Newsletter July Disputes

ARBITRATION

Case Name: Manash Kamal Bezboruah v. Bokahola Tea Company Private Limited and Others, (Arising Out of SLP (Civil) Nos. 7233-7234 of 2026)

Forum: Supreme Court

The dispute in the present case has its roots in a family partnership firm, M/s Boloma Tea Company, constituted in 1948, in which the Appellant held a 25% share under a partnership deed dated 16 November 1976. Clause 5 of the said deed contained an arbitration clause. Following the death of successive partners and alleged mismanagement and financial irregularities by the remaining partners and associated companies, the Appellant instituted a title suit in 2012 before the Civil Judge, Jorhat. An application under Section 8 of the Arbitration and Conciliation Act, 1996 (“A&C Act”) seeking reference to arbitration was rejected by the Trial Court and thereafter affirmed in revision by the High Court, as several defendants, including Respondent Nos. 1 to 3, namely Bokahola Tea Company Pvt. Ltd., Kasojan Tea Company Pvt. Ltd., and Bokahola Investment Pvt. Ltd. were non-signatories to the partnership deed and therefore, relying on Sukanya Holdings, the suit could not be bifurcated.

Subsequently, the Supreme Court vide its consent order dated 21 November 2024 referred all disputes to arbitration and appointed a Sole Arbitrator. Respondent Nos. 1 to 3, although parties to the proceedings before this Court, neither contested nor sought modification of the said order. During arbitration proceedings, Respondent Nos. 1 to 3 filed applications before the Tribunal seeking deletion of their names on the ground that they were non-signatories. The Tribunal, treating these as Section 16 applications under the A&C Act, rejected the same, relying on the Group of Companies doctrine and the Supreme Court’s consent order.

Aggrieved, Respondent Nos. 1 to 3 filed a Civil Revision Petition under Article 227 of the Constitution of India before the High Court of Gauhati. The High Court stayed the notices issued by the Tribunal and rejected the Appellant’s preliminary objection regarding maintainability, observing that the revision petition was maintainable to examine whether the Tribunal’s order suffered from patent lack of inherent jurisdiction.

Issues:

1. Whether a revision petition under Article 227 of the Constitution is maintainable against an Arbitral Tribunal’s order rejecting an application under Section 16 of the A&C Act?
2. Whether the High Court was justified in exercising supervisory jurisdiction under Article 227 without recording a specific finding of patent lack of inherent jurisdiction?
3. Whether the remedy against rejection of a jurisdictional objection under Section 16 of the A&C Act lies under Section 34 of the Act, after passing of the final award?
4. Whether Respondent Nos. 1 to 3 could challenge the arbitral reference, having failed to contest or seek modification of the Supreme Court’s consent order dated 21 November 2024?

Submission of the Parties:

The Appellant contended that the A&C Act is a self-contained code and that Section 5 thereof expressly restricts judicial intervention to the limited extent contemplated under the Act itself. Relying on the Constitution Bench decision in Cox and Kings Ltd. v. SAP India Pvt. Ltd., (2024) 4 SCC 1, the Appellant submitted that Respondent Nos. 1 to 3 were veritable parties to the dispute, evidenced by inter-party relations, commonality of subject matter, and their corporate incorporation through borrowings from the partnership firm. The Appellant further argued that Respondent Nos. 1 to 3 were estopped from challenging the arbitral reference by their non-contestation of the Supreme Court’s consent order.

Per contra, Respondent Nos. 1 to 3 submitted that the Appellant’s own earlier pleadings explicitly contended that these respondents were not parties to the arbitration agreement, and having secured favourable orders on that premise, the Appellant could not now approbate and reprobate. It was further argued that Respondent Nos. 1 to 3 did not fulfil the test of a “veritable party” under Cox and Kings (supra), and that the consent given in the Supreme Court order did not bind them as no Board Resolution authorised Respondent No. 7 to consent on their behalf. The Respondents urged that the Tribunal’s assumption of jurisdiction over non-signatories constituted a patent lack of inherent jurisdiction warranting High Court interference under Article 227.

Observations of the Court:

The Supreme Court re-emphasised that the A&C Act is a self-contained code and that its non-obstante clause under Section 5 limits judicial intervention to the extent expressly contemplated under the Act. The doctrine of kompetenz-kompetenz, enshrined in Section 16 of the Act, empowers the Arbitral Tribunal to rule on its own jurisdiction, and the ordinary mechanism to challenge an arbitral award, including any in-between jurisdictional orders, is by way of a petition under Section 34 of the Act, after the final award is rendered.

