminal offenses. The Court emphasized that disputes arising from commercial transactions, where parties have civil remedies, cannot be converted into criminal cases without evidence of fraudulent intent or dishonest inducement at the inception of the transaction. The Bench noted that the pending civil suit for specific performance demonstrated the civil nature of the dispute, and the FIR appeared to be an attempt to arm-twist the appellants into executing the sale deed.
The case arose from an agreement to sell property where the appellants received ₹11 lakh as advance and promised to execute the sale upon receiving the balance ₹1 crore. When the appellants allegedly refused to complete the transaction, the respondent filed an FIR alleging cheating. The Supreme Court highlighted that non-performance of a contract, without proof of dishonest intent at the time of agreement, is a civil wrong and not a criminal offense. This judgment reinforces the judiciary’s stance against misuse of criminal law in contractual disputes, ensuring that criminal proceedings are not weaponized to pressure parties in civil matters. It clarifies the distinction between civil breaches and criminal offenses, safeguarding individuals from unwarranted criminal prosecution in commercial disputes.
25. Delhi Race Club (1940) Ltd. and Ors. V. State of Uttar Pradesh and Ors.
Citation: Delhi Race Club (1940) Ltd. and Ors. v. State of Uttar Pradesh and Ors., Criminal Appeal No. 3114 of 2024, In the Supreme Court of India, decided by Hon’ble Justice J.B. Pardiwala and Hon’ble Justice Manoj Misra, dated 23.08.2024.
https://www.barandbench.com/news/litigation/police-unaware-of-distinction-between-cheating-criminal-breach-of-trust-despite-162-years-of-ipc-supreme-court-calls-for-training The Supreme Court quashed criminal proceedings under Sections 406 (criminal breach of trust) and 420 (cheating) of the Indian Penal Code (IPC), ruling that non-payment for goods supplied in a sale transaction does not constitute criminal offenses. The Court clarified that criminal breach of trust requires “entrustment” of property, which is absent in a sale where ownership is transferred. Similarly, cheating necessitates fraudulent intent at the inception of the transaction, which was unproven here. The Bench emphasized that such disputes are civil in nature and cannot be criminalized merely due to non-payment, especially when no civil suit was filed within the limitation period. The Court criticized the police for conflating civil and criminal liability and urged nationwide training to distinguish between cheating (fraudulent intent at the outset) & breach of trust (misappropriation after lawful possession).
The case arose from a 1995 agreement where the complainant supplied horse feed to Delhi Race Club but was directed to invoice the Delhi Horse Trainers Association (DHTA), which later defaulted on payments. The Supreme Court held that the transaction was a sale, not entrustment, and the dispute was purely commercial. By dismissing the criminal charges, the judgment reinforces the principle that criminal law cannot remedy civil contractual disputes. It underscores the need for precise legal scrutiny to prevent misuse of criminal proceedings, safeguarding individuals and entities from unwarranted prosecution.
26.Ram Chander Aggarwal Vs. Ram Kishan Aggarwal and Ors.
Citation: Ram Chander Aggarwal v. Ram Kishan Aggarwal and Ors., O.M.P. (Comm) 457/2022, In the High Court of Delhi, decided by Hon’ble Justice Prateek Jalan, dated 16.08.2024.
The Delhi High Court held that once an arbitrator is validly appointed and the arbitral tribunal is constituted, a party cannot unilaterally challenge the appointment or seek a change of arbitrator unless there is a statutory ground such as bias, ineligibility, or misconduct. The Court emphasized that the principle of party autonomy in arbitration is subject to the statutory framework of the Arbitration & Conciliation Act, 1996, and that frivolous or belated challenges to the arbitrator’s appointment are not permissible. The Court clarified that if a party has participated in the arbitration proceedings without raising objections, it is deemed to have waived any right to challenge the arbitrator’s appointment at a later stage, unless there is a justifiable reason recognized under the Act.
