Supreme Court Observer Law Reports (SCO.LR)

The Supreme Court held that excluding the creamy layer from Other Backward Classes is a constitutional imperative to ensure that reservation benefits reach the genuinely backward sections. It further held that creating artificial distinctions between similarly placed government and Public Sector Undertaking (PSU) employees for this determination violates the equality mandate under Article 14.

Several candidates who cleared the Civil Services Examination were denied OBC reservation benefits because their parents were PSU employees. The government relied on a 2004 letter, which counted salary income of PSU employees when determining whether their posts were equivalent to government posts. This position contradicted the 1993 Office Memorandum, which explicitly excluded salary from the income test for determining creamy layer status. The candidates secured favourable rulings from various High Courts, prompting the Union’s appeals.

The Supreme Court dismissed the appeals, ruling that the 2004 letter cannot override the substantive framework laid down in the 1993 Office Memorandum. It directed authorities to reassess the candidates’ eligibility and create additional posts in excess of sanctioned strength to accommodate them.

The Supreme Court held that Clinically Assisted Nutrition and Hydration (CANH) is a “medical treatment” as opposed to primary care. Doctors may exercise clinical judgement to determine if CANH treatment can be withheld for the purpose of passive euthanasia.

A fall had left Harish Rana in a permanent vegetative state for 13 years. His plea for passive euthanasia was dismissed by the Delhi High Court in 2024. The same year, the Supreme Court upheld the High Court’s decision that withholding CANH treatment through PEG tubes would result in Rana starving to death. In a miscellaneous application, filed in 2025, Rana’s parents sought a declaration that CANH should be classified as “medical treatment” for the purpose of passive euthanasia.

The Court permitted Rana’s plea for passive euthanasia, holding that it would be in his “best interest” to withhold or withdraw CANH. It held that administering CANH requires clinical judgement and routine checks from medical professionals. It is not on the same level as spoon or oral feeding. The Court observed that Rana’s medical condition was irreversible and that continued CANH treatment was not improving it.

The Supreme Court held that the State has an obligation under Article 21 to ensure a mechanism of redressal for affected families when a grave harm is alleged to have occurred in the course of a State-led public health intervention. It observed that the absence of a structured framework to address adverse events following immunisation (AEFI) raises constitutional concerns.

A writ petition was instituted before the Supreme Court by parents of young individuals who had received COVID-19 vaccination and are stated to have died thereafter. The petition sought constitution of an independent expert medical board to inquire into such deaths, formulation of protocols for early detection and treatment of AEFI, and grant of compensation. The petition was taken as the lead case along with appeals against the Kerala High Court’s interim directions for formulation of a policy on AEFI cases by the Ministry of Health and Family Welfare and the National Disaster Management Authority.

The Court held that Article 21 is not limited to protection against unlawful deprivation of life but includes a wide range of rights, including the right to health and bodily integrity. Asserting that the State bears a positive obligation to safeguard the health of its people, it clarified that questions of causality between vaccination and deaths involve complex scientific assessment and are best left to domain experts. The Court directed the Union of India, through the Ministry of Health and Family Welfare, to expeditiously formulate and place in the public domain an appropriate no-fault compensation framework for serious adverse events following COVID-19 vaccination.

The Supreme Court held that the conduct of parties is significant in determining their bona fide intent at the time of executing an agreement in a suit for specific performance. It observed that “even a slight doubt” regarding the plaintiff’s manner or possibility of material facts being withheld could result in denial of equitable and discretionary relief.

The plaintiff filed a suit for specific performance of an agreement of sale dated 4 June 2002 for a total sale consideration of ₹13 lakhs. The defendants received ₹6 lakhs as advance and as per the agreement, the remaining amount was to be paid within 11 months. The defendants contended that the advance was in fact a hand loan with the agreement of sale executed as security. They relied on a Memorandum of Understanding (MoU) dated 4 June 2002 which stated that upon return of the advance amount within 12 months, the plaintiff would cancel the registered agreement and return the original title deeds. When the Trial Court decreed the suit in the plaintiff’s favour, the defendants appealed to the High Court. The High Court dismissed the suit and held that the agreement of sale appeared to be a sham and nominal document.

The Supreme Court noted that the MoU was executed on the same day as the agreement of sale. It found that both the MoU and the No Objection letter from the defendant’s son were executed on non-judicial stamp paper purchased from the same stamp vendor on the same date. The witnesses to both the documents were also the same. The Court observed that these circumstances made out a very strong case that the agreement of sale was a nominal document executed as security for a loan transaction. Holding that the plaintiff approached the Court with unclean hands, it dismissed the appeal.

The Supreme Court held that a valuation report is not mandatory for reduction of share capital under Section 66 of the Companies Act, 2013.

The respondent, Bharti Telecom, decided to reduce its share capital under Section 66 of the Companies Act by cancelling equity shares held by its minority shareholders. The minority shareholders approached the National Company Law Appellate Tribunal (NCLAT) arguing that the reduction in the value per share was mala fide since the valuation of the company was conducted by an internal auditor–an interested party. Further, they alleged that the company failed to disclose the valuation report to the shareholders. The appellants approached the Supreme Court after the NCLAT dismissed the plea.

The Supreme Court rejected the appeals. It held that a valuation report under Section 66 is not a statutory requirement and that reduction of share capital can be achieved through a special resolution approved by shareholders and confirmed by the tribunal. The Court further observed that non-disclosure or mis-disclosure of a valuation report does not invalidate the reduction process under Section 66 of the Act.

The Supreme Court held that under Section 133 of the Indian Contract Act, 1872, a surety is discharged only for transactions made after a variance is made to the contract without the surety’s consent. It observed that the liability of the surety continues for the amount originally guaranteed and for transactions prior to such variance.

