Supreme Court Observer Law Reports (SCO.LR)

The Supreme Court held that a complaint under the Negotiable Instruments Act, 1881 (NI Act) is maintainable against a trustee who signs a cheque on behalf of a trust, even though the trust itself is not made an accused.

A cheque issued by the Chairman and authorised signatory of the Orion Education Trust, which was dishonoured due to insufficient funds. A complaint under Section 138 of the NI Act was filed against the Chairman in his personal capacity as the signatory of the cheque. He contended that Orion, being a juristic entity, was a necessary party and that failure to name it rendered the complaint defective. The Trial Court took cognisance and summoned him. The Meghalaya High Court quashed the complaint and the summoning order, noting that as the drawer of the cheque the trust should be arraigned as an accused. The complainant appealed to the Supreme Court challenging this finding.

The Supreme Court held that a trust is not a legal or juristic person under the Indian Trusts Act, 1882 but an entity vested with the obligations attached to the ownership of property. Consequently, it cannot sue or be sued in its own name and functions only through its trustees. Since the cheque had been signed by the Chairman as an authorised representative, he was personally responsible for the transaction and fell within the ambit of Section 141 of the NI Act. The Court overruled contrary High Court rulings that had equated trusts with companies and restored the criminal proceedings.

The Supreme Court held that couples who had commenced the surrogacy process cannot be denied their right to parenthood only because of the age bar under the Surrogacy (Regulation) Act, 2021.

Three couples intending to become parents had commenced the surrogacy process, prior to the commencement of the Surrogacy (Regulation) Act, 2021. They were above the age-limits of 50 for women and 55 for men under Section 4(iii)(c) (I) of the Act. The couples filed a Writ Petition at the Supreme Court, challenging the propriety of the age-restrictions under the Act.

The Supreme Court held that couples intending to have a surrogate child have a constitutional right regulated by statute. The Bench exempted the petitioners from seeking certification on the qualifying age for the purpose of continuing surrogacy procedure, provided they satisfy the other conditions under the Act and the rules.

The Supreme Court held that the failure to file a written statement within the time stipulated under Rule 1(1) of Order VIII Code of Civil Procedure, 1908 (CPC) cannot result in denial of the substantial right of defence through cross-examination.

M/s. Aroush Motors was appointed as a dealer and paid over ₹171,00,000 toward inventory, security, fit-out, etc. When BS-IV vehicles got banned in 2020, the Defendant-M/s. Avnita Auto Tech failed to upgrade stock, stalling business for its dealers. Aroush Motors terminated the dealership in 2020 and sued for damages. The defendant appeared when summons was served in July 2021, but failed to file a written statement within the 120 days mandated for commercial suits. The trial court rejected multiple applications filed by Avnita Auto Tech for extension of time. It excluded the written statement, recorded the examination-in-chief of PW1, and marked the defendant’s cross-examination as Nil. A decree was accordingly passed against the defendant and upheld by the High Court.

The Supreme Court set aside the High Court’s decision. The Bench held that citing procedural lapses for denial of the defendant’s right to cross-examination was “absolutely perverse” and violated the defendant’s right of defence. Further, it noted that a series of Orders passed by the Supreme Court during the COVID-19 (March 2020 and February 2022) excused the application of limitation period. The Court remanded the matter to the trial court.

The Supreme Court extended the doctrine of public trust, which mandates government protection of natural resources for public use, to include man-made objects that promote the environment.

The Swacch Association filed a Public Interest Litigation (PIL) at the Bombay High Court against constructions developed near Futala Lake, Nagpur. They argued that the lake was a wetland and construction activities in the area violated the restrictions found under Rule 4(2)(vi) of the Wetlands (Conservation & Management) Rules, 2017. The High Court disposed of the PIL holding that Futala Lake did not fall under the definition of a ‘wetland’ under Rule 2(1)(g) of the 2017 Rules, as it was man-made. However, the Court recognised the status of Futala Lake as a wetland as declared by the National Wetland Inventory and Assessment (NWIA). Further, it noted that the Supreme Court had held that wetlands recognised by the NWIA should be protected as per Rule 4 of the 2017 Rules.

The Supreme Court upheld the High Court’s judgement. It reasoned that the doctrine of public trust compels the state to protect the lake and prohibit permanent constructions, even if the Futala Lake is man-made. It observed that much of the construction in and around the Futala lake was not permanent and met the criteria set in Rule 4.

The Supreme Court held that a tender condition which required bidders to have previously supplied goods to state government agencies in Chhattisgarh was arbitrary, discriminatory, and violative of Articles 14 and 19(1)(g).

Vinishma Technologies, a supplier of sports kits to several states, challenged a clause in tender notices issued by the Chhattisgarh Government for the supply of sports kits to government school students. The condition required bidders to have supplied sports goods worth at least six crores to state government agencies of Chhattisgarh in the three preceding financial years. The Chhattisgarh High Court upheld the clause, reasoning that it ensured reliable and timely delivery by suppliers familiar with the State’s geography.

The Supreme Court set aside the High Court’s decision. It held that while the State has discretion to frame tender criteria, such discretion is subject to the constitutional guarantees of equality and freedom of trade. The Court observed that linking eligibility to past supply within Chhattisgarh created an artificial barrier that curtailed competition and excluded qualified bidders, contrary to the doctrine of level playing field.

