Supreme Court Observer Law Reports (SCO.LR)

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 It noted that sureties will not be liable for the excess amounts withdrawn beyond the sanctioned limits.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.

The Supreme Court reaffirmed that Article 21 encompasses rehabilitative justice and dignity for prisoners. Open Correctional Institutions (OCIs) are constitutionally mandated instruments for decongesting prisons and facilitating social reintegration, with cost-effectiveness deemed secondary to human dignity.

In 2018, the Supreme Court in In Re: Inhuman Conditions in 1382 Prisons directed States to implement Model Uniform Rules for OCIs. Human rights activist, Suhas Chakma filed the present writ petition in 2020 highlighting chronic prison overcrowding and seeking permanent decongestion mechanisms. Prisoners are selected for transfer to open prisons on the basis of seniority, conduct and physical and mental ability to work, subject to the completion of a stipulated portion of sentence awarded to them. Inmates are permitted to reside with their families, cultivate land, prepare their own meals and earn wages at rates significantly higher than those in closed prisons.

The Court directed all States to fill existing OCI vacancies within two months, establish new facilities where absent, and constitute Monitoring Committees headed by State Legal Services Authority Chairpersons. A High-Powered Committee under Justice S. Ravindra Bhat was directed to formulate Common Minimum Standards within six months. States were directed to revise eligibility criteria to prioritise reformative potential over incarceration duration and ensure gender-inclusive access by amending exclusionary rules within three months.

The Supreme Court held that “Sharbat Rooh Afza” is classifiable as a fruit drink under Entry 103 of Schedule II, Part A of the Uttar Pradesh Value Added Tax Act, 2008 (UPVAT) and is taxable at four percent VAT, and not under the residuary entry taxable at 12.5 percent.

The dispute is related to the period from 1 January 2008 to 31 March 2012. The appellant paid four percent VAT, treating the product as falling under Entry 103, which covers processed or preserved vegetables and fruits including fruit jams, jelly, pickle, fruit squash, paste, fruit drink and fruit juice. The Joint Commissioner (Corporate Circle), Commercial Tax, Ghaziabad classified the product under the residuary entry in Schedule V and levied tax at 12.5 percent. The Additional Commissioner (Appeals), Commercial Tax Tribunal, Ghaziabad and the Allahabad High Court affirmed that view. “Sharbat Rooh Afza” contained 10 percent fruit juice along with invert sugar syrup and herbal distillates. The Revenue relied upon the clarification dated 31 July 2009 under the Fruit Products Order, 1995 that a fruit syrup must contain a minimum of 25 percent fruit juice.

The Supreme Court held that regulatory enactments operate in a distinct domain and are neither determinative nor conclusive for purposes of fiscal classification. It noted that the expression “fruit drink” not being defined under the Act must be understood in common parlance. The Court further held that where the Revenue seeks to classify a product under the residuary entry, the burden lies upon it. Applying the test of essential character, it held that invert sugar syrup functions as a carrier, sweetening medium and preservative base and does not determine the commercial or beverage identity of the product. The Court allowed the appeals and directed payment of consequential relief including refund or adjustment of excess tax paid, in accordance with law.

The Supreme Court held that each member in an unlawful assembly is equally liable for acts committed in furtherance of a common unlawful object. It emphasised that superficial application of bail parameters in grave offences undermines public faith in justice.

A prior civil dispute existed between the parties over agricultural land. The appellant’s husband was assaulted by six persons with iron rods and sticks. When she and her relatives attempted to intervene, they were attacked and subject to caste-based slurs and obscene acts. Five days later, her husband died while undergoing treatment and the post-mortem identified eight injuries and blunt trauma to the head as a probable cause of death. Charges were framed under Section 302 of the Indian Penal Code, 1860 along with provisions of the Scheduled Caste and Scheduled Tribe (Prevention of Atrocities) Act, 1989. The High Court of Bombay granted bail to two respondents, citing the pending dispute as possible motive for false implication, failure to identify individual action of each accused and the time gap between assault and death.

The Supreme Court set aside the High Court’s order. It reversed the bail granted to the accused stating that it was erroneously granted without considering the material on record and the gravity of the offence. The Court held that the prior litigation could work as a motive for the attack as well, and observed that medical evidence is a trial-stage inquiry. The accused were directed to surrender before the trial court within four weeks.

The Supreme Court held the evidence obtained during an unlawful search and seizure remains valid and can be further examined by the Court.

The Trial Court had summoned the appellant—a qualified radiologist—and two others after a District Appropriate Authority sting operation revealed that they were illegaly determining the sex of a foetus—barred under the Pre-natal and Pre-conception Diagnostic Techniques (Prohibition of Sex Selection) Rules, 1996. While no money was recovered from the appellant, ₹25,000 was recovered from his co-accused, Dr Abdul Kadir. Aggrieved, the appellant approached the Punjab and Haryana High Court under Section 482 of the Code of Criminal Procedure, 1973 for quashing the complaint arguing that he is a victim of an illegal sting operation. The High Court dismissed the petition, holding that the petition possessed no merit. The accused approached the Supreme Court.

The Supreme Court held that unless there is an express or implied provision in law, evidence obtained as a result of illegal search and seizure is not to be discarded. The Court further noted that it was prima facie revealed from the sting operation that the appellant has conducted ultrasonography on the pregnant women. The question as to whether he has disclosed the sex of the foetus is a matter of trial.

The Supreme Court held that missing DNA tests do not invalidate a deceased person’s identification if witnesses who knew them personally provide credible, consistent testimony.

The victim disappeared in July 2009. Based on a Section 27 statement from the appellant under the Indian Evidence Act, 1872, her body was discovered inside a well and her vehicle was found at a railway station. Medical evidence revealed homicidal strangulation as the cause of death. The Trial Court and Additional Sessions Judge convicted the appellant for murder and the Madhya Pradesh High Court dismissed his appeal. The appellant argued before the Supreme Court that there was no DNA identification of the decomposed body.

The Supreme Court upheld the conviction. It noted that DNA confirmation was unnecessary as the face of the deceased was still recognisable because of clothing and water had preserved the body. The Court found that the prosecution had established a complete, unbroken chain of circumstantial evidence. It noted the appellant spent 15 years in prison and granted him liberty to apply for remission.