The Court reiterated the settled position from SBP & Co. v. Patel Engineering Ltd. (2005) 8 SCC 618, that correcting orders of an Arbitral Tribunal under Articles 226 or 227 of the Constitution during the pendency of arbitral proceedings is impermissible and defeats the legislative policy of minimal judicial intervention. The Court further reiterated the test laid down in Deep Industries Ltd. v. ONGC (2020) 15 SCC 706, that the High Court’s power under Article 227 in arbitral matters is confined to exceptional cases where the Tribunal’s order suffers from a “patent lack of inherent jurisdiction” that must stare one in the face, requiring no argument whatsoever, a standard further reinforced by Punjab State Power Corporation Ltd. v. Emta Coal Ltd. (2020) 17 SCC 93.

The Court also drew attention to the recent judgment in Tarini Prasad Mohanty v. Sunflag Iron and Steel Company Limited 2026 INSC 566, emphasizing that courts exercising writ jurisdiction must strictly keep in mind the statutory scheme of the A&C Act, and that the threshold for interference at an interim stage under Articles 226 and 227 is materially higher given the legislative expectation of minimal interference.

The Court noted that the High Court had failed to record any specific finding of perversity or patent lack of inherent jurisdiction in the Tribunal’s order, and had mechanically entertained the revision petition. The Court also observed that Respondent Nos. 1 to 3 had been parties to the earlier proceedings before this Court but had deliberately chosen not to contest or seek modification of the consent order, thereby rendering their subsequent challenge before the High Court an instance of needless multiplication of litigation, which the A&C Act was precisely intended to prevent.

Held:

The Supreme Court held that the High Court was not justified in entertaining the challenge under Article 227 of the Constitution of India and staying the arbitral proceedings. It held that the remedy against rejection of a Section 16 application lies strictly under Section 34 of the Act after the final award. Both impugned orders of the High Court were set aside and the revision petition was dismissed. However, the Court directed the Tribunal to independently determine the status of Respondent Nos. 1 to 3 as to whether they are bound by the arbitration agreement, uninfluenced by the Supreme Court’s observations, and to conclude the arbitration expeditiously.

The judgment is a significant reaffirmation of the legislative policy of minimal judicial intervention in arbitral proceedings, clarifying that the constitutional jurisdiction of the High Court under Article 227 of the Constitution of India, though not ousted by Section 5 of the A&C Act, is to be exercised with extreme circumspection in arbitral matters and only where the Tribunal's order suffers from a manifest jurisdictional defect that is apparent on the face of the record without the aid of argument; the judgment further reinforces that parties who fail to challenge or seek modification of a Supreme Court consent order cannot subsequently seek to derail arbitral proceedings through Article 227 petitions, as such conduct multiplies litigation and defeats the very purpose for which the A&C Act was enacted.

CIVIL LAW

Date: 21 July 2026

Case Name: Madan Mohan (through LRs) v. Thakar Dass (through LRs), Civil Appeal arising out of Special Leave Petition (Civil) No. 12435 of 2019

Forum: Supreme Court

The appellant i.e., kamla Devi, instituted eviction proceedings against the respondent-tenant under Section 13 of the East Punjab Urban Rent Restriction Act, 1949 (“the Act”), principally on the grounds of non-payment of rent and bona fide requirement of the tenanted shop for herself and her son, Madan Mohan. The landlord-tenant relationship and monthly rent of Rs. 112.50 were undisputed. The arrears of rent were subsequently tendered by the tenant and accepted.

The principal dispute, therefore, concerned the alleged bona fide requirement. The tenant contended that the requirement was illusory and that the appellant, being approximately 80 years old, had no genuine need to run a business. It was further alleged that another shop was available to the landlord’s family and that one of the three shops owned by them was lying vacant.

The Rent Controller, Nabha (“RA”), framed eight issues and returned findings substantially in favour of the landlord, including that the premises were bona fide required by the appellant, that they did not possess any other suitable non-residential premises within Nabha, and that no other non-residential premises had been vacated by them after the commencement of the Act. The eviction petition was accordingly allowed.

The Appellate Authority, Patiala (“AA”), affirmed the order of the RA. Although the appellant’s personal requirement ceased to survive upon her death during the proceedings, the AA held that the requirement asserted on behalf of Madan Mohan continued to subsist and was sufficient to sustain the eviction order.

The High Court of Punjab and Haryana, exercising revisional jurisdiction under Section 115 of the Code of Civil Procedure, 1908 (“CPC”), reversed the concurrent findings by judgment dated 06 August 2018. It held that the appellant had concealed the existence of a third shop and had not approached the Court with clean hands. According to the High Court, the RA and AA had misread the evidence regarding the use of the third shop.

Issues:

1. Whether the landlord had established a bona fide requirement of the tenanted premises within the meaning of the Act?
2. Whether the High Court, while exercising limited revisional jurisdiction under Section 115 CPC, was justified in reappreciating the evidence and disturbing the concurrent findings of fact recorded by the RA and AA?

