SCO.LR | Volume 12 | Issue 3

Volume 12 Issue 3 of the Supreme Court Observer Law Reports (SCO.LR) is here with five important judgements delivered by the Supreme Court last week. 

In this Issue, we look at verdicts which cover key important issues, including judicial review of economic policy decisions, the applicability of Article 21 while granting bail in national security matters, the scope of deduction under the Income Tax Act, the limits of ICC jurisdiction in POSH cases and compassionate appointments. 

As always, our SCO.LR page has all the judgements in a clean, readable format. Use our assistive mindmaps and hyperlinking features to streamline your legal research experience.

**********

The Supreme Court Observer Law Reports

SCO.LR | Volume 12 | Issue 3

8 December – 13 December 2025

**********

Judicial Review in Economic Policy Decisions

Akola Municipal Corporation v Zishan Hussain

8 December 2025

Citations: 2025 INSC 1398 | 2025 SCO.LR 12(3)[11]

Bench: Justices Vikram Nath and Sandeep Mehta 

The Supreme Court held that the powers of judicial review in public interest litigation cannot be invoked to interfere with economic policy decisions or reforms sought to be undertaken by the government. 

The Bombay High Court had quashed revised property tax rates imposed by the appellant corporation in a writ petition filed by the respondent. The respondent claimed that the revised tax rates were illegal and procedurally improper. The appellant corporation appealed to the Supreme Court and argued that revision of property taxes was within its jurisdiction, and the High Court cannot exercise judicial review and interfere in policy decisions.

The Supreme Court held that the High Court overstepped its bounds of judicial review by interfering with the economic policy decision of the corporation to increase property taxes. It held that the corporation was under a statutory obligation to revise taxes. Further, an interference in the economic policy is only valid if there is a clear violation of a constitutional or statutory provision.

Keywords/phrases: Property Tax–Municipal Corporation–Increase in property tax rates–Challenge preferred in the High Court–Judicial Review in PIL matter–Powers of judicial review cannot be used to determine economic policy. 

Read the Judgement here.

Mind map

*********

Grounds for Bail in National Security Cases

Central Bureau of Investigation v Dayamoy Mahato

11 December 2025

Citations: 2025 INSC 1418 | 2025 SCO.LR 12(3)[12]

Bench: Justices Sanjay Karol and N.K.Singh

The Supreme Court held that the right to liberty under Article 21 cannot be the sole ground of consideration for granting bail in cases where security or integrity of the nation is called into question. 

The case concerned the 2010 derailment of the Jnaneshwari Express which killed 148 people. The accused were charged for murder (Section 302) under the Indian Penal Code, 1860, terrorist acts (Section 16)  under Unlawful Activities (Protection) Act and many other provisions. They were accused of conspiring to damage the railway tracks to protest anti-Moist operations carried out by the Government in the region. The Calcutta High Court had granted bail to the accused in 2022 and 2023 citing prolonged incarceration. It also relied on Section 436-A of the Code of Criminal Procedure, 1973 (CrPC) which deals with the maximum period for which an undertrial prisoner can be detained. The Central Bureau of Investigation (CBI) filed appeals in the Supreme Court.  

The Supreme Court set aside the High Court judgements to the extent that they relied on an erroneous legal premise. It held that the High Court should not have extended the benefit of Section 436-A as it bars its application to offences carrying the punishment of death (Section 302 of IPC and Section 16 of UAPA). Further, the High Court’s reliance on Article 21 was fallacious. It did not cancel the bail of the accused noting that the CBI had failed to show that they had misused their liberty, tampered with witnesses or caused delays to trial. 

Keywords/phrases: Sections 16/18 of the Unlawful Activities (Prevention) Act, 1967–Sections 120B, 302, 207, 323, 325, 326, 440, 212 of the Indian Penal Code, 1860–Sections 150/151 of the Indian Railways Act, 1989–Section 436A of the Code of Criminal Procedure, 1973–inapplicable to offences punishable by death–High Court erred in granting bail to accused–Article 21 of the Constitution of India—porlonged incarceration as ground of bail—national security 

Read the Judgement here.

Mind map

*********

Scope of Deduction under Section 36(1)(viii) of the Income Tax Act

National Cooperative Development Corporation v Assistant Commissioner of Income Tax

10 December 2025

Citation: 2025 INSC 1414 | 2025 SCO.LR 12(3)[13]

Bench: Justices P.S. Narasimha and A.S. Chandurkar

The Supreme Court held that deduction under Section 36(1)(viii) of the Income Tax Act, 1961 is confined to profits derived from the business of providing long-term finance and excludes income lacking a direct nexus with that business.

