Digital Supreme Court Reports 1706611468

Supreme Court Reports
Official Law Report of Supreme Court of India

2024 | Volume 1 | Part 1
Citation Style: [ Year ] Volume No. S.C.R. Page no.
Digitally Published by
Supreme Court of India
Supreme Court Reports
Official Law Report of Supreme Court of India
2024 | Volume 1 | Part 1
Digitally Published by
Supreme Court of India
Contents
1. Vashist Narayan Kumar v. The State of Bihar & Ors.. . . . . . . . . . . . . 1
2. Mary Pushpam v. Telvi Curusumary & Ors.. . . . . . . . . . . . . . . . . . . . 11
3. Radhey Shyam Yadav & Anr. Etc. v. State of U.P. & Ors.. . . . . . . . . 21
4. Neeraj Sharma v. State of Chhattisgarh . . . . . . . . . . . . . . . . . . . . . . 40
5. Brij Narayan Shukla (D) Thr. Lrs. v.

Sudesh Kumar Alias Suresh Kumar (D) Thr. Lrs. & Ors. . . . . . . . . . 60
6. Reliance Life Insurance Company Ltd. & Anr. v.

Jaya Wadhwani . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
7. State of NCT of Delhi v.

Raj Kumar @ Lovepreet @Lovely. . . . . . . . . . . . . . . . . . . . . . . . . . . 73
8. Rajendhiran v. Muthaiammal @ Muthayee & Ors. . . . . . . . . . . . . . . 81
9. Perumal Raja @ Perumal v.

State, Rep. by Inspector of Police. . . . . . . . . . . . . . . . . . . . . . . . . . . 87
10. DBS Bank Limited Singapore v.

Ruchi Soya Industries Limited and Another. . . . . . . . . . . . . . . . . . . 114
11. Bharti Airtel Limited and Another v.

Vijaykumar V. Iyer and Others. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140
12. Vishal Tiwari v. Union of India & Ors. . . . . . . . . . . . . . . . . . . . . . . . 171
13. The State of Uttar Pradesh & Ors. v. Association of Retired

Supreme Court and High Court Judges at Allahabad & Ors.. . . . . 211
14. Satish P. Bhatt v. The State of Maharashtra & Anr. . . . . . . . . . . . . 241
15. Darshan Singh v. State of Punjab. . . . . . . . . . . . . . . . . . . . . 248

[2024] 1 S.C.R. 1 : 2024 INSC 2
Case Details
Vashist Narayan Kumar

v.
The State of Bihar & Ors.
(Civil Appeal No. 1 of 2024)
02 January 2024
[J.K. Maheshwari and K.V. Viswanathan*, JJ.]
Issue for Consideration

Whether an error committed in the application form, which was
uploaded is a material error or a trivial error and was the State
justified in declaring the appellant as having failed on account of
the same.
Headnotes
Service Law – Recruitment – Inadvertent error in application
form – Final result reflected failed – Appellant applied for the
post of Police Constable – He cleared the written exam and
the Physical Eligibility Test – However, the final result reflected
him as failed – The only reason was that the application form
uploaded online, appellant’s date of birth was shown as
08.12.1997, in the school mark sheet, his date of birth was
reflected as 18.12.1997 – Propriety:
Held: The appellant’s application uploaded from the cyber café did
mention the date of birth as 08.12.1997, while his date of birth as
recorded in the educational certificate was 18.12.1997 – It is also
undisputed that it is the appellant who produced the educational
certificates – He was oblivious of the error that had crept into his
application form – On the peculiar facts and circumstances of the
case, it cannot be said that the error was so grave as to constitute
wrong or mis-leading information – There is an exception for trivial
errors or omissions as law does concern itself with trifles – This
principle is recognized in the legal maxim-De minimis non curat
lex – Also, admittedly the appellant derived no advantage as even
if either of the dates were taken, he was eligible; the error also had
no bearing on the selection process – Considering the background
in which the error occurred, the cancellation is set aside and the
respondent-State is directed to treat the appellant as a candidate
who has ‘passed’ in the selection process. [Paras 11,12,15, 25, 26]
* Author
2 [2024] 1 S.C.R.
DIGITAL SUPREME COURT REPORTS
List of Citations and Other References

Yogesh Kumar and Others vs. Govt. of NCT, Delhi
and Others, [2003] 2 SCR 662 : (2003) 3 SCC 548 –
distinguished.
Divya vs. Union of India & Ors., 2023 INSC 900 : 2023
(13) SCALE 730; Prince Jaibir Singh vs. Union of India &
Ors., C.A. No. 6983 of 2021 decided by the Supreme
Court – referred to.
Rohit Kumar and Another vs. Union of India and
Others, 2022 SCC OnLine Del 1219; Pradeep Kumar
vs. Union of India and Others, 2022 SCC OnLine Del
239 – distinguished.
Ajay Kumar Mishra vs. Union of India & Ors., [2016] SCC
OnLine Del 6563; Arkshit Kapoor vs. Union of India,
2017 SCC OnLine Del 10154; Anuj Pratap Singh vs.
Union Public Service Commission, 2018 SCC OnLine
Del 10982; K. Sangeetha vs. Tamil Nadu Public Service
Commission (2018) SCC OnLine Mad 5075; Shubham
Tushir vs. Union of India, 2019 SCC OnLine Del 9831;
Staff Selection Commission & Anr. Vs. Shubham Tushir,
LPA No. 237 of 2020; Poonam Pal vs. M.P. Gramin
Bank, (2022) SCC OnLine MP 2921; Pankaj Paswan
vs. State of Bihar Anr., 2015 SCC On Line Patna 8739
– referred to.
List of Acts
Constitution of India – Article 142.
List of Keywords
Service Law; Recruitment; Application form; Inadvertent error;
De minimis non curat lex.
Other Case Details Including Impugned Order and

Appearances
CIVIL APPELLATE JURISDICTION: Civil Appeal No.1 of 2024.

From the Judgment and Order dated 22.08.2022 of the High Court
of Judicature at Patna in LPA No.1271 of 2019.
[2024] 1 S.C.R. 3
VASHIST NARAYAN KUMAR v. THE STATE OF BIHAR & ORS.
Appearances:
Shivam Singh, Ms. Shaswati Parhi, Gopal Singh, Advs. for the
Appellant.
Azmat Hayat Amanullah, Tirupati Gaurav Shahi, Advs. for the
Respondents.
Judgment / Order of The Supreme Court

Judgment
K.V. Viswanathan, J.
1. Leave granted.
2. Vashist Narayan Kumar (the appellant) hails from a small village
named Dheodha in Bihar. He belongs to the downtrodden segment of
the society. He aspired to become a Police Constable and had applied
for the said post under the reserved category. Having possessed
the eligibility criteria of being an intermediate (10+2 pass), he also
cleared the written examination and the Physical Eligibility Test.
3. The appellant submitted his educational certificates/mark sheet as
well as his caste certificate for document verification. On 11.06.2018,
the final results reflected him as having failed. The only reason was
that, while in the application form uploaded online, his date of birth
was shown as 08.12.1997, in the school mark sheet, his date of
birth was reflected as 18.12.1997.
4. Distraught, the appellant represented and thereafter having failed to
receive any response, filed a writ petition before the High Court. His
explanation was simple and straight forward. He stated in his writ
petition that, after noticing the advertisement issued by the Central
Selection Board on 29.07.2017, he from his remote village went to the
Cyber café at Pakribarawan - a nearby town. With the assistance of
a person running the Cyber café, he filled in his form and uploaded
it online and he received application No. 7236126 indicating thereby
that the online application had been duly filled. His case was that,
while filling up the form, by an inadvertent error, the date of birth had
got recorded as “08.12.1997” instead of “18.12.1997”. He derived
no benefit from it as either way he fulfilled the eligibility criteria and
the age requirement. He prayed for the relief in the nature of a
4 [2024] 1 S.C.R.
mandamus to the respondents to consider his claim for selection

and direct them to issue an appointment letter treating the date of
birth as 18.12.1997, as reflected in his educational certificates.
5. The respondents vehemently opposed the writ petition. It was their
stand that the advertisement had clearly stipulated that candidates
should correctly mention their date of birth according to their 10th
board certificate; that if any discrepancy was found while matching the
information, the candidature would be cancelled; that the candidate
should read the instructions carefully and if any information is
found false or wrong, then the application form would be cancelled
and legal action will also be taken. It was further averred that the
advertisement also mentioned the method of making corrections and
that the appellant never availed that facility.
6. They contended that out of 9900 vacancies advertised, 9839
candidates were declared successful. They submitted that 61
vacancies remained unfilled due to non-availability of suitable Gorkha
candidates. They prayed for the dismissal of the writ petition.
7. The learned Single Judge, after referring to the clauses in the
advertisement, including the clause providing for correction, held that
since incorrect information was provided, no relief could be given. The
appellant filed a Letters Patent Appeal to the Division Bench, which
has been dismissed by the impugned order. The Division Bench,
while affirming the order of the learned Single Judge, additionally
recorded a finding that the appellant had not sought for quashing of
the result, as declared on 11.06.2018, on the website.
8. Being aggrieved, the appellant is before us in this Appeal.
9. We have heard Ms. Shaswati Parhi, learned counsel for the appellant
and Mr. Azmat Hayat Amanullah, learned counsel for the State.
Learned counsels have reiterated their respective contentions as
advanced in the Courts below. They have also relied on the judgments
of this Court and of some High Courts, in support of their respective
propositions. Learned counsels have also filed comprehensive written
submissions.
Question for Consideration
10. The question that arises for consideration is whether the error
committed in the application form, which was uploaded is a material
[2024] 1 S.C.R. 5
error or a trivial error and was the State justified in declaring the
appellant as having failed on account of the same?
Discussion
11. Admittedly, the appellant derived no advantage as even if either
of the dates were taken, he was eligible; the error also had no
bearing on the selection and the appellant himself being oblivious
of the error produced the educational certificates which reflected his
correct date of birth.
12. The facts are undisputed. The appellant’s application uploaded
from the cyber café did mention the date of birth as 08.12.1997
while his date of birth as recorded in the educational certificate
was 18.12.1997. It is also undisputed that it is the appellant who
produced the educational certificates. He was oblivious of the error
that had crept into his application form. It is also undisputed that
the advertisement had all the clauses setting out that in case the
information given by the candidates is wrong or misleading, the
application form was to be rejected and necessary criminal action
was also to be taken. It also had a clause that the candidates
had to fill the correct date of birth, according to their 10th board
certificate. The clause further stated that candidates will fill their
name, father’s name, address etc. correctly in the application form. It
states that any discrepancy, if found, while checking the documents,
the candidature of the candidate will stand cancelled. There was
also a clause providing for correction of wrong/erroneously filled
application forms, which stated that the errors can be corrected once
by re-depositing the application fee and filling a new application. It
also provided that those filling the application on the last date could
correct the application till the following day.
13. Equally undisputed is the fact that after filling out the application, the
appellant cleared the written examination and the Physical Eligibility
Test. It was also stated in the counter affidavit that there were 61
unfilled vacancies though it was submitted that it was meant for the
Gorkha candidates.
14. We are not impressed with the argument of the State that the error
was so grave as to constitute wrong or mis-leading information. We
say on the peculiar facts and circumstances of this case. Even the
6 [2024] 1 S.C.R.
State has not chosen to resort to any criminal action, clearly implying
that even they did not consider this error as having fallen foul of the
following clause in the advertisement:-
“Instructions to fill online application form are available
on the website. It is recommended to all the candidates
to carefully read the instructions before filling the online
application form and kindly fill the appropriate response
in the following tabs. In case, the information given by
the candidates found wrong or misleading, the application
form will get rejected and necessary criminal actions will
also be taken against the candidate.”
15. Recently this Bench in Divya vs. Union of India & Ors.,
2023:INSC:900 = 2023 (13) Scale 730, while declining relief to
candidates who acquired eligibility after the date mentioned in the
notification carved out a narrow exception. There, the judgment in
Ajay Kumar Mishra vs. Union of India & Ors., [2016] SCC OnLine
Del 6563, a case very similar to the facts of the present case, was
noted. In Ajai Kumar Mishra (supra), Indira Banerjee, J. (as Her
Ladyship then was) speaking for the Division Bench of the Delhi
High Court in para 9 stated as under:-
9. It is true that whenever any material discrepancy
is noticed in the application form and/or when any
suppression and/ or mis-representation is detected, the
candidature might be cancelled even after the application
has been processed and the candidate has been allowed
to participate in the selection process. However, after a
candidate has participated in the selection process and
cleared all the stages successfully, his candidature can
only be cancelled, after careful scrutiny of the gravity of
the lapse, and not for trivial omissions or errors.”
(emphasis supplied)
The exception for trivial errors or omissions is for the reason that
law does not concern itself with trifles. This principle is recognized
in the legal maxim - De minimis non curat lex.
16. Learned counsel for the appellant, in her written submissions, cited
the following judgments in support of her proposition that inadvertent
[2024] 1 S.C.R. 7
error in filling up the date of birth when no advantage is derived will