Submission of the Parties:

The appellant relied upon the concurrent findings of the RA and AA that the premises were genuinely required for the appellant. That appellants possessed no other non-residential premises within Nabha, and that they had not vacated any other non-residential premises after the commencement of the Act. It was contended, in substance, that the High Court had exceeded the narrow confines of Section 115 CPC by reassessing evidence and substituting its own factual conclusions for those concurrently recorded by the courts below.

The respondent-tenant’s case was that the alleged requirement was merely a pretext for eviction. Reliance was placed upon the appellant’s age, the alleged availability of another shop, and the fact that one of the other shops was being used by her son. It was contended that the existence of alternative accommodation had been concealed and that such suppression disentitled the landlord from relief.

Observations of the Court:

The Hon’ble Court first reiterated that rent control legislation is social welfare legislation intended to balance the competing interests of tenants and landlords. While protecting tenants from arbitrary eviction, such legislation cannot operate to unjustifiably curtail the legitimate right of a landlord to enjoy and utilise his property.

On bona fide requirement, the Court reaffirmed that the expression does not mean a mere desire or preference. The requirement must constitute a genuine, sincere and honest need, objectively assessed on the facts of each case. Relying upon Shiv Sarup Gupta v. Mahesh Chand Gupta (1999) 6 SCC 222 and Baldev Singh Bajwa v. Monish Saini (2005) 12 SCC 778, the Hon’ble Court held that once bona fide need is established on objective standards, the landlord’s choice of accommodation should ordinarily be respected and the Hon’ble Court should not substitute its own judgment for that of the landlord.

Applying these principles, the Hon’ble Court found the High Court’s reasoning regarding the third shop to be unsustainable. Both the RA and AA had found that the shop in question was being used for storing waste material. The High Court, while exercising revisional jurisdiction, could not simply substitute its own appreciation of the evidence for that of the courts below. The Hon’ble Court further noted that the requirement had, from the outset, been pleaded not only for Kamla Devi but also for Madan Mohan, whose requirement continued to survive.

The Court thereafter reiterated the restricted scope of Section 115 CPC. Relying upon Masjid Kacha Tank, Nahan v. Tuffail Mohammed 1991 Supp (2) SCC 270, Hindustan Petroleum Corpn. Ltd. v. Dilbahar Singh (2014) 9 SCC 78 and Ambadas Khanduji Shinde v. Ashok Sadashiv Mamurkar (2017) 14 SCC 132, the Court held that revisional jurisdiction cannot be equated with appellate jurisdiction. A High Court cannot reappreciate evidence or interfere with concurrent findings merely because another view of the evidence is possible. Interference is warranted only where the findings suffer from perversity, jurisdictional error, illegality or material procedural irregularity.

Held:

The Hon’ble Court held that the High Court had erred on both counts: first, in upsetting the concurrent findings regarding the landlord’s bona fide requirement, and second, in exceeding the permissible limits of revisional jurisdiction under Section 115 CPC.

Accordingly, the Hon’ble Court set aside the High Court’s judgment dated 06 August 2018, restored the concurrent orders of the RA and AA, and directed the respondent-tenant to hand over vacant and peaceful possession of the tenanted shop to the appellants within two months. The appeal was accordingly allowed.

The judgment is significant for reaffirming two important principles of rent jurisprudence. First, bona fide requirement must be assessed on the basis of a genuine and objectively established need, while respecting the landlord's legitimate choice of premises once such need is established. Second, Section 115 CPC confers a narrowly circumscribed revisional jurisdiction and does not permit the High Court to function as a second appellate court by reappreciating evidence or disturbing concurrent findings of fact in the absence of perversity, jurisdictional error or material illegality.

The decision thus reinforces the statutory balance between tenant protection and the landlord's legitimate right to possess and utilise his property, while simultaneously underscoring the jurisdictional discipline required when exercising revisional powers.

CRIMINAL LAW

Date: 01 July 2026

Case Name: Shaurya Sunil Kumar Singh v. Central Bureau of Investigation, (@ Special Leave Petition (Crl.) No. 4333 of 2026)

Forum:Supreme Court

The present appeal arose from an FIR registered by the CBI, Mumbai, wherein a sophisticated cybercrime network involving digital impersonation, forged KYC documents, and the operation of mule bank accounts had been uncovered. The FIR implicated, inter alia, one Sudhir Palande, who used the account of M/s SP Cargo and Courier Services Pvt. Ltd. as a mule account to receive and transfer proceeds of cybercrime. The Appellant, Shaurya Sunil Kumar Singh, was alleged to have provided logistical support to the principal accused by transporting cheque books, ATM cards, and SIM cards, facilitating payments, andwas found in possession of the mobile phones allegedly used for the transfers. An amount of Rs. 3.81 crores was transferred into the mule account on 2 July 2025.