The National Cooperative Development Corporation claimed deduction under Section 36(1)(viii) on dividend income from redeemable preference shares, interest earned on short-term bank deposits, and service charges received while acting as a nodal agency under the Sugar Development Fund. The Assessing Officer disallowed the claim, holding that the income was not derived from long-term finance. This view was affirmed by the Commissioner (Appeals), the Income Tax Appellate Tribunal as well as the Delhi High Court, which held that the expression “derived from” requires a direct link with the business of providing long-term finance.

The Supreme Court upheld the High Court’s decision while noting that after the Finance Act, 1995, Section 36(1)(viii) was amended to restrict the deduction to profits derived from long-term finance, defined as loans or advances repayable over a period of not less than five years. It observed that dividend income flows from shareholding, interest on short-term deposits from parking of funds and service charges from administrative functions, and therefore do not constitute profits derived from the business of providing long-term finance.

Keywords/phrases: Section 36(1)(viii) Income Tax Act, 1961–deduction for financial corporations–profits “derived from” long-term finance-effect of Finance Act, 1995–definition of long-term finance–dividend income from preference shares–interest on short-term bank deposits–service charges as nodal agency–direct nexus requirement–deduction disallowed

 Read the Judgement here. 

Mind map

*********

Limits of ICC Jurisdiction in POSH cases

Dr Sohail Malik v Union of India

12 December 2025

Citations: 2025 INSC 1415 | 2025 SCO.LR 12(3)[14]

Bench: Justices J.K. Maheshwari and Vijay Bishnoi

The Supreme Court held that complainants under the POSH Act 2013 can approach the Internal Complaints Committee (ICC) of their own workplace to lodge complaints against harassment by an employee of a different workplace. 

An aggrieved woman filed a complaint against the appellant before the ICC of her workplace. The ICC summoned the appellant, who challenged its jurisdiction at the Central Administrative Tribunal (CAT). The appellant argued that the ICC lacks jurisdiction under Section 9 of the POSH Act, and the ICC constituted by his department can hear the case. The CAT and the Delhi High Court dismissed the challenge. He appealed to the Supreme Court. 

The Supreme Court held that “workplace” under Section 2(o) has a wide meaning, including any place visited by an employee, whether out of or during the course of employment. Noting that the definition does not require the respondent to be an employee of the same workplace as the aggrieved, the Court ruled that the ICC of the aggrieved’s workplace has the power to conduct a fact-finding inquiry under the POSH Act. 

Keywords/phrases: Section 9 of the POSH Act 2013–Internal Complaints Committee–Jurisdiction of ICC–Respondent not from the same department–ICC lacks jurisdiction–challenge preferred at CAT–Dismissed–Upheld by High Court–Wide meaning of workplace under Section 2(o)–Respondent not required to be employee of the same workplace as aggrieved–Appeal dismissed. 

Read the Judgement here. 

Mind map

*********

Claim for Higher Post After Compassionate Appointment

Director of Town Panchayat v M. Jayabal

12 December 2025

Citation: 2025 INSC 1423 | 2025 SCO.LR 12(3)[15]

Bench: Justices Rajesh Bindal and Manmohan

The Supreme Court held that compassionate appointment is a concession intended to relieve immediate financial distress and does not confer a vested right. Once a dependent accepts appointment to a particular post on compassionate grounds they cannot seek appointment to a higher post on the basis of qualification or parity.

Jayabal and another respondent were appointed as sweepers on compassionate grounds following the death of their fathers, who were also sweepers. Several years after joining service, they approached the Madras High Court seeking appointment as Junior Assistants, contending that they possessed the requisite qualifications at the time of their initial appointment. A Single Judge allowed the writ petitions, and the Division Bench affirmed the decision, holding that the applicable Government Orders permitted appointment to a higher post.

The Supreme Court set aside the High Court’s judgment. It held that compassionate appointment is an exception to the normal rule of public employment and is meant only to help the family tide over a sudden financial crisis. Once the appointment is accepted, the object of the scheme is fulfilled and no second option can be exercised. The Court further held that eligibility for a higher post does not create a right to compassionate appointment at that level.

Keywords/phrases: compassionate appointment–object and scope of compassionate employment–exception to Articles 14 and 16–no vested or enforceable right–acceptance of appointment exhausts claim–qualification irrelevant after acceptance–parity cannot be claimed on the basis of illegal appointments–negative equality impermissible

Read the Judgement here.

Mind map