Supreme Court Observer Law Reports (SCO.LR)

The Supreme Court enforced retroactive operation of the 2016 amendments to the Prohibition of Benami Property Transactions Act, 1988. It held that confiscatory proceedings under the Act are not merely punitive, but serve a larger public purpose of preserving the sanctity of lawful ownership.

The respondent instituted a suit seeking declaration for ownership of properties based on a 2018 Will. The deceased was employed in the company of the respondent’s father. The land was purchased in Raghunath’s name to circumvent statutory restrictions on land acquisitions. The appellants (the wife and children of the deceased) filed an application under Order VII Rule 11(d) of the Civil Procedure Code, 1908 seeking rejection of the claim on the grounds that it was barred under the Benami Act and the Hindu Succession Act, 1956, as the plaintiff was being investigated by the CBI for murder of the deceased. The respondent claimed that he had a “fiduciary relationship” with the deceased and was exempted under the Benami Act. The trial Court rejected the suit but it was restored by the High Court of Karnataka in 2024 for adjudication on merits. The appellants approached the Supreme Court.

The Supreme Court restored the trial Court’s rejection of the suit, emphasising that no person can profit from a wrong doing. It relied on the 2016 amendments to deny exemption, stating that there is no fiduciary relationship between a company and its employee. The Court further held that the appellants were not entitled to the land and that it was liable for confiscation.

The Supreme Court held that proceedings under the Insolvency and Bankruptcy Code, 2016 (IBC) cannot be used as a coercive recovery mechanism for individual contractual claims.

Emerald Mineral Exim Pvt. Ltd. (Corporate Debtor) entered into an agreement with Bengal Shrachi Housing Development (Builder) over sale of a unit. The Debtor secured a loan facility of Rs. 1.5 crores with Dhanlaxmi Bank, with the amount directly disbursed to the Builder. Following a default in repayment, the Bank initiated proceedings before the Debt Recovery Tribunal (DRT), which directed the Builder to deposit Rs. 1.5 crores as security. The Bank then initiated insolvency proceedings under Section 7 of the IBC against the debtor, leading the NCLT to admit the petition and commence Corporate Insolvency Resolution Process (CIRP). The NCLAT set aside the NCLT’s decision and held that because the Bank did not directly disburse the amount to the Debtor, it cannot be termed as “Financial Creditor” under Section 7. The Bank appealed to the Supreme Court.

The Supreme Court upheld the NCLAT order and dismissed the appeal. It held that the transaction was predominantly dependent on the contractual performance of the Builder. As the DRT was actively adjudicating the matter, the IBC proceedings were deemed impermissible as a recovery tactic. The Court held that the IBC’s purpose is to address financial distress and not resolve individual recovery claims.

The Supreme Court held that ex-post facto environmental clearance must be granted in strict conformity with applicable rules if a unit complies with pollution norms and the adverse consequences of denying clearance outweigh those of regularising the operation.

The National Green Tribunal had directed the closure of Formaldehyde units in Rajasthan and Haryana after holding that they were operating without prior environmental clearance. The units appealed to the Supreme Court arguing that the respective Pollution Control Board (PCB) had granted Consent to Establish and Consent to Operate. The Boards had belatedly applied for environmental clearance, which the units did within sixty days. The Order directing their closure was set aside in a separate judgement: Pahwa Plastics Private Limited v Dastak NGO (2022). The appeals from Rajasthan and Haryana remained pending.

The Supreme Court held that closure cannot be directed merely for procedural lapse where the regulator itself was mistaken about the requirement. The Court set aside the NGT’s closure orders and allowed the units to operate. It directed the Ministry of Environment, Forest and Climate Change to decide the pending clearance applications of the units within a month.

The Supreme Court held that writ jurisdiction of a High Court under Article 226 cannot be invoked to direct the registration of First Information Report (FIR) unless statutory remedies have been exhausted.

The appellant, a lease holder in the complainant-company, was accused of using forged documents, fabricated details and signatures to mislead revenue officials into completing measurement of the leased property, after an insolvency process was initiated. Subsequently, the complainant sought the registration of FIR with the Deputy Superintendent of Land Records Office, Tribakeshwar, which was declined. The Bombay High Court directed registration of the FIR after the complainant invoked its writ jurisdiction under Article 226. The appellants approached the Supreme Court in a criminal appeal.

The Supreme Court set aside the High Court order, noting that the complainants failed to show that statutory remedies were unavailable or were inefficacious. The Court held that barring special circumstances, the High Court cannot act as a forum of first instance, bypassing the statutory scheme in its entirety.

The Supreme Court held that a person qualifies as a ‘member’ for oppression and mismanagement proceedings under Sections 397 and 398 of the Companies Act, 1956, even without a formal entry in the register of members.”