The Appellant was taken into custody on 13 July 2025 and was placed in police custody, subsequently remanded to judicial custody on 20 July 2025. A chargesheet was filed by the prosecution on 2 September 2025 under Sections 61(2), 318, 319, 336, and 340 of the Bharatiya Nyaya Sanhita, 2023 and Sections 66 and 66D of the Information Technology Act, 2000, within the statutory period. A copy of the chargesheet was supplied to the Appellant on 23 September 2025.

The Appellant contended that the chargesheet filed on 02 September 2025 was accompanied by the main report but was not filed along with additional copies as mandated by Section 193(8) of the Bharatiya Nagarik Suraksha Sanhita, 2023 (“BNSS”), and that a copy thereof was not supplied to him within the prescribed period. Accordingly, the Appellant filed an application for default bail under Section 187(3) of the BNSS on 17 September 2025, asserting that he had become entitled to default bail on 11 September 2025. The Special Judge, CBI dismissed the application on 25 September 2025. The High Court of Judicature at Bombay affirmed this dismissal.

Issue:

Whether the filing of a chargesheet without the additional copies required under Section 193(8) of the BNSS would entitle the accused to default bail under Section 187(3) of the BNSS?

Submission of the Parties:

The Appellant submitted that the requirement to file additional copies of the chargesheet along with supporting documents under Section 193(8) of the BNSS is mandatory in nature, as fortified by Section 230 of the BNSS which prescribes a fourteen-day timeline for supply of the chargesheet to the accused. The Appellant urged that non-compliance with Section 193(8) is of the same legal consequence as non-filing of the chargesheet itself, thereby triggering the indefeasible right to default bail under Section 187(3) of the BNSS.

Per contra, the CBI submitted that this Court has consistently held that the right to statutory default bail is available only when the chargesheet is not filed within the period of sixty or ninety days, as prescribed. Once the chargesheet is filed in compliance with the prescribed form within the statutory period, the right to default bail is extinguished. A copy of the chargesheet was supplied within three days of the appellant’s appearance before the Magistrate and delivered on 23.09.2025, in compliance with Section 230 of the BNSS.

Observations of the Court:

The Supreme Court undertook a detailed comparative analysis of the provisions governing default bail under Section 167(2) of the Code of Criminal Procedure, 1973 (“CrPC”) and Section 187(3) of the BNSS, and the provisions governing a chargesheet under Section 173 of the CrPC and Section 193 of the BNSS. The Court noted that while both the CrPC and the BNSS are substantially similar on default bail, Section 193(8) of the BNSS introduces an additional requirement that the investigating officer must submit such number of copies of the police report, along with other documents, to the Magistrate for supply to the accused under Section 230 of the BNSS.

The Court enumerated five well-settled principles governing default bail: (a) the right to default bail is an indefeasible right flowing from Article 21 of the Constitution; (b) it is not a release on merits but on the failure to file chargesheet within the prescribed period; (c) the right ceases upon filing of the chargesheet within time; (d) its object is to ensure expeditious investigation; and (e) an application for default bail may be made orally and courts cannot be overly technical in matters of personal liberty.

The Hon’ble Court, relying on Judgebir Singh v. NIA (2023) 17 SCC 48, reiterated that the benefit of default bail is available only when the chargesheet is not filed, and that non-filing of all documents relied upon by the prosecution along with the chargesheet does not invalidate or vitiate the chargesheet itself. It further relied on CBI v. R.S. Pai (2002) 5 SCC 82, where this Court had held that the word “shall” in the provision requiring supporting documents to be forwarded along with the police report is to be construed as directory and not mandatory. This position was further affirmed in Narendra Kumar Amin v. CBI (2015) 3 SCC 417.

Held:

The Hon’ble Court held that the non-filing of additional copies of the chargesheet under Section 193(8) of the BNSS does not vitiate the chargesheet itself, and cannot be construed to produce the same legal consequence as non-filing of the chargesheet under Section 187(3) of the BNSS. As the chargesheet was duly filed in compliance with Section 193(3) of the BNSS within the statutory period on 02 September 2025, the Appellant’s right to default bail stood extinguished on that date. The Courts below were held to have rightly rejected the application. The appeal was accordingly dismissed, with a direction that the Appellant’s pending regular bail application be considered on its own merits, independent of the observations in the present appeal.

The judgment is a significant clarification of the law on default bail under the newly enacted BNSS. By holding that non-compliance with Section 193(8) does not invalidate a chargesheet or entitle an accused to default bail, the Court effectively treated the requirement as directory rather than mandatory, the Court draws a clear distinction between the act of filing a chargesheet (which is mandatory for stopping the clock on default bail) and compliance with ancillary procedural formalities such as filing of supporting copies (which, though required, do not have a bearing on the right to default bail). The judgment reaffirms the inviolability of the default bail right under Article 21 while simultaneously ensuring that the right is not diluted or expanded beyond its legislative purpose to encompass procedural non-compliances that do not touch upon the substantive act of filing the chargesheet.