not constitute a wilful mis-representation and contended that in all
those cases reliefs were given to the candidates:
i) Arkshit Kapoor vs. Union of India, 2017 SCC OnLine Del
10154 [para 20]
ii) K. Sangeetha vs. Tamil Nadu Public Service Commission
(2018) SCC OnLine Mad 5075 [Paras 9 & 11]
iii) Anuj Pratap Singh vs. Union Public Service Commission,
2018 SCC OnLine Del 10982 [Paras 15,16 & 21]
iv) Shubham Tushir vs. Union of India, 2019 SCC OnLine Del
9831 [Paras 4 & 10]
v) Staff Selection Commission & Anr. Vs. Shubham Tushir
LPA No. 237 of 2020 before the Delhi High Court
vi) Poonam Pal vs. M.P. Gramin Bank, (2022) SCC OnLine MP
2921 [Paras 9-12]
17. In fact, in Anuj Pratap Singh (supra), as is clear from para 14 of
the said judgment, the candidate unable to correct the error at the
first point was forced to repeat it while submitting the application for
sitting in the main exam since he had no other option. The Court
accepted the explanation and condoned the error in the filling up of
the column pertaining to the date of birth.
18. The learned counsel for the State drew attention to the verification
by the appellant, of the details in a printed form furnished by the
selection board. He contended that the appellant signed the form
which carried the date of birth. First of all, the form was a printed
form which reflected the date of birth as given by the appellant and
the appellant signed the printed form on 10.03.2018. We are inclined
to accept the explanation of the appellant that since the appellant
was unaware of his own mistake he had mechanically signed the
printed form. It is only later, on 11.06.2018, on the publication of
the result that the appellant realized the error. We do not think that
the appellant could be penalised for this insignificant error which
made no difference to the ultimate result. Errors of this kind, as
noticed in the present case, which are inadvertent do not constitute
misrepresentation or wilful suppression.
8 [2024] 1 S.C.R.
19. In this case, the appellant has participated in the selection process
and cleared all the stages successfully. The error in the application
is trivial which did not play any part in the selection process. The
State was not justified in making a mountain out of this molehill.
Perhaps the rarefied atmosphere of the cybercafe, got the better of
the appellant. He omitted to notice the error and even failed to avail
the corrective mechanism offered. In the instant case, we cannot turn
a Nelson’s eye to the ground realities that existed. In the order dated
22.11.2021 in C.A. No. 6983 of 2021 [Prince Jaibir Singh vs. Union
of India & Ors.], this Court rightly observed that though technology
is a great enabler, there is at the same time, a digital divide.
20. In one of the cases cited as a precedent in the counter affidavit,
before the High Court, Pankaj Paswan vs. State of Bihar Anr.,
2015 SCC On Line Patna 8739, the State had taken a defence that
many candidates applied in more than one place and hence there
could be deliberate tweaking in the date of birth to take advantage
of the selection process in more than one district or region. It is very
important to notice that there is no such plea taken in the present
case. If any such device or trick had been adopted, the State would
have easily detected the same and placed the same before the Court.
The fact that the same has not been done shows that there was no
trick or device resorted to by the appellant. It is a trivial error which
appears to be a genuine and bona fide mistake. It will be unjust to
penalise the appellant for the same.
21. Learned counsel for the State, in the written submissions, stated that
the instructions clearly stipulated that if two or more candidates obtain
the same marks in the Physical Eligibility Test, their relative rank in
the final merit list could be determined on the basis of their date of
birth. The implication in the submission is that the date of birth is a
significant aspect. On that basis, he submits that the cancellation
ought to be upheld. We do not find merit in the submission. The
original date of birth, as available is 18.12.1997, in the educational
certificates. There is no dispute that the appellant’s date of birth was,
in fact, 18.12.1997. In view of that, we do not see the said clause in
the instructions as an impediment for the selection of the appellant.
22. Learned counsel for the State has also, in the written submissions,
cited the judgment of this Court in Yogesh Kumar and Others
[2024] 1 S.C.R. 9
vs. Govt. of NCT, Delhi and Others, (2003) 3 SCC 548. The said
judgment is clearly distinguishable. There the issue was about allowing
entry of ineligible persons into the selection. While the eligibility
prescribed was Teacher’s Training Certificate from a recognized
institute or intermediate or equivalent from a recognized Board/
University with an elective subject in the required language at the
matric level, candidates with B.Ed. degree sought appointment as
Assistant Teacher. Negating their claim, this Court held that the
B.Ed. qualification cannot be treated as a qualification higher than
the Teacher’s Training Certificate, because the nature of the training
imparted for grant of certificate and for grant of degree was totally
different. In that context, this Court held that deviating from the rules
and allowing entry to ineligible persons would deprive many others
who could have competed for the post. Yogesh Kumar (supra) has
no application to the facts of the present case. Equally distinguishable
are the judgments of the Delhi High Court in Rohit Kumar and
Another vs. Union of India and Others, 2022 SCC OnLine Del
1219 and Pradeep Kumar vs. Union of India and Others, 2022
SCC OnLine Del 239.
23. In the case of Rohit Kumar (supra), the undisputed facts, as is
clear from para 10 of the judgment, was that the candidate was
declared unsuccessful on two counts, namely, that the OBC certificate
uploaded by the candidate was not as per the format as mentioned
in the advertisement and additionally on the ground that the date
of issuance of the certificate was wrongly mentioned in the online
application.
24. In Pradeep Kumar (supra), the identity proof (Aadhaar Card) was not
uploaded and instead the self photograph of the candidate has been
uploaded. We find that the said two judgments are distinguishable
on facts for the reasons set out above.
25. On the peculiar facts of this case, considering the background in which
the error occurred, we are inclined to set aside the cancellation. We
are not impressed with the finding of the Division Bench that there
was no prayer seeking quashment of the results declared over the
web. A reading of the prayer clause in the writ petition indicates that
the appellant did pray for a mandamus directing the respondents
to consider the candidature treating his date of birth as 18.12.1997
10 [2024] 1 S.C.R.
and also sought for a direction for issuance of an appointment letter.

A Writ Court has the power to mould the relief. Justice cannot be
forsaken on the altar of technicalities.
Conclusion
26. For the reasons stated above, we set aside the judgment of the
Division Bench of the Patna High Court in LPA No. 1271 of 2019 dated
22.08.2022 and direct the respondent-State to treat the appellant as a
candidate who has “passed”, in the selection process held under the
advertisement No. 1 of 2017 issued by the Central Selection Board
(Constable Recruitment), Patna with the date of birth as 18.12.1997.
We further direct that if the appellant is otherwise not disqualified,
the case of the appellant be considered and necessary appointment
letter issued. We further direct that, in the event of there being no
vacancy, appointment letter will still have to be issued on the special
facts of this case. We make the said direction, in exercise of powers
under Article 142 of the Constitution of India. We further direct that the
State will be at liberty in that event to adjust the vacancy in the next
recruitment that they may resort to in the coming years. We notice
from the written submissions of the State that 21,391 vacancies have
been notified in Advertisement No.1 of 2023 and it is stated that the
procedure for selection is ongoing. We place the said statement on
record. We direct compliance to be made of the aforesaid direction
within a period of four weeks from today.
27. The appeal is allowed in the above terms. No order as to costs.
Headnotes prepared by: Ankit Gyan Result of the case: Appeal allowed.
[2024] 1 S.C.R. 11 : 2024 INSC 8
Case Details
Mary Pushpam
v.
Telvi Curusumary & Ors.
03 January 2024
[Vikram Nath* and Rajesh Bindal, JJ.]
As regards the principles of judicial discipline, if the lower or
subordinate Courts could contradict the decisions of higher courts.
Headnotes
Judicial Discipline – Rule and importance of:
Held: Rule of ‘Judicial Discipline and Propriety’ promotes certainty
and consistency in judicial decisions providing assurance to
individuals as to the consequences of their actions – When a
decision of a coordinate Bench of same High court is brought to
the notice of the bench, it is to be respected and is binding subject
to right of the bench of such co-equal quorum to take a different
view and refer the question to a larger bench – Following the
principles of judicial discipline, lower or subordinate Courts do not
have the authority to contradict the decisions of higher courts –
On facts, the trial court and the High Court, in the second round
of litigation, violated the judicial discipline by adopting a position
contrary to the High Court’s final judgment dated 30.03.1990, from
the first round of litigation – Judgment dated 30.03.1990 attained
finality and should be regarded as the conclusive and binding order
from the initial litigation – Interpreting the said judgment which
was clear in itself any differently would clearly amount to judicial
indiscipline – Also the Sub-Judge in its judgment rightly observed
that the trial court had no business to interpret the judgment of
the High Court dated 30.03.1990 in any other way than what was
recorded therein – Thus, the impugned judgment and order of
the High Court is set aside and that of the first appellate court is
restored. [Paras 1, 15, 16, 20]
* Author
12 [2024] 1 S.C.R.
Suit – Suit for possession – Accurate description of the actual

boundary or the measurements of the property – Requirement:
Held: Suit for possession has to describe the property in question
with accuracy and all details of measurement and boundaries –
When the same is lacking, the suit for possession with respect to
such a property would be liable to be dismissed on the ground of
its identifiability. [Para 23]
Doctrines – Doctrine of merger – Basis of:
Held: Doctrine of merger is rooted in the idea of maintenance
of the decorum of hierarchy of courts and tribunals – Doctrine is
based on the simple reasoning that there cannot be, at the same
time, more than one operative order governing the same subject
matter. [Para 17]
Doctrines – Doctrine of precedent – Rule of:
Held: It promotes certainty and consistency in judicial decisions
providing assurance to individuals as to the consequences of their
actions – When a decision of a coordinate Bench of same High
Court is brought to the notice of the bench, it is to be respected
and is binding subject to right of the bench of such co-equal
quorum to take a different view and refer the question to a larger
bench – It is the only course of action open to a bench of co-equal
strength. [Para 1]

Kunhayammed & Ors. v. State of Kerala & Anr., [2000]
1 Suppl. SCR 538 : (2000) 6 SCC 359; State of
Punjab & Anr. v. Devans Modern Breweries Ltd. & Anr.,
[2003] 5 Suppl. SCR 930 : (2004) 11 SCC 26; Central
Board of Dawoodi Bohra Community & Anr. vs. State
of Maharashtra & Anr., [2004] 6 Suppl. SCR 1054 :
(2005) 2 SCC 673 – referred to.
Lists of Key Words
Judicial Discipline; Judicial Indiscipline; Judicial Propriety; Doctrine

of precedents; Consistency in judicial decisions; Co-equal quorum;
Doctrine of merger; Maintenance of the decorum; Hierarchy of
courts and tribunals; Civil suit; Declaration of title; Possession;
Permanent injunction; Accurate measurement and boundaries.
[2024] 1 S.C.R. 13
MARY PUSHPAM v. TELVI CURUSUMARY & ORS.