The respondent, Dhananjay Pande, filed proceedings under Section 397 and 398 of the Companies Act after fewer shares were allotted to him against the money paid by him. The appellant, Bais Surgical and Medical Institute, argued that the proceedings were not maintainable as Pande Pande was not a “member” since his name had not been entered in the register of members under Section 41 of the Act. The Company Law Board rejected the objection and treated Pande as a member. The Bombay High Court affirmed the finding, leading to the Institute approaching the Supreme Court.

The Supreme Court upheld the High Court’s interpretation and held that a conjoint reading of Sections 397, 398 and 399 indicates that the expression “member” cannot be confined to the technical formulation contained in Section 41(2). The Court directed that Pande was entitled to be treated as a member. It relied on the cumulative factual circumstances, including correspondence describing Pande as a “co-owner”, conciliation proceedings acknowledging his entitlement to shares and the utilization of his investment in the institute’s business.

The Supreme Court held that a constitutional court cannot create or expand criminal offences if there is no legislative sanction.

Thirteen writ petitions, two special leave petitions, and eight contempt matters had accumulated since 2020 alleging rise in hate speech instances after the Covid -19 pandemic. Petitioners sought directions along the lines of introducing provisions to curb speeches as per the 267th Law Commission Report and the registration of suo moto FIRs for instances of hate speech.

The Supreme Court dismissed the writ petitioners and appeals. It held that the doctrine of separation of powers does not permit the judiciary to create new offences. Further, the existing framework sufficiently covers provisions that deal with speeches that outrage religious sentiments or disturb public tranquillity.

The Supreme Court held that the protection against arbitrary removal of civil servants under Article 311 does not apply to the employees of the Indian Council of Agricultural Research (ICAR).

The appellant, who is the Assistant Director General of the Agricultural Research Information System, alleged that he was removed from four committees under ICAR’s National Agricultural Technology Project (NATP) after whistleblowing irregularities in the award of contracts. He approached the Delhi High Court, claiming that he is protected against the arbitrariness of his removal and triggered retaliatory action under Article 311. The High Court disposed of the appeal and declined the review. The appellant approached the Supreme Court in a civil appeal.

The Supreme Court held that the protection under Article 311 is not applicable to ICAR since it is an autonomous body under the Department of Agricultural Research and Education and is governed by the rules and by-laws of ICAR. Further, the Court mentioned that the allegations of mala fide must be supported by clean and cogent evidence and cannot be inferred from surrounding circumstances.

The Supreme Court held that free and compulsory education at a “neighbourhood school” under the Right to Free and Compulsory Education Act, 2009 (RTE) is a deliberate statutory conception to ensure equality of status and social integration during a child’s formative years.

A student was selected for admission into pre-primary classes in a neighbourhood school by the Basic Education Department of the Uttar Pradesh government under the U.P. RTE Rules, 2011. The school did not permit her to attend classes on the ground that her eligibility was uncertain. The Allahabad High Court held that the school cannot sit in appeal over a decision taken by a state government and directed the school to grant admission to her. The school approached the Supreme Court.

The Supreme Court upheld the High Court’s decision. It affirmed that the fundamental right to education under Article 21A would be an “empty promise” if the RTE mandate is not worked out in letter and spirit.

The Supreme Court held that mitigation reports in death references must be considered at the earliest stage of proceedings. It directed all trial courts and high courts to call for mitigation reports and assign a dedicated legal team in all death reference matters.

In January, the Patna High Court confirmed a death sentence granted to the two appellants. The appellants were sentenced under Sections 302 and 34 of the Indian Penal Code, 1860 for the murder of three women. The High Court had held that the aggravating factors leave no room for any mitigating factors to commute the death sentence to life imprisonment or a special sentence.

The Supreme Court stayed the sentence pending disposal of appeal and directed the Bihar government and the Jail Superintendent to submit reports regarding the appellants conduct along with a psychological evaluation.

The Court observed that despite directions issued in Manoj v State of Madhya Pradesh (2023), trial and high courts often slip into a retributive approach and fail to consider mitigation circumstances. It directed the National Legal Services Authority to formulate guidelines for production of mitigation reports and conduct of fieldwork required to collect necessary information.

The Supreme Court held that adjudicatory efficiency required formal closure of the 1984 M.C. Mehta petition. Pending issues will be split between fresh suo moto proceedings of this Court and the Delhi High Court under Article 226.

The 1984 petition arose from unauthorised heavy and noxious industries in the erstwhile Union Territory of Delhi. Early judgements of 15 May 1992 and 8 July 1996 barred stone crushers and closed 168 highly polluting units. A judgement of 16 February 2006 ordered sealing of misused residential premises. 433 interlocutory applications in the petition remain pending.

The writ petition was formally disposed of. Two new suo moto writ petitions on hazardous industries and water resources were registered. IAs on the Delhi Master Plan, illegal construction and Monitoring Committee appeals were transferred to the Delhi High Court.