Date: 23 July 2026

Case Name: State of Meghalaya v. Sonam Raghuvanshi Criminal Appeal of 2026 arising out of SLP (Crl.) No. 11944 of 2026

Forum: Supreme Court

The appellant i.e., State of Meghalaya challenged the orders granting bail to the respondent i.e., Sonam Raghuvanshi in connection with FIR No. 7/2025, registered at Police Station Sohra, East Khasi Hills, for offences under Sections 103(1), 238(a), 309(6) and 3(6) of the Bharatiya Nyaya Sanhita, 2023 (“BNS”). The prosecution alleged that, during a honeymoon trip to Meghalaya, the respondent, in conspiracy with co-accused persons, was involved in the murder of her husband, whose body was subsequently recovered from a gorge.

The respondent was arrested on 09 June 2025 after surrendering before the police in Uttar Pradesh. The grounds of arrest were supplied to her on the same day, along with the relevant documents. Although the grounds incorrectly referred to Section 403(1) instead of Section 103(1) BNS, the Judicial Magistrate, while remanding the respondent to custody on 11 June 2025, recorded that the accused persons were aware of the reasons and grounds of their arrest and that the respondent had been informed of her right to legal aid.

Three successive bail applications filed by the respondent were rejected on merits. Thereafter, a fourth bail application was filed principally on the ground that the mandatory requirement of communicating the grounds of arrest had not been complied with. The Trial Court accepted the contention and granted bail, which was affirmed by the High Court of Meghalaya. The appellant consequently approached the Hon’ble Supreme Court.

Issues:

1. Whether the respondent had been duly furnished the grounds of arrest and whether the alleged deficiencies therein vitiated her arrest?
2. Whether the plea regarding non-compliance with the requirement of furnishing grounds of arrest could be raised for the first time in a subsequent bail application after earlier applications had been rejected on merits?
3. The applicability of Mihir Rajesh Shah v. State of Maharashtra (2026) 1 SCC 500, to an arrest effected prior to that judgment?
4. Whether the respondent’s continued enlargement on bail was justified when the trial had commenced and earlier bail applications had been rejected on merits?

Submission of the Parties:

The appellant, contended that Mihir Rajesh Shah (supra) operated prospectively and could not govern an arrest made prior to its pronouncement. It was submitted that the respondent had in fact been furnished the grounds of arrest and relevant documents, and that the remand order expressly recorded her awareness of the reasons for arrest. The State further argued that the plea had been raised belatedly in the fourth bail application, despite three earlier applications having been rejected on merits. Given the gravity of the allegations and commencement of trial, it was urged that the bail order be set aside.

Per Contra, the respondent submitted that the document furnished to the respondent was merely a mechanically prepared format which failed to communicate the actual reasons for arrest and incorrectly cited the penal provision. It was contended that compliance with Article 22(1) is a constitutional requirement, non-compliance with which goes to the root of the arrest and cannot be waived or defeated by delay. On merits, it was submitted that the prosecution had yet to establish the allegations against the respondent.

Observations of the Court:

The Supreme Court drew a material distinction between non-service of grounds of arrest and inadequacy or insufficiency of the reasons contained in the grounds of arrest. The Hon’ble Court held:

“There is a fundamental difference between non-service of grounds of arrest and non-furnishing of adequate reasons thereunder.”

According to the Hon’ble Court, while complete non-service may vitiate the arrest, inadequacy in the reasons furnished requires examination of the prejudice caused to the accused.

On the facts, the Hon’ble Court found that the respondent had been furnished the grounds of arrest and relevant documents. The incorrect reference to Section 403(1) BNS instead of Section 103(1) BNS was treated as an apparent typographical error. Significantly, the remand order expressly recorded that the accused persons were aware of the reasons and grounds of their arrest. The Court therefore found no demonstrated prejudice sufficient to invalidate the arrest.

The Court also rejected the attempt to resurrect the issue in the fourth bail application. It held that although the stage at which a plea is raised may, in appropriate circumstances, not be decisive, the position is different where an accused has previously invoked the jurisdiction of the Hon’ble Court for bail and obtained findings on merits. Having unsuccessfully pursued three bail applications on merits, the respondent could not subsequently seek to reopen the matter by raising the grounds-of-arrest issue as an afterthought.

The Hon’ble Court further noted that Mihir Rajesh Shah (supra) had introduced the requirement of furnishing grounds of arrest as judge-made law and had been applied prospectively. Since the respondent’s arrest preceded that judgment, its mandate could not be mechanically applied to the present case.