Appearances
CIVIL APPELLATE JURISDICTION : Civil Appeal No.9941 of 2016

of Madras in SA No.451 of 2004.
Appearances:
Ms. N. S. Nappinai, V. Balaji, Atul Sharma, Asaithambi, C. Kannan,
Nizamuddin, S. Devendran, Rakesh K. Sharma, Advs. for the
Appellant.
Vikas Mehta, Vinayak Sharma, Advs. for the Respondents.

Judgment
Vikram Nath, J.
1. The rule of ‘Judicial Discipline and Propriety’ and the Doctrine of
precedents has a merit of promoting certainty and consistency
in judicial decisions providing assurance to individuals as to the
consequences of their actions. The Constitution benches of this
court have time and again reiterated the rules emerging from Judicial
Discipline. Accordingly, when a decision of a coordinate Bench of
same High court is brought to the notice of the bench, it is to be
respected and is binding subject to right of the bench of such co-
equal quorum to take a different view and refer the question to a
larger bench. It is the only course of action open to a bench of co-
equal strength, when faced with the previous decision taken by a
bench with same strength.
2. The plaintiff is in appeal assailing the correctness of the judgment
and order dated 21.07.2009 passed by the Madurai Bench of
Madras High Court, whereby, the Second Appeal filed by the
defendant-respondent was allowed, the judgment and decree
passed by the Sub-Judge, Padmanabhapuram dated 13.10.2003
was set aside and that of the Trial Court dated 30.06.1997 was
restored and confirmed.
3. The appellant instituted a civil suit for declaration of title, possession
and permanent injunction against the respondents which was
registered as OS No. 308 of 1995 in the Court of District Munsiff-
14 [2024] 1 S.C.R.
cum-Judicial Magistrate at Eraniel. The basis for filing the suit was
that earlier in 1976, the respondents had filed a suit for ejectment
of the appellant which was registered as OS No. 70 of 1976. The
said suit was dismissed, First Appeal was dismissed and the Second
Appeal was also dismissed by the High Court, vide judgment dated
30.03.1990. The same became final as it was not carried any further.
4. The appellant continued in possession of the property in suit. However,
as the respondents were trying to interfere with the possession of
the appellant, she filed the suit.
5. The respondents contested the suit and filed their written statements.
According to them, the defence taken was that they had purchased
8 cents of land by way of registered sale deed on 13.03.1974 which
was with respect to an open piece of land and did not contain any
building as such. The suit of 1976 filed by them was with respect
to the constructions raised by the appellant and not with respect to
8 cents of land. The appellant had no right, title or interest over the
suit property. The suit was liable to be dismissed.
6. The Trial Court framed the following six issues:
(i). Whether the suit property properly absolutely belongs to the
plaintiffs?
(ii). Whether the decision of the Honourable High Court of Madras
in S.A. No. 2082/1990 relates to the entire 8 cents of the suit
property or whether it pertains to the house in a portion of the
suit property?
(iii). Whether the plaintiffs have been in possession and enjoyment
of the entire suit property?
(iv). Whether the plaintiffs are entitled to the relief of permanent
injunction as prayed for?
(v). Whether the suit property is to be demarcated and northern
boundary is put up as prayed for?
(vi). What reliefs are the Plaintiffs entitled to?
7. Issue No. 2 related to the question whether the judgment of the High
Court in Second Appeal No. 2082 of 1990 related to the entire 8
cents of the property or whether it pertained only to the house in a
portion of the land in dispute.
[2024] 1 S.C.R. 15
8. The Trial Court, vide judgement dated 30.06.1997, decreed the suit
for declaration of title, possession and permanent injunction but
only with respect to the portion over which the house property was
situated out of the total extent of 8 cents of the suit property. With
respect to the other property, the suit was dismissed.
9. Aggrieved by the dismissal of the suit, the appellant preferred an
Appeal which was registered as Appeal No. 169 of 1997. The Sub-
Judge vide judgement dated 13.10.2003 modified the judgement
and decree of the Trial Court and declared that the appellants were
entitled for the entire suit property for relief of declaration of title,
permanent injunction and for setting up their boundary for securing
the said property. The learned Sub-Judge had mainly relied upon
the judgment of the High Court dated 30.03.1990 in the earlier round
of litigation.
10. Aggrieved by the judgment of the Sub-Judge, the respondents
preferred second appeal before the High Court registered as Second
Appeal No. 451 of 2004. The High Court, by the impugned judgment
dated 21.07.2009, allowed the appeal, set aside the judgment of the
Sub-Judge and restored the decree of the Trial Court. Aggrieved by
the same, the plaintiff has preferred the present appeal.
11. Heard learned counsel for the parties and perused the material on
record.
12. The main argument advanced on behalf of the appellant is that
the High Court in the first round in its judgment dated 30.03.1990
had specifically recorded that the dispute was with respect to 8
cents of land and the construction standing thereon. The Trial
Court or the High Court therefore in the present round of litigation
could not have confined it only to the construction and not the
entire portion of land measuring 8 cents. It is further submitted
that under the law of merger, the judgment of the Trial Court
and the First Appeal Court in the first round of litigation merged
with the judgment of the High Court dated 30.03.1990 and it is
that judgment alone which has to be read as final and binding
between the parties. It is also submitted that the First Appeal
Court in its judgement dated 13.10.2003 in the present round had
specifically recorded that the Trial Court had no jurisdiction to go
against the judgement of the High Court. The High Court in its
impugned judgement has in fact breached the judicial discipline
by taking a view contrary to the earlier judgement.
16 [2024] 1 S.C.R.
13. On the other hand, learned Counsel for the respondents submitted that
the judgements of the Trial Court and the High Court in the present
round is correct in law and facts. The earlier round of litigation initiated
by the respondents was only with respect to the constructions raised
by the appellant which of course they had lost. The respondents had
throughout been in possession of the 8 cents of land. The appellants
were never in possession thereof. The judgement of the Trial Court
and that of the High Court deserves to be maintained.
14. In the judgement of the High Court in the first round dated 30.03.1990,
it is not at one place but at number of places that the High Court
has recorded that the suit property comprised of 8 cents of land
which was the land purchased by the respondents in 1974. It would
be relevant to refer to such facts noted in the said judgment. In the
opening paragraph the High Court mentioned as follows:
“The suit property is consisting of 8 cents. The defendant
was residing in this property even prior to the purchase
of this property by the plaintiff.”
Then again in paragraph no.2, the High Court records as follows:
“The learned counsel appearing for the appellant contended
that the suit property is comprised of 8 cents of land and
the appellant purchased the same by a sale deed dated
13.03.1974, which is marked as Exhibit A-1”.
The above clearly shows that not only the High Court notes that it
was 8 cents of land which was in dispute but also the Counsel for
the appellants therein (respondents herein) whose submissions are
recorded understood it in the same manner. Again, in paragraph
no.3, the High Court records as follows:
“In the sale deed dated 13.03.1974 (Exhibit A1) there is no
mention about the superstructure in which the respondent
herein is residing. The sale deed merely states about
the sale of 8 cents of land. As already stated, that the
respondent was residing in the suit property even prior
to the purchase by the appellant.”
Lastly, the High Court records its finding as follows:
[2024] 1 S.C.R. 17
“The courts below found that all the documents produced by

the respondent herein are in the name of the respondent.
Therefore, considering all these documents, the courts
below came to the conclusion that the respondent herein
is in possession of the suit property for more than the
statutory period and so she had perfected her title by
adverse possession.”
15. In the light of the above facts, arguments and findings recorded
by the High Court in its judgment dated 30.031990, apparently no
defence was left for the respondents to take as it was already held
that the appellant had perfected her rights by adverse possession
over the suit property which was 8 cents of land. The construction of
the appellant was standing over the 8 cents of land may be on part
of it but she was found in possession of the entire 8 cents.
16. The respondents never sought any clarification of the findings of the
High Court or the observations made therein nor did they assail the
same before any higher forum. The judgement dated 30.03.1990
attained finality. Interpreting the said judgement which was clear in
itself any differently would clearly amount to judicial indiscipline. The
Sub-Judge in its judgement dated 13.10.2003 had rightly observed
that the Trial Court had no business to interpret the judgement of
the High Court dated 30.03.1990 in any other way than what was
recorded therein.
17. The doctrine of merger is a common law doctrine that is rooted in
the idea of maintenance of the decorum of hierarchy of courts and
tribunals. The doctrine is based on the simple reasoning that there
cannot be, at the same time, more than one operative order governing
the same subject matter. The same was aptly summed up by this
Court when it described the said doctrine in Kunhayammed & Ors.
v. State of Kerala & Anr.1:
“44 (i) Where an appeal or revision is provided against an
order passed by a court, tribunal or any other authority
before superior forum and such superior forum modifies,
reverses or affirms the decision put in issue before it, the
1 (2000) 6 SCC 359

18 [2024] 1 S.C.R.
decision by the subordinate forum merges in the decision

by the superior forum and it is the latter which subsists,
remains operative and is capable of enforcement in the
eye of the Law.”
18. The legal position on Coordinate Benches has further been elaborated
by this Court in State of Punjab & Anr. v. Devans Modern Breweries
Ltd. & Anr.2:
“339. Judicial discipline envisages that a coordinate Bench
follow the decision of an earlier coordinate Bench. If a
coordinate Bench does not agree with the principles of law
enunciated by another Bench, the matter may be referred
only to a larger Bench.
340. In Halsbury’s Laws of England (4th Edn.), Vol. 26
at pp. 297-98, para 578, it is stated: “A decision is given
per incuriam when the court has acted in ignorance of a
previous decision of its own or of a court of coordinate
jurisdiction which covered the case before it, in which case
it must decide which case to follow.”
19. We have already discussed about the importance of ensuring judicial
discipline and the same has also been upheld by various judgement
of this Court. In Central Board of Dawoodi Bohra Community &
Anr. vs. State of Maharashtra & Anr.3, this Court has summed up
the legal position of rules of judicial discipline as follows:
“12. ***
(1) The law laid down by this Court in a decision delivered
by a Bench of larger strength is binding on any
subsequent Bench of lesser or coequal strength.
(2) A Bench of lesser quorum cannot disagree or dissent
from the view of the law taken by a Bench of larger
quorum. In case of doubt all that the Bench of lesser
quorum can do is to invite the attention of the Chief
Justice and request for the matter being placed for
hearing before a Bench of larger quorum than the
2 (2004) 11 SCC 26
3 (2005) 2 SCC 673
[2024] 1 S.C.R. 19
Bench whose decision has come up for consideration.