Bhagyalaxmi Co-operative Bank granted a cash credit facility of ₹4 lakh to Darshak Trading Company. Babaldas Amtharam Patel and another stood as sureties for the loan. When the borrower defaulted, the Bank filed a suit before the Board of Nominees for recovery with interest. The Board decreed the claim only against the borrower and dismissed the suit against the sureties. On appeal, the Gujarat State Co-operative Tribunal held the sureties liable for ₹4 lakh with interest. The Gujarat High Court set aside the Tribunal’s order holding that the sureties would either be liable for the entire loan amount or not at all.

The Supreme Court held that permitting the borrower to withdraw amounts in excess of the sanctioned limit constituted a variance in the terms of the contract between the creditor and the principal debtor. It noted that sureties will not be liable for the excess amounts withdrawn beyond the sanctioned limits. The Court set aside the High Court decision and observed that the sureties are liable only to the extent of ₹4 lakh with interest, the amount for which they had agreed to stand as guarantors.

The Supreme Court held that cancellation of coal block allocation pursuant to its decision in Manohar Lal Sharma v Principal Secretary (2014) amounts to a “change in law”. While granting compensation on this ground, it clarified that procurements made prior to the change in law will not be covered.

A power purchase agreement between the parties included a “change in law” clause. This provided compensation to restore the affected party to the same economic position as if the “change in law” had never occurred. The respondent’s coal block in Ganeshpur, Jharkhand, stood cancelled after the Manohar Lal Sharma decision. Their bid to secure coal block allocation also failed after the Coal Mines (Special Provision) Act, 2015 came into force. The Central Electricity Regulatory Commission granted compensation only to meet the shortfall incurred prior to the change, due to non-operationalisation of the Ganeshpur coal block. It held that the cancellation did not amount to a “change in law”. The Appellate Tribunal for Electricity (APTEL) awarded compensation on both grounds of non-operationalisation and change in law.

The Supreme Court set aside the APTEL order to the extent that it granted compensation to meet the shortfall pending operationalisation. It held that the cancellation and change in allocation of coal blocks did amount to a change in law, giving rise to grounds for compensation for losses incurred post 2014. The Court found that although the source of coal was not stipulated in the agreement, the conclusion that “captive coal block” referred to the one in Ganeshpur was “irresistable” from surrounding correspondence. It clarified that the immunity extended to the appellant in case of escalation in coal price due to procurement from alternative sources was not applicable in case of change in law.

The Supreme Court held that pending proceedings with respect to Scheme of Arrangement (SOA) under the Companies Act, 2013 cannot bar the initiation of Corporate Insolvency Resolution Proceedings (CIRP) under the Insolvency and Bankruptcy Code (IBC) 2016.

The appellant–a financial creditor, instituted proceedings against the respondent–a corporate debtor, under Section 7 of IBC for the recovery of a default since 2003 in the Company Law Tribunal. The respondents resisted the claim, submitting that proceedings related to SOA are pending before the Punjab and Haryana High Court. The Tribunal rejected this submission, concluding that the SOA was defunct due to gross delay and allowed the IBC proceedings to resume. On appeal, the Company Law Appellate Tribunal put the IBC proceedings on hold pending disposal of proceedings at the Punjab and Haryana High Court. The appellant approached the Supreme Court.

The Supreme Court held that a Section 7 insolvency proceeding is independent and remains unaffected by other pending legal proceedings as the IBC has an overriding effect. It clarified that in cases of conflict between proceedings, the IBC prevails over the Companies Act.

The Supreme Court held that permission granted to licensees to continue operations on quashed 2G licenses was in the interest of the general public and not to benefit the licensees.

On 2 February 2012, the Supreme Court declared the allotment of 2G spectrum illegal in Centre for Public Interest Litigation v Union of India (CPIL). The Court permitted licensees to continue operations for four months pending a new auction. The Department of Telecommunications (DoT) requested several extensions, and the auction eventually took place in November 2012. However, no bids were received. On 15 February 2013, the Supreme Court ruled that all licensees operating after CPIL must pay the government-fixed reserve price, regardless of their auction participation. The DoT then directed the respondent to pay within 15 days. On appeal, the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) held that the payment obligation began only on 15 February 2013. The respondent subsequently paid a revised amount to the DoT.

The Supreme Court set aside the TDSAT judgment, ruling that the payment obligation began on 2 February 2012. It held that the operators received a “lease of life” despite the quashing of their licenses.

The Supreme Court held that writ courts must not resort to repetitive orders that postpone effective relief by using phrases such as “consider” or “reconsider”. Courts should decide rights through clear and enforceable directions.

In 2000, the Uttar Pradesh government stopped financial assistance to non-aided colleges. The respondents, appointed as private college lecturers in 1993, challenged the policy. They sought sanctioned posts and salaries from the state. The Allahabad High Court remitted the matter to the Director of Education on three occasions (2010, 2013 and 2023). It refrained from stating whether the lecturers had a legal entitlement to claim financial aid. The respondents filed contempt applications against the authorities. Meanwhile, the department rejected their claim. The government reiterated the policy in May 2025.

The Supreme Court held that a relief must follow claims of rights that are legal and justified. It observed that if the High Court had been clear about the existence of a right, the government would have had to comply, appeal or face contempt. The Court stated that the “consider jurisprudence” pattern is counterproductive and keeps litigation alive without resolving the controversy. It directed the lecturers to challenge the May 2025 Order and directed the High Court to adjudicate on their challenge in a clear and categorical manner. It barred any further remand to the authorities.