The Hon’ble Court additionally observed that even where an arrest is held invalid for non-compliance with the requirement of furnishing grounds of arrest, such invalidity does not, by itself, create an absolute bar against the investigating agency subsequently effecting a lawful re-arrest.

Finally, while reiterating that bail is the rule and jail is an exception, the Hon’ble Court considered the peculiar circumstances of the case, particularly that the respondent’s earlier bail applications had been rejected on merits and that the trial had already commenced. It held that her continued enlargement on bail at that stage could impede the progress of the trial.

Held:

The Hon’ble Supreme Court held that the respondent had, in substance, been furnished the grounds of arrest and that the alleged deficiencies therein did not establish such prejudice as would vitiate her arrest. The plea raised in the fourth bail application could not, in the circumstances, be permitted to reopen issues already considered in the earlier bail proceedings.

The Hon’ble Court further held that the High Court and Trial Court had erred in granting bail on the basis of the grounds urged by the respondent. Given the commencement of trial and the earlier rejection of bail on merits, continued enlargement of the respondent on bail was not warranted.

Accordingly, the Supreme Court allowed the appeal, set aside the High Court’s order dated 29 June 2026 and the Trial Court’s order dated 27 April 2026, and directed the respondent to surrender within three weeks. At the same time, recognising the principle that an accused should not remain incarcerated indefinitely, the Hon’ble Court granted liberty to the respondent to seek fresh bail if the trial was not concluded within six months.

The judgment is significant in distinguishing non-service of grounds of arrest, which may vitiate the arrest, from defective or inadequate communication, where prejudice must be demonstrated. It further holds that such a plea cannot ordinarily be resurrected after successive bail applications have been rejected on merits, while reaffirming the prospective application of judge-made procedural safeguards. The judgment thus balances constitutional protections of personal liberty with the need to ensure orderly and expeditious criminal trials.

INSOLVENCY & BANKRUPTCY LAW

Date: 27 July 2026

Case Name: Tejas J. Shah & Amisha T. Shah and Others v. Mantri Technology Constellations Pvt. Ltd. and Others, Civil Appeal Nos. 4289-4290 of 2025

Forum: Supreme Court

The Appellants are homebuyers who had booked residential apartments in the project “Mantri Manyata Energia”, being developed by Respondent No. 1, Mantri Technology Constellations Pvt. Ltd. Pursuant to agreements executed in 2016, possession of the apartments was to be delivered by 31 December 2018. Despite substantial payments and repeated assurances, possession was not delivered within the stipulated period.

The Appellants, along with other homebuyers, instituted a consumer complaint before the National Consumer Disputes Redressal Commission (“NCDRC”) against Respondent Nos. 1 to 7, comprising the developer company, an associated company, the promoters/directors, and the landowners. During the pendency of the consumer complaint, the National Company Law Tribunal, Bengaluru Bench, admitted an application under Section 9 of the Insolvency and Bankruptcy Code, 2016 (“IBC”) against Respondent No. 1 on 23 August 2024, initiating the Corporate Insolvency Resolution Process (“CIRP”) and consequentially imposing a moratorium under Section 14 of the IBC against Respondent No. 1.

The Appellants thereafter filed interlocutory applications before the NCDRC seeking that the consumer complaint be proceeded with against Respondent Nos. 2 to 7, notwithstanding the moratorium operating against Respondent No. 1. The NCDRC rejected these applications, holding that the liability arising from the deficiency in service had yet to be determined, but that since all agreements were entered into between the Appellants and Respondent No. 1, the proceedings could not be bifurcated to continue against the remaining respondents. The NCDRC accordingly adjourned the consumer complaint sine die.

Issue:

Whether the NCDRC was justified in refusing to proceed with the consumer complaint against Respondent Nos. 2 to 7 i.e., promoters, directors, associated company, and landowners, solely on account of the moratorium imposed under Section 14 of the IBC against Respondent No. 1, the corporate debtor?

Submission of the Parties:

The Appellants submitted that the moratorium under Section 14 of the IBC operates only against the corporate debtor and cannot be extended to non-corporate debtor respondents. As no independent moratorium or legal bar operated in favour of Respondent Nos. 2 to 7, the consumer complaint ought to be proceeded with against them. The Appellants further contended that the NCDRC had erred in prejudging the merits of the complaint by prematurely concluding that the deficiency was attributable only to Respondent No. 1.

Per contra, the Respondents (particularly Respondent Nos. 2 to 7) raised objections including absence of privity of contract, maintainability of the complaint, and the absence of any independent obligation under the agreements, and contended that the liability having arisen under agreements exclusively with Respondent No. 1, no proceedings could be split and continued against the remaining respondents.