It will be open only for a Bench of coequal strength
to express an opinion doubting the correctness of the
view taken by the earlier Bench of coequal strength,
whereupon the matter may be placed for hearing
before a Bench consisting of a quorum larger than
the one which pronounced the decision laying down
the law the correctness of which is doubted.”
20. In the current case, as previously mentioned, the High Court’s
judgment from the initial round dated 30.03.1990, noted that the
disputed property included 8 cents of land, not just the building
structure on it. As per the Doctrine of Merger, the judgments of the
Trial Court and the First Appellate Court from the first round of litigation
are absorbed into the High Court’s judgment dated 30.03.1990. This
1990 judgment should be regarded as the conclusive and binding
order from the initial litigation. Following the principles of judicial
discipline, lower or subordinate Courts do not have the authority to
contradict the decisions of higher Courts. In the current case, the
Trial Court and the High Court, in the second round of litigation,
violated this judicial discipline by adopting a position contrary to the
High Court’s final judgment dated 30.03.1990, from the first round
of litigation.
21. The argument of the Counsel for respondents is mainly that the
judgment of the Trial Court and First Appellate Court in the first
round of litigation clearly stated in the case of the plaintiff that
it was with respect to the constructed portion only in which the
mother of the appellant was residing and not the whole area of
8 cents purchased by them. The High Court committed a bona
fide error in recording that the suit property was 8 cents along
with constructions standing over it. As such the Trial Court and
the High Court in the present round were correct in limiting the
decree only to the constructions and not the entire area of 8 cents.
22. In order to test the above agreement, we carefully examined the
judgement of the Trial Court as also the First Appellate Court.
What is discernible is that nowhere it is recorded the actual
boundary or the measurements of the property in possession of
the mother of the appellant (defendant therein). The respondents-
20 [2024] 1 S.C.R.
plaintiff therein had based her case on the ground that they had
purchased 8 cents of open piece of land and the defendant
therein had raised construction over some adjoining land, and
had trespassed over part of her purchased land as such decree
of possession be granted.
23. We are unable to appreciate the said argument of the respondents.
Suit for possession has to describe the property in question with
accuracy and all details of measurement and boundaries. This
was completely lacking. A suit for possession with respect to such
a property would be liable to be dismissed on the ground of its
identifiability. Further, it may be noted that if the construction by
the defendant were not made over 8 cents of purchased land,
then the plaintiff therein would not have a claim to possession
of the same. The argument thus has to be rejected not only on
facts but also on legal grounds as discussed above.
24. The appeal is, accordingly, allowed. The impugned judgment
and order of the High Court is set aside and that of the First
Appellate Court dated 13.10.2003 passed by the Sub-Judge,
Padmanabhapuram is restored and maintained.
25. There shall be no order as to costs.
Headnotes prepared by: Nidhi Jain Result of the case: Appeal allowed.
[2024] 1 S.C.R. 21 : 2024 INSC 7
Case Details
Radhey Shyam Yadav & Anr. Etc.

v.
State of U.P. & Ors.
(Civil Appeal Nos.20-21 Of 2024)
03 January 2024
[J.K. Maheshwari and K.V. Viswanathan*, JJ.]
Three appellants herein were appointed as Assistant Teachers

at the Junior High School on 25.06.1999. From October, 2005,
abruptly their salaries were stopped. Whether the State was justified
in abruptly stopping their salary.
Headnotes
Service Law – Recruitment – Stoppage of salary – The

District Basic Education Officer case was that by order dated
26.12.1997, only two additional posts of Assistant Teacher were
created by the Joint Director of Education – It was averred that
manipulation was made by the management in collusion with
the appellants to show that three posts of Assistant Teacher
were sanctioned – From October, 2005, abruptly salaries of
appellants were stopped – Propriety:
Held: Apart from the bare allegation, absolutely no material was
placed on record to show how the appellants, who were the
applicants from the open market, had colluded or were blameworthy
for any manipulation – According to the State, two posts were, in
fact, sanctioned and it was the School that manipulated it, to make
it three – Even according to the State, admittedly, till date there is
no order terminating their services – In an inquiry report initiated
pursuant to the directions of the High Court, it was found that
the Manager of the School had fraudulently changed the number
of posts from two to three in the order dated 26.12.1997 and
accordingly, an FIR was filed against the manager – There were
no findings of collusion or blameworthiness against appellants for
the alleged manipulation – Appellants were bona fide applicants
from the open market – The alleged mischief, even according to
the State, was at the end of the School and its Manager – In the
light of the various Supreme Court decisions, it will be travesty of
* Author
22 [2024] 1 S.C.R.
justice if relief is denied to the appellants – Appellants were not at

fault and the State could not have abruptly stopped their salaries
– Accordingly, the State directed to pay salaries to the appellants
for the period from 25.06.1999 till January, 2002 in full – Also,
the State directed that insofar as the period from October, 2005
till today is concerned, the State shall pay the appellants 50% of
the backwages – The State also directed to allow the appellants
to commence work. [Paras 8, 14, 16, 30, 34, 35]

Chief Engineer, M.S.E.B and Another vs. Suresh
Raghunath Bhokare, (2005)10 SCC 465; Vikas Pratap
Singh and Ors. vs. State of Chhattisgarh and Ors.,
[2013] 10 SCR 1114:(2013) 14 SCC 494; Anmol Kumar
Tiwari and Others vs. State of Jharkhand and Others,
2021 INSC 101: (2021) 5 SCC 424; Dr. M.S. Mudhol
and Another vs. S.D. Halegkar and Others, [1993] 1
Suppl. SCR 115:(1993) 3 SCC 591; Rajesh Kumar and
Others vs. State of Bihar and Others, [2013] 4 SCR
753:(2013) 4 SCC 690; K. Ameer Khan and Anr. Vs. A.
Gangadharan and Ors., (2001) 9 SCC 84; Sivanandan
C.T. and Others vs. High Court of Kerala and Ors.,
(2023) SCC OnLine SC 994 – relied on.
Sachin Kumar and Ors. Vs. Delhi Subordinate
Service Selection Board (DSSSB) and Ors. [2021]
2 SCR 1073:2021 INSC 147: 2021 (4) SCC 631 –
distinguished.
Vivek Kaisth and Anr. Vs. The State of Himachal Pradesh
and Ors., 2023 INSC 1007:2023 SCC OnLine SC
1485 – referred to.
List of Keywords
Service Law; Recruitment; Stoppage of salary; Bona fide
applicants; Open market; Full salary payment; Backwages.

Appearances
CIVIL APPELLATE JURISDICTION : Civil Appeal Nos.20-21 of 2024.

[From the Judgment and Order dated 15.09.2021 of the High Court of
Judicature at Allahabad in Special Appeal Nos.1435 and 1445 of 2023]
[2024] 1 S.C.R. 23
RADHEY SHYAM YADAV & ANR. ETC. v. STATE OF U.P. & ORS.
Appearances:
Surender Kumar Gupta, Chitvan Singhal, Advs. for the Appellants.
Ms. Sansriti Pathak, Krishnanand Pandeya, Dhawal Uniyal, Naresh
Kumar, Himanshu Sharma, Advs. for the Respondents.

Judgment
K.V. Viswanathan, J.
1. Leave granted.
2. Radhey Shyam Yadav, Lal Chandra Kharwar and Ravindra Nath
Yadav are the three appellants. On 25.06.1999, they were appointed
as Assistant Teachers at the Junior High School, Bahorikpur,
Maharajganj, District Jaunpur, U.P. (hereinafter referred to as ‘the
School’). From October, 2005, abruptly their salaries were stopped.
They moved the High Court for redressal. Both the learned Single
Judge and the Division Bench declined them relief. Aggrieved, they
are before us in these Appeals.
Brief facts:-
3. From the record, it appears that the School started as a recognized
unaided school in 1983-1984 with one post of Head Master, four posts
of Assistant Teacher, three posts of Peon and one post of Clerk. On
07.10.1996, two posts of Assistant Teacher were increased, raising
the sanctioned strength of Assistant Teacher to six.
4. On 26.12.1997, the Director of Education (Basic) sanctioned certain
additional posts of Assistant Teacher in the aforesaid School. While
the department claims that by the order of 26.12.1997, only two
posts of Assistant Teacher were sanctioned, the Manager/Principal
of the School claiming that three posts were sanctioned, went ahead
and sought permission from the District Basic Education Officer for
issuing advertisement. This was done by their letter of 28.01.1998.
The letter of 26.12.1997 has been placed before us by the State in
the form of an additional affidavit which indicates that only two posts
were sanctioned. The State does not dispute that by the above letter
two posts of Assistant Teacher were sanctioned. In 1998, the School
became an aided School.
24 [2024] 1 S.C.R.
5. Thereafter, responding to the letter of the School, the District Basic

Education Officer by his letter of 20.11.1998 accorded permission
to issue advertisement for appointment of three posts of Assistant
Teachers. On 25.11.1998, an advertisement was issued. The School,
thereafter, on 08.12.1998, wrote a letter to the District Basic Education
Officer to nominate a Member for the selection of the teachers.
In response, the District Basic Education Officer nominated the
Assistant District Basic Education Officer, Bahorikpur as a Member
of the Selection Committee. The Selection Committee duly met and
considered the twelve applications received by it. Seven out of the
twelve applicants, including the three appellants herein, participated
in the interview. By its letter of 27.12.1998, the Selection Committee
informed the District Basic Education Officer that the appellants, on
basis of their ability, have been selected and their case was being
submitted for approval. The order in which the Selection Committee
has sent subject-wise names were as follows:
i. Lal Chandra Kharwar – Science and Math
ii. Radhey Shyam Yadav – English
iii. Ravindra Nath Yadav – Agric & Gen.Topic
It is not disputed that by an order of 09.06.1999, the District Basic
Education Officer granted approval for the appointment of the
appellants. As stated earlier, they were appointed on 25.06.1999
and were working continuously.
6. The undisputed case is that from October, 2005, their salaries were
stopped from being disbursed, forcing them to file Writ Petitions in
the High Court, namely, Civil Misc. Writ Petition No. 10286 of 2007
and Civil Misc. Writ Petition No. 18641 of 2008. The three appellants,
in all, filed two writ petitions. In the writ petitions, the prayer was
for a writ of mandamus commanding the respondents to pay the
arrears of salary from July, 1999 to January, 2002 and continue to
pay salary from October, 2005. It was their case that from the date
of appointment till January 2002, their salary had not been released.
7. The District Basic Education Officer filed counter affidavits to the
writ petitions. It was his case that, by order dated 26.12.1997, only
two additional posts of Assistant Teacher were created by the Joint
Director of Education. It was averred that manipulation was made by
the management in collusion with the appellants to show that three
posts of Assistant Teacher were sanctioned.
[2024] 1 S.C.R. 25
8. Apart from this bare allegation, absolutely no material was placed on

record to show how the appellants had colluded or were blameworthy
for any manipulation.
9. Subsequent to the counter affidavit filed by the State, on 30.07.2013,
a compliance affidavit was filed. It is averred therein that a detailed
enquiry was conducted in the matter wherein it had transpired that
manipulation was got done at the level of the School in question by
overwriting the sanctioned posts of teachers of the School as “three”
in place of “two”.
10. The Learned Single Judge, by order dated 10.09.2013, held that
if based on the forged order, proceedings were initiated for the
selection of Assistant Teacher, then the entire selection needs to be
cancelled. It was also held that since forgery was committed by the
persons involved in the selection of Assistant Teachers and since
the selection process was not fair, being based on a forged letter,
the candidates who were selected in the selection process are not
entitled to be appointed and retained on the post of Assistant Teacher,
and holding so, the writ petitions were dismissed. The appellants filed
writ appeals. By the impugned order, the appeals were dismissed
reiterating the findings of the learned Singe Judge.
Contentions:
11. We have heard Mr. Surender Kumar Gupta, learned counsel for
the appellants and Ms. Sansriti Pathak, learned counsel for the
respondent-State.
12. Learned counsel for the appellants, after placing a comprehensive
overview of the facts, vehemently contended that there was no fault on
the part of the appellants and for any wrong computation of vacancy,
the appellants ought not to be prejudiced. He further contended that
the State admittedly does not dispute that two vacancies were, in
fact, created and that if at all there was any manipulation, it was at
the level of the School. In the absence of any blameworthy conduct
attributed to the appellants, they ought not to be prejudiced after
serving the School for very long. According to the appellants, they
were continuously teaching till 30.03.2016 by entering their names in
a separate register. However, according to the State, from October,
2005 their salaries have been stopped. In support of their claim,
learned counsel for the appellants relied upon the judgments of this
26 [2024] 1 S.C.R.
Court in Vikas Pratap Singh and Ors. Vs. State of Chhattisgarh