The Supreme Court held that the right to seek compensation for injuries in a motor accident under Section 166(5) of the Motor Vehicles Act, 1988 (MV Act) survives to the legal representatives of the deceased claimant, even when death is unrelated to the injuries.

The claimant, who had suffered 100 percent permanent disability in a 2013 accident,was awarded compensation by the Motor Accident Claims Tribunal. Dissatisfied with the quantum, he preferred an appeal before the High Court seeking enhancement, which was partly allowed. He died during the pendency of the appeal. The insurer argued that the claim was personal in nature and stood extinguished under Section 306 of the Indian Succession Act, 1925.

The Court held that Section 166(5) of the MV Act expressly preserves the right to continue proceedings despite the claimant’s death, overriding the bar contained in Section 306 of the Indian Succession Act. The provision, introduced by the 2019 amendment, was intended to remove the hardship caused by abatement of genuine claims where death was unconnected to the accident. The Court observed that the right to compensation, once accrued, becomes part of the deceased’s estate and must be recoverable by the legal representatives.

The Supreme Court held that an arbitral tribunal cannot travel beyond its mandate to rewrite the contract. The Bench reiterated that a court is obligated to interfere with an award if the conditions mandating reappreciation of the merits under Section 34 of the Arbitration and Conciliation Act, 1996, are fulfilled.

SEPCO, a China-based EPC contractor, entered into several agreements with GMRKE Limited for the construction of four coal-fired thermal plant units in Odisha. SEPCO raised a notice of arbitration for disputes related to payments. The tribunal awarded ₹995 crores to SEPCO. A single judge of the Odisha High Court upheld the award. A Division Bench set aside the award on multiple grounds, including the finding that the tribunal’s rewriting of a ‘waiver of notice’ provision in the agreement was against the fundamental policy of Indian law.

The Supreme Court upheld the Division Bench’s setting aside of the entire award. It confirmed that the Division Bench had correctly found that estoppel was barred by the parties through the inclusion of “No Waiver” and “No Oral Modification” clauses. In favouring SEPCO’s claim of ‘waiver of notice’, the tribunal had erred in ignoring express contractual provisions. The Court also found that the tribunal had not fulfilled its explicit duty under Section 28(3) of the Arbitration Act, which requires it to resolve disputes in accordance with contractual terms.

The Supreme Court held that criminal proceedings based on vague and general allegations, unsupported by statutory ingredients of the offence cannot sustain a prima facie case. It emphasised that Section 498A of the Indian Penal Code, 1860 cannot be extended to relatives without specific allegations.

The complainant was married to Piyush. She filed a case alleging that her father-, mother- and sister-in-law were demanding gifts and dowry. The complainant invoked Sections 498A (cruelty by husband or relatives of husband), 377 (unnatural sex) and 506 (criminal intimidation) against them. When an FIR was registered, Piyush and his family filed an application seeking quashing of the proceedings, arguing that the FIR contained no details of how they were involved in the offences they were charged with. The High Court dismissed the application, relying on the complainant’s claims. While Piyush did not appeal, his family approached the Supreme Court.

The Supreme Court quashed the criminal proceedings against the relatives. It held that allegations against the appellants were general and vague and did not sufficiently satisfy the conditions under any of the alleged offences. For the offences to be made out, cruelty caused by the husband’s family must be inflicted with the intention to cause grave injury or drive the victim to commit suicide or inflict grave injury to herself.

The Supreme Court held that bail granted in disregard of prior judicial findings recording false undertakings, dishonest conduct and misuse of process, is perverse and liable to be set aside.

The accused husband and wife had allegedly cheated the complainant company of ₹1.9 crores in a property transaction and failed to honour undertakings to repay ₹6.25 crores. The Delhi High Court had previously rejected anticipatory bail under Section 438 CrPC, having recorded findings of deceit and abuse of interim protection. Despite these findings, the Additional Chief Metropolitan Magistrate (ACMM) granted regular bail after the filing of the charge sheet. The Sessions Court and later the Delhi High Court affirmed the ACMM’s decision

The Court observed that where a superior court has recorded conclusions of false undertakings or dishonest conduct, a subordinate court cannot disregard those findings or reopen the issue on identical facts. The Supreme Court set aside the impugned orders. The accused were directed to surrender within two weeks. The ACMM and Sessions Judge were directed to undergo short-term training at the Delhi Judicial Academy on bail jurisprudence and judicial discipline.

The Supreme Court held that the High Court’s inherent power under Section 482 of the Code of Criminal Procedure, 1973 is wide and must be exercised sparingly, when criminal colour has been given to a civil dispute.

Eight FIRs were registered against Anukul Singh within a short span during a civil dispute over ownership and possession of property involving Singh. The Allahabad High Court failed to infer that the cases were being filed malafide. Police filed a charge sheet for offences under sections 420, 467 and 468 of the Indian Penal Code, 1860, though the dispute concerned repayment of loan money and coercion in execution of documents.

The Supreme Court set aside the High Court judgement and held that criminal law cannot be permitted to be misused for settling civil disputes or to wreak vengeance. It further set aside the FIR and the consequential charge sheet pending before the Trial Court. The Court clarified that parties are free to pursue civil remedies.