Observations of the Court:

The Supreme Court commenced its analysis with a plain reading of Section 14 of the IBC. It observed that the moratorium, upon initiation of CIRP, operates only against the corporate debtor and that neither the statute nor any other authority extends its protective sweep to subsidiaries, directors, promoters, or personal guarantors unless specifically provided. The Court cited its earlier decisions in P. Mohanraj v. Shah Brothers Ispat Pvt. Ltd., (2021) 6 SCC 258, and Ansal Crown Heights Flat Buyers Association v. Ansal Crown Infrabuild Pvt. Ltd., (2024) 5 SCC 745, which had clearly held that a moratorium against the corporate debtor does not shield its promoters and directors and that proceedings can continue against them.

The Court further relied on Saranga Anilkumar Aggarwal v. Bhavesh Dhirajlal Sheth, 2025 INSC 314, observing that the protective sweep of a moratorium must remain within the four walls carved out by the statute and must not be expanded in a manner that stultifies remedies available under the Consumer Protection Act, unless expressly provided. The object of the IBC is to facilitate the resolution process, and not to eclipse statutory remedies available against non-corporate debtor respondents.

The Court found the NCDRC’s approach to be fundamentally erroneous in two respects. First, the NCDRC had effectively foreclosed inquiry into the liability of Respondent Nos. 2 to 7 at the interlocutory stage itself, even while acknowledging that such liability was yet to be determined. This constituted a contradictory and impermissible approach, having observed that the liability arising from deficiency in service was yet to be determined, the NCDRC could not simultaneously conclude that such deficiency was attributable only to Respondent No. 1. Second, the question before the NCDRC at the interlocutory stage was not whether Respondent Nos. 2 to 7 were ultimately liable, but whether, in the absence of any statutory bar against continuation of proceedings against them, the consumer complaint could proceed.

Held:

The Supreme Court set aside the impugned order of the NCDRC and partly allowed the interlocutory applications filed by the Appellants. It directed the NCDRC to proceed to hear Consumer Complaint No. 13 of 2023 insofar as Respondent Nos. 2 to 7 are concerned and to adjudicate the complaint in accordance with law. Proceedings against Respondent No. 1 (the corporate debtor) shall continue to remain governed by the moratorium under Section 14 of the IBC. The Court declined to express any opinion on the merits of the rival contentions raised by Respondent Nos. 2 to 7, including privity of contract, maintainability, and independent obligations, leaving those for the NCDRC to adjudicate.

The judgment reaffirms the settled position that the moratorium under Section 14 of the IBC is a limited statutory protection available only to the corporate debtor and cannot be construed to create an umbrella of immunity for promoters, directors, associated companies, and landowners involved in a composite consumer dispute. It further clarifies that adjudicating authorities must not foreclose questions of liability of non-corporate debtor respondents at the interlocutory stage, as such determination requires full adjudication on merits, and that the legitimate remedies of homebuyers under the Consumer Protection Act cannot be eclipsed by the commencement of CIRP against the developer entity.

WHITE COLLAR CRIMES

Date: 14 July 2026

Case Name: Amit Katyal v. Union of India & Anr., Writ Petition (Crl.) No. 57 of 2026

Forum: Supreme Court

The Petitioner, Amit Katyal, was a promoter of M/s Krrish Realtech Pvt. Ltd. (“Krrish”), which was developing a real estate project titled “Krrish World” in Gurugram. Multiple criminal cases were registered against Krrish, its group companies, and directors, including the Petitioner alleging cheating of homebuyers. On the basis of six such scheduled offences, an Enforcement Case Information Report (“ECIR”) bearing No. ECIR/GNZO/04/2023 dated 3 March 2023 was registered by the Directorate of Enforcement (“ED”) under the Prevention of Money Laundering Act, 2002 (“PMLA”).

The Petitioner had originally sought quashing of the Prosecution Complaint No. COMA/16/2025 dated 28 July 2025 arising out of the said ECIR, which was pending before the Special Judge, PMLA, Gurugram, Haryana. However, during arguments, the prayer was restricted to seeking transfer of the PMLA case from Gurugram to the Special Court under PMLA at Delhi.

The prosecution complaint revealed that during investigation, further evidence disclosed that directors and promoters of Krrish and its sister concerns had cheated investors and homebuyers in respect of various projects, including through a new scheduled offence registered as FIR No. 439/2024 dated 21 December 2024 by the Economic Offences Wing, Gurugram Police. Critically, the prosecution complaint alleged that the Petitioner duped Rs. 503 crores from innocent homebuyers through dishonest representations regarding 466 residential plots in a 151.57-acre project at Gurugram, and that these proceeds were diverted through multiple group companies and a shell company namely M/s Mahadev Infratech Pvt. Ltd. which siphoned approximately Rs. 205 crores to a Sri Lankan subsidiary.