and Ors., (2013) 14 SCC 494 and the recent judgment in Civil Appeal
Nos. 6233-34 of 2023 dated 20.11.2023 titled Vivek Kaisth and Anr.
Vs. The State of Himachal Pradesh and Ors., 2023:INSC:1007 =
2023 SCC OnLine SC 1485.
13. Ms. Sansriti Pathak, learned counsel for the State vehemently
defended the impugned judgment. She contended that where
there was fraud, the whole selection process shall be vitiated. She
relied on Sachin Kumar and Ors. Vs. Delhi Subordinate Service
Selection Board (DSSSB) and Ors. 2021:INSC:147 = 2021 (4)
SCC 631 in support of her proposition. Learned counsel submitted
that there was no case warranting interference under Article 136 of
the Constitution of India.
Discussion and Findings:
14. We have given our thoughtful consideration to the matter and
considered the submissions of the rival parties and perused the
records. The correspondence between the School and the Directorate
of Education culminated in the order of 26.12.1997. There is a dispute
about the number of posts that were sanctioned. According to the
State, two posts were, in fact, sanctioned and it was the School that
manipulated it, to make it three. We will proceed on the basis that the
version of the State is correct. The nominee of the State participated
in the selection process. Twelve candidates had applied and ultimately
three appellants were empanelled for selection. Due approval was
given for the appointment and admittedly they discharged their duties
on their post from 25.06.1999 till September, 2005. Even according
to the State, admittedly, till date there is no order terminating their
services. What impelled the appellants to go to the High Court was
the stoppage of their salary.
15. There is not an iota of material to demonstrate how the appellants,
who were applicants from the open market, were guilty of colluding
in the manipulation.
16. We are also reinforced on this, by the findings in the inquiry report
initiated pursuant to the directions of the High Court in the writ
petitions. In the Inquiry Report, the conclusion was that, it was the
erstwhile District Basic Education Officer, Jaunpur and his office, in
collusion with the Manager of the School, who had taken steps for
appointment/approval. It was mentioned that there was involvement
[2024] 1 S.C.R. 27
of Shri Ram Dular Yadav, Principal, Shri Triloki Nath Singh, Manager
of the school, the erstwhile District Basic Education Officer, Jaunpur
and also the officials of the District Basic Education Officer, Jaunpur.
It was further found that the Manager of the School has fraudulently
changed the number of posts from two to three in the order dated
26.12.1997 and it was mentioned that Shri Triloki Nath Singh, the
Manager was guilty and accordingly, District Basic Education Officer,
Jaunpur has lodged an F.I.R. against Shri Triloki Nath Singh on
08.07.2013.
17. What is important to notice is, nothing has been mentioned as to
how the appellants, who were applicants from the open market,
were in any way responsible. There is no reference to any material
whatsoever that had been unearthed either in the departmental inquiry
launched or in the criminal investigation. On a pointed query to the
counsel for the State as to whether the appellants were arrayed as
accused in that criminal case, she candidly replied that they were
not. On being further asked as to whether any action has been taken
against the School, she replied that no action has been taken. The
School continues to function with grants-in-aid. She submitted that
the only action taken was to file an F.I.R. against the Manager of the
School, which F.I.R. has since resulted in a charge-sheet.
18. In the inquiry report, the following crucial findings occur. They are
extracted hereinbelow:
“(3) Two additional posts of Assistant Teachers were
created vide the Directorate’s letter No.Samanya(l)
Basic/2117-20/96-97 dated 26.12.1997 (certified copy
enclosed) as a result the number of sanctioned posts of
Asst. Teachers in the school in question became 06 (six).
Earlier this letter was typed for being sent to the Zonal
Assistant Education Director (Basic), Azamgarh which
was later on erased and ‘Varanasi’ was written with pen.
In this letter, in column No.2, the number of sanctioned
post is mentioned as 02 and against column No.5 the
number of Assistant Teachers is clearly mentioned as 8.
This file bears the signatures of Ex-Desk Assistant Shri
Rajnarain Trivedi and Deputy Education Director (Science)
Shri Harish Chandra Tiwari, who has since retired on the
note side of the file there is the order of creation of two
28 [2024] 1 S.C.R.
posts dated 11.8.1997 of late Shri Vinay Kumar Pandey,

Deputy Education Director (Basic).
(4) In the aforesaid post creation order of the Directorate
dated 26.12.1997, the Manager of the institute, showing
03 (three) posts of Assistant Teachers fraudulently and
obtained approval for appointment of 03 Assistant Teachers
S/Shri Lal Chand Kharwar, Radhey Shyam Yadav and
Ravinder Nath from District, Jaunpur vide letter No
B-2/1313-14/99-2000 dated 9.6.98.
(5) The District, Jaunpur sought permission from the
Directorate for payment of salary of the aforesaid three
teachers vide letter No.3909 dated 28.8.2001. With this
letter the Directorate’s letter dated 16.12.1997, which was
sent by the Manager duly certified by the District, Jaunpur
was enclosed in which fraudulently 03(three) in place of 02
(two) in column No.3, 09 (nine) in place of 08 (eight) and
total 12 (twelve) in place of 11 (eleven) against column
No.5 were shown.
(6) After the verification of the said fraudulent letter dated
26.12.1997 sent by the District, Jaunpur, vide the registered
letter No.Arth(4)/1812/2004-05 dated 27.10.2004 and
Letter No.Arth(4)/2310-13/2004-05 dated 19.11.2004, the
District, Jaunpur was directed that in the post creation order
in question the Manager of the institute had fraudulently
mentioned three posts while in the post creation order
dated 28.12.1997 only two posts of Assistant Teachers
have been sanctioned. The Directorate directed the District,
Jaunpur to call for the explanation of the Manager and the
Principal of the institute responsible for the same, and to
furnish the information about the then District, Jaunpur who
had verified the posts and the name, designation and the
place of posting of the then Desk Assistant (photo copy
enclosed). On the aforesaid two letters of the Directorate
no action was taken by the then District, Jaunpur which
prima facie shows that the erstwhile District, Jaunpur and
his office in collusion with the Manager of the school, had
taken steps for appointment/approval in the school in which
the involvement of Shri Ram Dular Yadav, Principal, Shri
Triloki Nath Singh, Manager of the institute, the erstwhile
[2024] 1 S.C.R. 29
District, Jaunpur and the officials of the office of District,

Jaunpur, is clearly visible.
xxx xxx
(c) The erstwhile District, Jaunpur/erstwhile Finance and
Accounts Officer, Basic Education Office, Jaunpur and the
Desk Assistant are prima facie guilty in granting permission
for advertisement selection, approval and taking steps for
disbursement of salary on the basis of the forged letter
of creation of posts dated 26.12.1997 of the Manager of
the institute and in this respect the Education Director
(Basic) should submit proposal to the Government to
initiate disciplinary action against them. In addition take
action against the concerned Desk Assistants at his level.”
There was absolutely nothing found against the three appellants.
However, the following recommendations were made:-
“(d) The appointments of S/Shri Lala Chand Kharwar,
Radhey Shyam Yadav and Ravindra Nath Yadav, made
pursuant to the said forged letter dated 26.12.1997 are
illegal. They have been paid for the period February, 2002
to October, 2005, the salary is illegal. The same be counted
and action for proportionate recovery be taken against the
guilty erstwhile District/erstwhile Finance and Accounts
Officer, Basic Education and the concerned Desk Officer
by the Director of Education (Basic) as per the settled
procedure and steps taken to terminate the services of
illegally appointed Assistant Teachers S/Shri Lala Chand
Kharwar, Radhey Shyam Yadav and Ravindra Nath Yadav.”
19. In the inquiry, the appellants were not given any opportunity. Even
in the inquiry held behind the back of the appellants, there were
no findings of collusion or blameworthiness against them for the
alleged manipulation. Even as on date, the appointment order dated
25.06.1999 and the approval order of 09.06.1999 have not been
revoked. With no finding of guilt against the appellants and with no
material against them, their salaries had been stopped and they have
been prevented to sign on the regular attendance register, admittedly
from October, 2005. The contention of the appellants is that they
continued with their teaching work up till 30.03.2016 entering their
names on a separate attendance register.
30 [2024] 1 S.C.R.
20. We may also note the fact that in the F.I.R. lodged by the State on
17.07.2015 also, there is no allegation against the appellants or any
other applicants and only two persons were named in that F.I.R.
They were Vinod Kumar Chaturvedi, Senior Assistant and Rajendra
Prasad Yadav, Senior Assistant. Both were employees in the office
of the District Basic Education Officer. The allegation was that the
documents related to approval of appointments/teacher listings from
the concerned schools were missing and that the said two officers
were responsible for maintaining the records.
21. In this background, the question that really falls for consideration is,
was the State justified in abruptly and without anything more, stopping
the salary? We are constrained to answer the question in negative.
22. Assuming the case of the State to be true and taking it at its highest,
the factual position would come to this, namely, that while the State
sanctioned two vacancies, the school went ahead and recruited
three. The State has no proof of commission of any malpractice
by the appellants. The State approved their appointments, and the
approval order till date has not been cancelled. The appointments
have not been terminated. No action has been taken against the
school and the school continues to receive the aid.
23. Chief Engineer, M.S.E.B. and Another vs. Suresh Raghunath
Bhokare, (2005) 10 SCC 465 is a case which, on facts, has a striking
resemblance to the case at hand. The respondent therein had been
recommended by the department and was selected as line-helper
in the appellant-Board. On the ground that the recommendation
was allegedly made fraudulently, the respondent was dismissed
from service. The complaint preferred by the respondent had been
dismissed by the Labour Court. The Industrial Court reversing
the findings of the Labour Court, quashed the termination of the
respondent therein and directed reinstatement. Writ Petition filed
by the appellant therein was dismissed by the High Court. This
Court, while observing that in the absence of any overt act being
attributed to the respondent, held that it could not be inferred that
the respondent had a role in sending fraudulent list, solely on the
basis of the presumption that he got the job. Para 5 of the judgment
which is crucial for the decision of the present case is extracted
herein below:-
[2024] 1 S.C.R. 31
“5. The entire basis of the dismissal of the appellant

depends upon the factum of the alleged misrepresentation
attributed to the respondent. The Industrial Court in its
impugned order has noticed the fact that the respondent
was appointed in April 1994 pursuant to the selection
procedure followed by the competent authority and that
he was selected by the panel of Selection Committee
consisting of 6 members which included the very same
Social Welfare Officer who had sent the proposal including
the name of the respondent for appointment. It also noticed
the fact that the selection in question was made after an
oral interview and the required test as also the medical
examination. The Industrial Court also noticed the fact that
the appointment of the respondent was confirmed after
one-year period and thereafter the respondent has been
working without any complaint. The said Industrial Court
also noticed the fact that the termination of the respondent
was based on a show-cause notice issued on 5-7-1999
which was replied to by the respondent on 17-7-1999
and the termination was made in a summary procedure
permissible under Rule 90(b) of the Service Regulations.
The Industrial Court after perusing the pleadings and the
notice issued to the respondent came to the conclusion
that the alleged misrepresentation which is now said to
be a fraud was not specifically pleaded or proved. In the
show-cause notice, no basis was laid to show what is the
nature of fraud that was being attributed to the appellant.
No particulars of the alleged fraud were given and the said
pleadings did not even contain any allegation as to how
the appellant was responsible for sending the so-called
fraudulent proposal or what role he had to play in such
proposal being sent. It also noticed from the evidence of Mr
Waghmare, Social Welfare Officer who sent the proposal
before the Labour Court that he did not utter a single word
as to whether the said supplementary list was ever called
for by the department concerned or not. Thus applying the
basic principle of rule of evidence which requires a party
alleging fraud to give particulars of the fraud and having
found no such particulars, the Industrial Court came to the
conclusion that the respondent could not be held guilty of
32 [2024] 1 S.C.R.
fraud. The said finding of the Industrial Court has been

accepted by the High Court. Mr. Bhasme though contended
that the fraud in question was played in collusion with the
Social Welfare Officer and 2 other employees of the Board
and action against the said 2 employees of the Board has
been taken, but by that itself we are unable to accept the
argument of Mr. Bhasme that there is material to support
the contention of the Board that the appellant had also
contributed to making the misrepresentation at the time of
applying for the job with the Board. In the absence of any
such particulars being mentioned in the show-cause notice
or at the trial, attributing some overt act to the respondent,
we do not think the Board can infer that the respondent
had a role to play in sending a fraudulent list solely on the
basis of the presumption that since the respondent got a
job by the said proposal, the said list is a fraudulent one.
It was the duty of the Board to have specifically produced
the material to prove that the respondent himself had the
knowledge of such a fraud and he knowingly or in collusion
with other officials indulged in this fraud. Since there is no
such material on record, on the facts of the instant case,
the Industrial Court and the High Court have come to
the right conclusion that the alleged fraud has not been
established by the appellants, hence, this is not a fit case
in which interference is called for. This appeal, therefore,
fails and the same is dismissed.”
(emphasis supplied)
24. In Vikas Pratap Singh (supra), this Court, while protecting the
selection of the appellants, had the following to say:-
“27. Admittedly, in the instant case the error committed by
the respondent board in the matter of evaluation of the
answer scripts could not be attributed to the appellants
as they have neither been found to have committed any
fraud or misrepresentation in being appointed qua the
first merit list nor has the preparation of the erroneous
model answer key or the specious result contributed to
them. Had the contrary been the case, it would have
justified their ouster upon re-evaluation and deprived
[2024] 1 S.C.R. 33
them of any sympathy from this Court irrespective of