The case arose from a family business dispute where the petitioner sought to challenge the appointment of the arbitrator after actively participating in the proceedings. The High Court dismissed the petition, ruling that the petitioner’s conduct amounted to acquiescence and that there was no evidence of bias or ineligibility of the arbitrator. This judgment is significant for arbitration law as it reinforces the finality and integrity of the arbitral process, discourages tactical delays, and clarifies the limited grounds on which an arbitrator’s appointment can be challenged post-constitution of the tribunal. It underscores the importance of timely objections and the need for parties to act in good faith during arbitration proceedings.
27. Pam Developments Pvt Ltd Vs. The State of West Bengal and Ors.
Citation: Pam Developments Private Limited v. The State of West Bengal and Others, Civil Appeal Nos. 9781-9782 of 2024 (Arising out of SLP (C) Nos. 8128-8129 of 2021), In the Supreme Court of India, decided by Hon’ble Justice Pamidighantam Sri Narasimha and Hon’ble Justice Pankaj Mithal, dated 23.08.2024.
The Supreme Court held that an Arbitrator has the power to award pre-reference and pendente lite interest even when the agreement is silent on such claims, provided there is no explicit prohibition in the contract. The Court emphasized that judicial intervention under Sections 34 and 37 of the Arbitration and Conciliation Act, 1996, is limited to cases of patent illegality or perversity, and courts cannot substitute their own reasoning for the Arbitrator’s plausible view. The Bench reinstated the Arbitrator’s award for Claim No. 4 (interest on delayed payments) and Claim No. 6 (pre-reference interest), which the Calcutta High Court had modified, stating that the Arbitrator’s conclusions were neither perverse nor contrary to public policy. However, the Court upheld the setting aside of Claim No. 1 (loss of business) and Claim No. 3 (idle labour charges) due to lack of contractual basis.
The case arose from disputes over a 2010 road construction contract where delays led to arbitration. The appellant (Pam Developments) claimed compensation for delays, uneconomic machinery use, and interest on delayed payments. While the Arbitrator awarded ₹1.37 crores, the District Court and High Court partially set aside/modified the award. The Supreme Court’s ruling reinforces the autonomy of arbitral tribunals and clarifies that courts must not re-adjudicate merits under the guise of Section 34/37 challenges. This judgment is pivotal for arbitration law, ensuring that arbitrators’ awards are respected unless fundamentally flawed, and underscores the enforceability of interest claims even in contractually silent scenarios.
28. Kamladityya Construction Pvt. Ltd. Vs. Rail Land Development Authority
Citation: Kamladityya Construction Private Limited v. Rail Land Development Authority, ARB.P. 1223/2023, In the High Court of Delhi, decided by Hon’ble Justice C. Hari Shankar, dated 31.07.2024.
The Delhi High Court held that an arbitration clause is invalid if it denies the contractor the right to select an arbitrator from a panel provided by the Railway, as such unilateral appointment violates the principles of fairness and neutrality under the Arbitration and Conciliation Act, 1996. The Court emphasized that Clause 26.3 of the contract, which allowed the Rail Land Development Authority (RLDA) to unilaterally appoint an arbitrator from its panel, was unconstitutional and contravened Supreme Court precedents (Central Organization for Railway Electrification v. ECI-SPIC-SMO-MCML). The Bench distinguished the clause from valid arbitration agreements by noting the absence of a mechanism for the contractor to choose from a panel of independent arbitrators. Consequently, the Court exercised its power under Section 11(6) of the Act to appoint Justice Indermeet Kaur Kochhar (Retd.) as the sole arbitrator.
The case arose from disputes over unpaid dues of ₹51.38 crores for redevelopment work at Bijwasan Railway Station. The RLDA terminated the contract and encashed performance bank guarantees, prompting Kamladityya Construction to seek arbitration. The judgment is significant for clarifying that arbitration clauses must ensure equal participation in arbitrator selection to avoid bias. It reinforces judicial scrutiny of unilateral appointment mechanisms in government contracts and upholds the integrity of arbitration as a neutral dispute resolution forum. This ruling safeguards contractors from oppressive contractual terms and ensures compliance with the principles of natural justice in arbitration proceedings.