The Petitioner submitted that a Coordinate Bench of this Court had clubbed FIR No. 439/2024 with an earlier FIR No. 30/2019, and transferred the former to Delhi. On this basis, transfer of the PMLA prosecution to Delhi was sought, so as to align the PMLA proceedings with the scheduled offences pending at Delhi.

Issues:

1. Whether the PMLA prosecution complaint filed at Gurugram was validly within the jurisdiction of the Special Court at Gurugram?
2. Whether the PMLA case should be transferred to the Special Court under PMLA at Delhi, given the transfer of the scheduled offence (FIR No. 439/2024) to Delhi?
3. Whether the simultaneous jurisdiction of PMLA Courts at Delhi and Gurugram over parts of the offence warranted transfer for the ends of justice, including the mandate under Section 44(1) of the PMLA that the PMLA offence and the scheduled offence be tried by the same Special Court?

Submission of the Parties:

The Petitioner, through Senior Counsel Mr. Kapil Sibal, submitted that since the scheduled offence (FIR No. 439/2024) had already been transferred to Delhi by a Coordinate Bench, it would be incongruent and contrary to the statutory mandate under Section 44(1) of the PMLA for the PMLA prosecution to remain at Gurugram. He urged that the PMLA case ought also to be transferred to Delhi so that the PMLA proceedings are tried alongside the scheduled offence in accordance with Section 44(1) of the PMLA.

Per contra, the learned ASG for the Respondents argued that the prosecution was rightly filed at Gurugram, as the homebuyers were duped and the “proceeds of crime” were acquired at Gurugram where the project was situated, with vast tracts of land constituting proceeds of crime having been attached in Gurugram. Relying on KA Rauf Sherif v. Directorate of Enforcement, (2023) 6 SCC 92, the Respondents opposed the prayer for transfer, which in that case had been denied on grounds of jurisdiction, convenience, and remand of the accused.

Observations of the Court:

The Supreme Court set out the elements constituting the offence of money laundering under the PMLA, the derivation or obtaining of proceeds of crime from criminal activity; their concealment, possession, acquisition, or use; and their projection or claim as untainted property. It noted that Section 44 of the PMLA provides that offences under the PMLA and any connected scheduled offence are triable by the Special Court constituted for the area in which the offence has been committed, while Section 178(d) of the CrPC (as applicable under Section 46 of the PMLA) permits trial before a Court having jurisdiction over any one of multiple local areas if the offence consists of several acts done in different areas.

The Court acknowledged the uncontroverted allegations that the homebuyers were duped and the proceeds of crime were acquired at Gurugram, and that vast tracts of land in Gurugram had been attached as proceeds of crime. It therefore held that the institution of the PMLA prosecution at Gurugram could not be faulted. However, the Court distinguished the present case from KA Rauf Sherif (supra), observing that part of the offence, specifically the concealment of proceeds of crime, had also occurred at Delhi, where cash, jewellery, vehicles, and fixed deposits of the Petitioner had been seized/attached. Furthermore, the scheduled offence (FIR No. 439/2024) itself had been transferred to and clubbed with proceedings at Delhi.

Held:

The Supreme Court held that since part of the PMLA offence had occurred in Delhi i.e. by way of concealment of proceeds of crime attached at Delhi, there was simultaneous jurisdiction vested in the PMLA Courts at both Delhi and Gurugram. In order to give effect to the statutory mandate under Section 44(1) of the PMLA, which requires that both the PMLA offence and the scheduled offence be tried by the same Special Court, and considering that the scheduled offence had already been transferred to Delhi, it was found expedient for the ends of justice to transfer the PMLA proceeding to the Special Court (PMLA) at Delhi. Accordingly, the PMLA proceedings pending before the Special Judge, PMLA, Gurugram were directed to be transferred to the Special Judge, PMLA, Saket Court Complex, Delhi, to proceed from the stage at which they were presently pending.

The judgment clarifies the principles governing territorial jurisdiction in PMLA prosecutions where different components of the alleged offence occur across multiple jurisdictions. It reaffirms the principle, drawn from Rana Ayyub v. Directorate of Enforcement (2023) 4 SCC 357, that the PMLA prosecution may be instituted before any Special Court having territorial jurisdiction over any place where the proceeds of crime are derived, obtained, concealed, possessed, acquired, used, or projected as untainted property. Critically, the judgment clarifies that when a scheduled offence is transferred to another jurisdiction, the mandate under Section 44(1) of the PMLA, requiring joint trial of the PMLA offence and the scheduled offence, may justify transfer of the PMLA prosecution to align both proceedings, thereby ensuring coherent, consolidated adjudication and avoiding the inconvenience and potential inconsistency of bifurcated trials in money-laundering matters.

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