their length of service.”
25. Vikas Pratap Singh (supra) was followed in Anmol Kumar Tiwari
and Others vs. State of Jharkhand and Others, 2021:INSC:101 =
(2021) 5 SCC 424. This Court, in para 11, held as follows:-
“11. Two issues arise for our consideration. The first relates
to the correctness of the direction given by the High Court
to reinstate the writ petitioners. The High Court directed
reinstatement of the writ petitioners after taking into account
the fact that they were beneficiaries of the select list that
was prepared in an irregular manner. However, the High
Court found that the writ petitioners were not responsible
for the irregularities committed by the authorities in
preparation of the select list. Moreover, the writ petitioners
were appointed after completion of training and worked
for some time. The High Court was of the opinion that the
writ petitioners ought to be considered for reinstatement
without affecting the rights of other candidates who were
already selected. A similar situation arose in Vikas Pratap
Singh case [Vikas Pratap Singh v. State of Chhattisgarh,
(2013) 14 SCC 494 : (2013) 3 SCC (L&S) 100], where
this Court considered that the appellants therein were
appointed due to an error committed by the respondents in
the matter of valuation of answer scripts. As there was no
allegation of fraud or misrepresentation committed by the
appellants therein, the termination of their services was set
aside as it would adversely affect their careers. That the
appellants therein had successfully undergone training and
were serving the State for more than 3 years was another
reason that was given by this Court for setting aside the
orders passed by the High Court. As the writ petitioners
are similarly situated to the appellants in Vikas Pratap
Singh case [Vikas Pratap Singh v. State of Chhattisgarh,
(2013) 14 SCC 494 : (2013) 3 SCC (L&S) 100], we are
in agreement with the High Court that the writ petitioners
are entitled to the relief granted. Moreover, though on pain
of contempt, the writ petitioners have been reinstated and
are working at present.”
(emphasis supplied)
34 [2024] 1 S.C.R.
26. To the same effect is the ratio of the judgment of this Court in Dr.
M.S. Mudhol and Another vs. S.D. Halegkar and Others, (1993)
3 SCC 591 wherein, in para 6, it was observed as under:-
“6. Since we find that it was the default on the part of the
2nd respondent, Director of Education in illegally approving
the appointment of the first respondent in 1981 although
he did not have the requisite academic qualifications
as a result of which the 1st respondent has continued
to hold the said post for the last 12 years now, it would
be inadvisable to disturb him from the said post at this
late stage particularly when he was not at fault when his
selection was made. There is nothing on record to show
that he had at that time projected his qualifications other
than what he possessed. If, therefore, in spite of placing
all his cards before the selection committee, the selection
committee for some reason or the other had thought it
fit to choose him for the post and the 2nd respondent
had chosen to acquiesce in the appointment, it would be
inequitous to make him suffer for the same now. Illegality,
if any, was committed by the selection committee and the
2nd respondent. They are alone to be blamed for the same.”
27. In Rajesh Kumar and Others vs. State of Bihar and Others, (2013)
4 SCC 690, this Court finding the appellants to be innocent parties
ruled that even if in the re-evaluation the appellants do not make
the grade, still the appellants appointments ought to be protected.
Para 21 & 22.3 are extracted herein below:-
“21. There is considerable merit in the submission of
Mr Rao. It goes without saying that the appellants were
innocent parties who have not, in any manner, contributed
to the preparation of the erroneous key or the distorted
result. There is no mention of any fraud or malpractice
against the appellants who have served the State for
nearly seven years now. In the circumstances, while inter
se merit position may be relevant for the appellants, the
ouster of the latter need not be an inevitable and inexorable
consequence of such a re-evaluation. The re-evaluation
process may additionally benefit those who have lost
the hope of an appointment on the basis of a wrong key
[2024] 1 S.C.R. 35
applied for evaluating the answer scripts. Such of those

candidates as may be ultimately found to be entitled to
issue of appointment letters on the basis of their merit
shall benefit by such re-evaluation and shall pick up their
appointments on that basis according to their inter se
position on the merit list.
22.3. In case the writ petitioners, Respondents 6 to 18
also figure in the merit list after re-evaluation of the answer
scripts, their appointments shall relate back to the date
when the appellants were first appointed with continuity
of service to them for purpose of seniority but without any
back wages or other incidental benefits.”
28. In K. Ameer Khan and Anr. Vs. A. Gangadharan and Ors., (2001)
9 SCC 84, a case involving the wrong computation of vacancies,
while protecting the promotion of the appellants, this Court had the
following to say:-
“2. .....The appellants have been selected quite some
time back and the first appellant has been promoted to
a higher grade. The appellants were not responsible for
the wrong computation of vacancies done by the second
respondent. After the empanelment and appointment of
the appellants, it is brought to our notice that there have
been fresh promotions to the post of Assistant Controller
of Stores at least on two occasions in June 1995 and May
1997. In a new selection, five Scheduled Caste candidates
and four Scheduled Tribe candidates have been selected.
The appellants could not participate in the same as they
had already been promoted to the higher grade. Now,
when the appellants have been working in the higher grade
from 1994 onwards, it would not be equitable to disturb
their promotions…….”
29. More recently, this Court in Vivek Kaisth (supra), following the
judgment of the Constitution Bench in Sivanandan C.T. and Others
vs. High Court of Kerala and Ors., (2023) SCC OnLine SC 994
protected the appointments of the appellants even after finding that
their appointments were in excess of the advertised vacancies. This
Court held as under:-
36 [2024] 1 S.C.R.
“32. … …. Today, when we are delivering this judgment the

two appellants have already served as Judicial Officers for
nearly 10 years. Meanwhile, they have also been promoted
to the next higher post of Civil Judge (Senior Division). In
this process of their selection and appointment (which has
obviously benefitted them), nothing has been brought to
our notice which may suggest any favouritism, nepotism or
so-called blame as to the conduct of these two appellants,
in securing these appointments. The High Court in fact
notes this factor. While placing the blame on the State
Commission it records that “………. there is nothing on
record suggestive of the fact that any mala fides were
behind the selection of respondents Nos.4 and 6……….”
“34. The appellants were not entitled for any equitable relief
in view of the High Court as they were the beneficiaries
of an illegality committed by the Selection/appointing
authority. But then it failed to take this question further,
which in our opinion, it ought to have done. What the High
Court never answered was as to how much of this blame
of “illegal” selection and appointment would rest on the
High Court (on its administrative side). Undoubtedly, with
all intentions of timely filling of the vacancies, the High
Court still cannot escape the blame…..”
“36. What is also important for our consideration at this
stage is that the appellants in the present case have
been working as Judicial Officers now for nearly 10 years.
They are now Civil Judge (Senior Division). These judicial
officers now have a rich experience of 10 years of judicial
service behind them. Therefore, unseating the present
appellants from their posts would not be in public interest.
Ordinarily, these factors as we have referred above, would
not matter, once the very appointment is held to be wrong.
But we also cannot fail to consider that the appellants were
appointed from the list of candidates who had successfully
passed the written examination and viva voce and they
were in the merit list. Secondly, it is nobody’s case that
the appellants have been appointed by way of favouritism,
nepotism or due to any act which can even remotely be
called as “blameworthy”. Finally, they have now been
[2024] 1 S.C.R. 37
working as judges for ten years. There is hence a special

equity which leans in favour of the appellants. In a recent
Constitution Bench decision of this Court in Sivanandan
C.T. and Ors. v. High Court of Kerala and Ors. (2023)
SCC OnLine SC 994 though the finding arrived at by this
Court was that the Rules of the game were changed by
the High Court of Kerala by prescribing minimum marks
for the viva voce, which were not existing in the Rules
and therefore in essence the appointment itself was in
violation of the Rules, yet considering that those persons
who had secured appointments under this selection have
now been working for more than 6 years it was held that
it would not be in public interest to unseat them.”
(emphasis supplied)
30. The situation of the appellants in the present case is no different
from the individuals whose appointments were protected in the cases
cited hereinabove. They had no blameworthy conduct. They were
bona fide applicants from the open market. The alleged mischief,
even according to the State, was at the end of the School and its
Manager. It will be a travesty of justice if relief is denied to the
appellants. Enormous prejudice would also occur to them.
31. Ms. Sansriti Pathak, learned counsel, who ably defended the case for
the State, made a valiant attempt to draw support from the judgment
in Sachin Kumar (supra). In that case, what was in issue was the
validity of the cancellation of the selection process for recruitment
to the 231 vacancies in the post of Grade 2 (DASS) (Head Clerk).
This Court, while reversing the judgment of the Tribunal and the
High Court held that in that case there was a basic denial of access
to Tier I examination. The Court further held that the nature of the
allegations was found substantiated upon the careful examination by
the first Committee whose report showed that the credibility of the
process itself had been eroded. In that case, the total vacancies for
which recruitment was to be made was 231 and 61,179 candidates
were found to be eligible. The first Committee which enquired
found that there were serious irregularities including cheating and
impersonation in the course of both Tier 1 Screening examination
and Tier 2 Main examination. The Secretary (Vigilance) had also
pointed out in his opinion there was a huge difference between the
38 [2024] 1 S.C.R.
number of applications received, namely, 62056 and the number of

candidates who had appeared in the Tier 1 examination i.e. 8224,
indicating thereby that proper information regarding the exam was not
given to the candidates. The second Committee had observed that no
irregularity was found in the documents of the 281 candidates. The
Tribunal holding that 281 candidates were free from blame, set aside
the order cancelling selection process, clarifying that the appointments
to be offered would be subject to the ACB investigation. The High
Court had held that the scope of the order of the Tribunal should
be confined to the six applicants who have moved the Tribunal. The
High Court had also held that it was possible to determine that at
least in respect of 281candidates there was no evidence of use of
unfair means and that it was a case where separation of the tainted
from the untainted was possible.
32. Reversing the judgment of the Tribunal and the High Court, this Court
held that the irregularities were not confined to acts of malpractice
or unfair means on the part of specific group of persons and that
the report of the Committee found deficiencies of a systemic nature
which cast serious doubts on the legitimacy of the entire process of
recruitment. This Court held that in such a situation where a decision
is taken by the government to cancel the entire process, the decision
cannot be held to be irrational or arbitrary.
33. This judgment in Sachin Kumar (supra) is clearly distinguishable
from the case at hand. First of all, Sachin Kumar (supra) involved
the cancellation of the selection process before any appointments
were made. No rights were crystallized to any of the candidates.
The issue was about the validity of the cancellation of the selection
process. Sachin Kumar (supra) falls in that genre of cases
concerning validity of cancellation of the selection process due to
largescale irregularities. The Case at hand is proximate to the facts
and ratio in Suresh Raghunath Bhokare (supra) and cases of that
ilk set out hereinabove.
34. We feel that the appellants were not at fault and the State could not
have abruptly stopped their salaries. Accordingly, we set aside the
judgments of the High Court dated 15.09.2021 in Special Appeal Nos.
1435/2013 and 1445/2013 and direct that the State shall pay the
salaries of the appellants for the period from 25.06.1999 till January,
2002 in full. We also direct that insofar as the period from October,
[2024] 1 S.C.R. 39
2005 till today is concerned, the State shall pay the appellants 50%
of the backwages. Since the appointment order and the approval
order are still in force, we declare that the appellants have always
been and are deemed to be in service. Apart from 50% backwages,
as ordered above, we direct that all consequential benefits, including
seniority, notional promotion, if any, and fitment of salary and other
service benefits due, be granted to the appellants. We direct the
State to comply with these directions within four weeks from today.
We also direct that the appellants be allowed to commence work
within the said period of four weeks.
35. We notice from the record that the Committee of Management,
Junior High School, Bahorikpur was arrayed as fifth respondent
in the writ petition before the High Court. They are also arrayed
as fifth respondent before us in these appeals. Before us, even
though notice has been served on the Committee of Management,
Junior High School, Bahorikpur, nobody has entered appearance. It
appears that even before the learned Single Judge and the Division
Bench, the Committee of Management did not appear. We grant
liberty to the State to issue a show-cause notice to the Committee
of Management (R-5), after setting out clearly the charge pertaining
to the alleged manipulation of the sanction order and altering of
the figure from two to three. After receiving reply, if any, and after
holding an inquiry with an opportunity of personal hearing, the State
will be at liberty to pass an appropriate order. In the event of the
Committee of Management being exonerated, no further question
will arise. In the event of them being found guilty of the charge, in
view of any finding that may be arrived that the manipulation prior to
the recruitment was done at the level of the employees of the school
(whether by themselves or in collusion with the officials), we grant
liberty to the State to recover from the Committee of Management
one-third of the arrears, as ordered to be paid, hereinabove. This
direction will serve the ends of justice in the matter.
36. The appeals are allowed in the above terms. No order as to costs.
Headnotes prepared by: Ankit Gyan Result of the case: Appeals allowed.
[2024] 1 S.C.R. 40 : 2024 INSC 6
Case Details
Neeraj Sharma
v.
State of Chhattisgarh
(Criminal Appeal No. 1420 Of 2019)
03 January 2024
[Sudhanshu Dhulia* and
Satish Chandra Sharma, JJ.]
Conviction and sentence of the appellants, inter alia, for offence

u/s.364-A, Penal Code, 1860, if justified.
Headnotes
Penal Code, 1860 – s.364-A – Conditions to be met to make
out offence u/s.364-A – Conviction of the appellants u/
ss.307/120B, 364-A and 392/397, IPC – Prosecution if proved
its case u/s.364-A beyond reasonable doubt:
Held: In the present case, the most important witness is the
complainant himself-an injured witness, who was an 18 year old
boy who trusted his friends (appellants), not aware that he was
being taken by deceit by his friends who had planned his murder
– Unless there are compelling circumstances/evidence placed by
the defence to doubt such a witness, this has to be accepted as an
extremely valuable evidence in a criminal trial – Injuries sustained
by the complainant match the case of the prosecution – An attempt
was made by the appellants to dispose of the body of the victim
by burning the body – There were burn injuries on both his legs
– The strong ligature mark on his neck was again significant as
it is the case of the prosecution that the two accused had tried to
strangulate him with the clutch wire – Prosecution proved its case
beyond reasonable doubt as regards robbery, abduction and attempt
to murder – However, in order to make out an offence u/s.364-A, the
necessary ingredients which the prosecution must prove, beyond
reasonable doubt, are not only an act of kidnapping or abduction
but thereafter the demand of ransom, coupled with the threat to
life of a person who has been kidnapped or abducted, must be
there – Prosecution miserably failed to establish the demand of
ransom – No worthwhile evidence placed by the prosecution in
* Author
[2024] 1 S.C.R. 41
NEERAJ SHARMA v. STATE OF CHHATTISGARH
this regard – There was no evidence at all to have convicted the

appellants u/s.364A – Trial Court and the High Court completely
misdirected in holding the present case to be a case u/s.364-A –
Findings of conviction u/s.364A converted to that of s.364, as the
appellants had committed an offence u/s.364 as the offence of
abduction in order to murder the victim stood proved – Appellants
sentenced to rigorous imprisonment of 10 years each on this count
and a fine of Rs.10,000/-, in default further imprisonment of three
months – Rest of the conviction and sentence u/s.307 r/w s.120B
as well as u/s.392 r/w s.397, affirmed – Fine imposed retained.
[Paras 7, 9, 11, 14, 16 and 18]
Penal Code, 1860 – ss.362, 364, 364-A, 365, 366 – Abduction
simpliciter not an offence, becomes a punishable offence
when combined with another act:
Held: While abduction simpliciter may not technically be an offence
under the IPC, it becomes a punishable offence when it is combined
with another act – Abduction in order to commit murder is an offence
u/s.364 – Abduction is an offence if done with an intent to secretly
or wrongfully confine a person u/s.365, or when done to compel
a woman for marriage etc. u/s.366 – s.364-A is an offence where
kidnapping or abduction is made and a person is put to death or
hurt; or a person is threatened with death or actually murdered,
on demand of ransom – Clarified, s.364-A does not merely cover
acts of terrorism against the Government or Foreign State but it
also covers cases where the demand of ransom is made not as a
part of a terrorist act but for monetary gains for a private individual
– Incorporation of s.364-A discussed. [Para 12]
Code of Criminal Procedure, 1973 – ss.357(1), 357-A:
Held: A victim of a crime cannot be treated merely as a prosecution
witness – s.357(1) empowers the court to order that the fine
amount recovered be given to any person as compensation who
has suffered any loss or injury caused due to that offence – There
may be times when the situation may demand that a substantive
amount of compensation be paid to the victim and the convict
may not be financially that strong to bear that burden – For such
situations, s.357A was therefore introduced, where compensation
to the victims may be paid out of State funds, as the State had the
responsibility to protect the victim against the offence committed
against the victim of the crime – In the present case, the victim
suffered burn injuries of 45-48% and lost one leg, when he was
only eighteen years of age – Rs.5,00,000/- be paid by the State to
42 [2024] 1 S.C.R.
the victim as compensation u/s.357A instead of Rs.1,00,000/- as

directed by the High Court. [Paras 19, 20]
Criminal Law – Criminal trial – Injured witness – Importance
– Discussed.

Balu Sudam Khalde v. State of Maharashtra 2023 SCC
OnLine SC 355; Vikram Singh v. Union of India [2015]
10 SCR 816:(2015) 9 SCC 502; Shaik Ahmed v. State of
Telangana (2021) 9 SCC 59; Rajesh v. State of Madhya
Pradesh, 2023 SCC OnLine SC 1202 – relied on.
Ravi Dhingra v. State of Haryana (2023) 6 SCC 76;
Gentela Vijayavardhan Rao and Another v. State of
A.P. [1996] 5 Suppl. SCR 273:(1996) 6 SCC 241;
Sunil Kumar and Others v. State of M.P. [1997] 1 SCR
589:(1997) 10 SCC 570; Shrawan Bhadaji Bhirad and
Others v. State of Maharashtra [2002] 4 Suppl. SCR
158:(2002) 10 SCC 56; State of U.P. v. Veer Singh
and Others [2004] 1 Suppl. SCR 790:(2004) 10 SCC
117; S. Arul Raja v. State of Tamil Nadu [2010] 9 SCR
356:(2010) 8 SCC 233 – referred to.
List of Acts
Penal Code, 1860; Code of Criminal Procedure, 1973.
List of Keywords
Abduction; Attempt to murder; Robbery; Kidnapping or abducting
to murder; Kidnapping for ransom; Conviction converted; Beyond
reasonable doubt; Injured witness; Victim compensation.

Appearances
CRIMINAL APPELLATE JURISDICTION : Criminal Appeal No.1420

of 2019.
of Chhattisgarh at Bilaspur in CRA No.200 of 2015.
With
Criminal Appeal No.36 of 2024
[2024] 1 S.C.R. 43
Appearances:
Sameer Shrivastava, Ms. Yashika Varshney, Mrs. Priyanka
Shrivastava, Mrs. Sangeeta, Shivendra Dixit, Advs. for the Appellant.
Sumeer Sodhi, Ms. Bhawana Mapwal, Advs. for the Respondent.
Judgment
Sudhanshu Dhulia, J.
Leave granted.
2. Both these appeals arise out of a common judgment and order dated
26.06.2018 passed by the High Court of Chhattisgarh at Bilaspur in
Criminal Appeal No.200 of 2015, which has dismissed the Criminal
Appeal of the present appellants, upholding the conviction and
sentence of the trial court. The two appellants were convicted for
offences under Sections 307/120B, 364-A and 392/397 and were
sentenced, inter alia, for life imprisonment under Section 364A Indian
Penal Code, 1860 (for short ‘IPC’).
The third accused in this case, called Ravi Kumar Dwivedi, was
acquitted by the trial court.
3. The case of the prosecution is that appellants had abducted one
Arjit Sharma (PW-6), a Class 12th student of KPS School, Durg. The
abduction, as per the prosecution, was for ransom, and a dastardly
attempt was also made by the accused to kill the victim, although
the victim miraculously escaped, but not before sustaining grievous
injuries, which eventually led to the amputation of his right leg.
The complainant/victim (PW-6) was at the relevant time residing
as a paying guest in the house of Smt. Seema Singh (PW-7)
at Priyadarshni Nagar, Durg. The accused, Neeraj Sharma and
complainant were known to each other and on 02.01.2013, the two
decided to go on a motorcycle ride to Nehru Nagar and Yugandar
College, Rajnandgaon. The complainant was picked from his guest
house by the two accused i.e., Neeraj Sharma and Ashwani Kumar
Yadav and the three took off on their motorcycle to a place called
“Doundilohara”. At about 1:00 am in the night when the complainant
was trying to ease himself, the two accused made an attempt to kill
44 [2024] 1 S.C.R.
him by throttling his neck by the clutch wire of the motorcycle. As

a result, the complainant fell on the ground unconscious and the
appellants thinking that the complainant had died, poured petrol on
his body and set him on fire.
As per the prosecution case the body was set on fire, but before
setting the body on fire, the complainant/victim’s mobile phone and
cash of Rs.5000/- (Rupees Five Thousand only) were looted from
him, by the two accused Neeraj Sharma and Ashwani Kumar Yadav.
4. The complainant, however, was not dead, but as it turned out
managed to escape from the scene and was later rescued by
strangers whom he met on his way while escaping who helped him
call an ambulance and he was taken to Doundilohara Hospital from
where he was referred to Rajnandgaon and ultimately to Sector -9
Hospital, Bhilai. While he was at Doundilohara hospital, the doctor
(PW-4) who had examined the complainant had also informed the
Police and therefore a “Dehati Nalishi”1 (Ex.P/12) was recorded
on 03.01.2013. The doctor PW-4 (Jai Kumar Chunarkar) who had
examined the complainant/victim at Doundilohara hospital, notes the
following burn injuries in his report (Ex.P/09).
“Injured had worn underwear of dark chocolate colour,
which was not burnt and smell of skin burning was emitting
from his entire body and he was in semi-conscious
condition. He was very restless and he had complaint of
plain and burn on the burning spots.”
“Burn injuries were found on frontal and backside of both
legs of the injured and skin of that spots had peeled out
from surface. Burn injuries and many burning blisters on
the lower portion of his belly and burn injury was on the
waist and burn injury was on the upper portion of right side
on the chest and a ligature mark like a lining was present
on the frontal portion of neck of the injured, which was in
light red colour, it had length of 122 to 14 cms and abrasion
injuries were found on the frontal portion of his neck which
had size of 3x2, 2x2 and 2x2 cms respectively. In this
connection he had submitted his Report (exhibit P-9).”
1 Dehati Nalishi is something akin to a zero FIR.

[2024] 1 S.C.R. 45
There were first degree burn injuries on the body of the victim as the
burnt area was 45% to 48% of his body. Statement of the victim (PW-
6) was recorded before a Nayab Tehsildar on 04.01.2013 at 12 noon.
The overall circumstances under which this statement was recorded
makes it an important piece of evidence. We must also remember
that this is a statement given by an eighteen year old boy who has
just come out of a harrowing incident where a dastardly attempt was
made on his life. He is also grievously injured and apparently had
consulted no one before giving this statement before an Executive
Magistrate. The veracity of this statement should not be in doubt.
He states how he was taken on a motorcycle by Neeraj Sharma and
Ashwani Kumar Yadav and how he was asked to consume alcohol
on the way and then at 1:00 AM in the night, how the two accused
first tried to strangulate him with clutch wire and later set his body
on fire, thinking he is dead. It is important here to note that there is
no mention here of any demand or talk of ransom.
5. The police after completing its investigation filed its Chargesheet
against the three accused under Sections 120B, 364A, 307, 392/397
and in the alternative section 394 of IPC. As it was a Sessions triable
offence, it was committed to Sessions from where it went to First
Additional Sessions Judge Balod, who ultimately framed charges on
15.04.2013 under Sections 364A, 307, 120B, 392, 397 and in the
alternative 394 of IPC against all the accused persons i.e., Neeraj
Sharma, Ashwani Kumar Yadav and Ravi Kumar Dwivedi.
The prosecution examined in all 11 witnesses and placed several
exhibits before the Court. The accused pleaded not guilty and faced
trial. The Trial Court passed its Judgement dated 03.01.2015 by which
the accused appellants were convicted for offences under sections
307/120B, 364A and 392/397 IPC for which they were sentenced to
life imprisonment inter alia for the major offence under section 364-A
IPC which has also been upheld by the High Court.
6. While issuing notice in the Special Leave Petition on 30.11.2018 this
Court in the case of Neeraj Sharma in fact issued a limited notice to
his conviction under section 364-A while confirming his conviction
under sections 307 read with 120B along with sections 392 read
with 397 of IPC. The said order is produced below:
“We do not find any good ground warranting interference
with the conviction of the petitioner under Section 307
IPC read with 120 (B) and Section 392 IPC read with 397.
46 [2024] 1 S.C.R.
Issue notice limited to the conviction under Section 364A

returnable within eight weeks.”
All the same nothing of this nature has been observed by this Court
while issuing notice in the case of Ashwani Kumar Yadav which was
issued on 02.08.2021.
As far as an attempt to murder and robbery are concerned, we have
no doubt in our mind that the prosecution has been able to establish
its case beyond a reasonable doubt. At the same time, we have our
doubts about the conviction of the accused under 364-A of the IPC.
In fact, this doubt was also in the mind of this Court, at least in the
case of Neeraj Sharma, as this Court has issued a limited notice as
only to the applicability of 364-A in the case.
7. The most important witness in this case is the complainant himself.
He is also an injured witness. The injuries sustained by him in the
incident match the case of the prosecution. An attempt was made
by the two accused to dispose of the body of the victim by burning
the body. There were burn injuries on both his legs. The strong
ligature mark on his neck was again significant as it is the case of
the prosecution that the two accused had tried to strangulate him
with the clutch wire. The condition of the victim was precarious to say
the least, and he gave a statement before the Executive Magistrate,
B.K. Verma who was the Nayab Tehsildar and Executive Magistrate,
Durg, he said:
“At 6.30-7.00 hrs in the evening Neeraj Sharma and Ashwini
Yadav came to me and said that lets go to Youganthar
College Rajnandgaon. I had not seen Youganthar College
so I went along with them in motor cycle to see the college.”
He also said,
“In the night of 3rd at 1.30 hrs there is a plant towards
Balod I do not know its name, near to that, Neeraj Sharma
and Ashwini Yadav first strangulated me with clutch wire I
had stopped my breath they thought that me dead, then
set me fire by pouring petrol.”
8. Apart from this, the veracity of the incident is further established by
the deposition of Santosh Shukla (PW-1), who was the first person
in the Bhilai Plant who saw the complainant in a burnt condition and
who inquired from him as to what led to his injuries and was informed
[2024] 1 S.C.R. 47
that these injuries were caused by his friends, and his money was
also looted by them. PW-4, Dr. Jai Kumar Chunarkar, was the first to
medically examine the complainant at Doundilohara Hospital. He had
recorded burn injuries on his body which we have already referred
above. Praneet Sharma (PW-5), is the father of the complainant who
stated that on the midnight of 03.01.2013, he was informed by Aman
Singh, that his son Arijit Sharma is not well and his son has been
hospitalized at Sector -9 Hospital, Bhilai and when he reached the
hospital, he saw his son in burnt condition and in severe pain. His
son informed him that the two appellants were the ones who tried
to kill him. He also said that at 12 noon on 03.01.2023 he received
a phone call from the mobile number 7869590607, where the caller
demanded a sum of Rs.8,00,000/- as ramson for the release of his
son, Arijit Sharma. When he said that his son is in hospital with
him and he would file a complaint against the caller, the phone got
disconnected. This part of the statement of this witness (PW-5) who
is the father of the complainant/injured, as regards the demand of
ransom, however, has not been established in any manner.
The complainant himself was examined as PW-6 who said in his
examination in chief that he was staying in Bhilai as paying guest
and on 02.01.2013 the accused Neeraj Sharma who was known to
him called on his mobile phone and asked him to come to Nehru
Nagar, Bhilai, from where they were supposed to go somewhere on
a motorbike. After informing his land lady, he went to meet Neeraj
Sharma at Nehru Nagar. Neeraj Sharma arrived after a few minutes
on a motorcycle with Ashwani Kumar Yadav riding their pillion. The
three went on this motorcycle towards Yugandar College and on
their way, they also consumed liquor. They had also met Rahul, the
brother of Neeraj Sharma, on their way. Past midnight, he requested
Neeraj Sharma to stop the vehicle, as he wanted to ease himself
and when the complainant was talking to Neeraj Sharma, the other
accused Ashwani Kumar Yadav, came from behind and tied clutch
wire around his neck and then both Ashwani Kumar Yadav and
Neeraj Sharma made an attempt to strangulate him with the clutch
wire. As a result, he fell down semi-conscious and he was thought
to be dead by the two assailants who then poured petrol on him. He
also heard Neeraj Sharma and Ashwani Kumar fetching petrol from
their motorcycle. Neeraj Sharma also took away Rs.5000/- from his
purse, and his cell phone. Later petrol was poured on him and then
48 [2024] 1 S.C.R.
he was set on fire. He somehow escaped and reached the nearby

Bhilai plant and he informed the guard about the incident and gave
the number of his landlord to him and subsequently ambulance was
called and he was sent to the hospital.
This witness was cross-examined at length by the defence counsel
but nothing has come out which may cast a doubt on any of his
statements.
9. PW-7 is the land lady Seema Singh, where the complainant was
staying as a paying guest who also testified against the accused.
She has said that the complainant had informed her that he is going
with his friend towards another place on 02.01.2013 for which he
sought her permission.
The mobile phone was traced by the police belonged to one of the
accused Ashwani Kumar Yadav. The police during their investigation
arrested Neeraj Sharma and Ashwani Kumar Yadav on 03.01.2013
and their Hero Honda Motorcycle and Mobile Phones were recovered.
The prosecution story therefore as far as abduction and attempt to
murder is concerned can hardly be in doubt. The prosecution has
been able to prove its case beyond a reasonable doubt. The most
important witness here is the complainant himself, who is an 18-year-
old boy, studying at the relevant time in a college near Bhilai, who
trusted his friends, not aware that he is being taken by deceit by his
friends who had planned his murder. PW-6 is also an injured witness.
10. The first doctor who had examined PW-6 was Dr. Jai Kumar
Chunarkar (PW-4), who works at the District Hospital at Balod. He
had examined the injured complainant in the early hours of morning
on 03.01.2013. His observation as to the injuries of PW-6 and his
general condition are as follows :
“Opinion : - Burn injuries were found over the body of the
patient, which were of durmel peed burn nature, which
expressed the first degree burn. The area of burnt was
approximately 45 to 48 percentage. Exhibit P-9 is the
examination report given by me, part A to A of which bears
my signature.
On the same date, on receiving the memo from the Station
House Officer Daundilohara for recording, statement of
injured Arjit Sharma, I had opined that, “injured Arjit Sharma
[2024] 1 S.C.R. 49
was not in the condition to give statement on 03.01.13 at

4:30 hours in the morning.”
The injured was then referred to Bhilai Hospital where he was
examined by Dr. Uday (PW-9). His observation is as follows :
“On examination, I found that both legs of the patient were
deeply burnt from top to bottom and some blisters were
therein stomach and both hands, which were burnt up to
40 to 45 percentage. There were mark in his neck, which
probably was comes due to pressure of clutch wire. The
treatment of which was undergone in my Hospital at about
60 days, in which he was operated twice, First operation
was done on 15.01.13, during which we compelled to cut
his right legs below the knee, which was rotten due to
heavily burnt.
Second operation was done on 12.02.13, wherein at the
place on deep injury, the skin from other places were
grafted. Therafter, it started improving gradually the
condition of the patient and on 04.03.13, he has been
discharged from the hospital. Registration Sheed (Bedhead
Ticket) of indoor patient regarding admission in our hospital
is Exhibit P-14, which is in 166 pages, wherein on each
pages at part A to A bears my signature.”
The other person who had met the injured while he had escaped
was PW-1 i.e. Santosh Shukla. The statement of PW-1 is as follows:
“I am posted to the post of Senior Executive H.R. in
Godawari Steel Plant Gidhali since January, 2009. It is the
matter of first week of the January of this year, at that time
I was on duty at night shift. On the night in between about
2 to 3, the Guard of the plant informed me that one boy
in burning condition has come inside the plant and then
reaching out from the office I saw that the boy was burnt
at leg, back and hand etc., he had worn underwear only.
On enquiring by me, the boy told that, “My friends carried
me to the forest and burnt me and looted money from me”.
Then I phoned to the Police-station of Daundilohara and
had also phone to Sanjivani 108. Thereafter, Sanjivani
Ambulance reached and had taken the boy to Daundilohara
Hospital for treatment.
50 [2024] 1 S.C.R.
Police personnel Station House Officer Sahu had come

to investigate the incident and had prepared Nazari map
(Exhibit P-01) of the incident, part A to A of which bears
my signature. Similarly, Halka Patwari had prepared the
Nazari map (Exhibit P-02) of the incident, part A to A of
which bears my signature. The police personnel had seized
pants, which was burnt, burnt shirt and pants jeep in burnt
condition, disposal glass, cigarette box etc. before me
and two hand cuff persons. The said seizure proceeding
of above articles was done according to Seizure memo
(Exhibit P-3), from the place of the incident in the presence
of accused Neeraj Sharma, present in the Court, wherein
at part A to A, there was my signature. The Police personal
had recorded my statement after enquiry.”
11. The importance of injured witness in a criminal trial cannot be over
stated. Unless there are compelling circumstances or evidence placed
by the defence to doubt such a witness, this has to be accepted as
an extremely valuable evidence in a criminal Trial.
In the case of Balu Sudam Khalde v. State of Maharashtra 2023
SCC OnLine SC 355 this Court summed up the principles which
are to be kept in mind when appreciating the evidence of an injured
eye-witness. This court held as follows:
“26. When the evidence of an injured eye-witness is to be
appreciated, the under-noted legal principles enunciated
by the Courts are required to be kept in mind:
(a) The presence of an injured eye-witness at the time
and place of the occurrence cannot be doubted unless
there are material contradictions in his deposition.
(b) Unless, it is otherwise established by the evidence,
it must be believed that an injured witness would not
allow the real culprits to escape and falsely implicate
the accused.
(c) The evidence of injured witness has greater
evidentiary value and unless compelling reasons
exist, their statements are not to be discarded
lightly.
[2024] 1 S.C.R. 51
(d) The evidence of injured witness cannot be doubted

on account of some embellishment in natural conduct
or minor contradictions.
(e) If there be any exaggeration or immaterial
embellishments in the evidence of an injured
witness, then such contradiction, exaggeration or
embellishment should be discarded from the evidence
of injured, but not the whole evidence.
(f) The broad substratum of the prosecution version must
be taken into consideration and discrepancies which
normally creep due to loss of memory with passage
of time should be discarded.”
12. In the case at hand the case of abduction and attempt to murder
are well established by the prosecution. All that is now left for us
to determine is whether an offence under Section 364A of IPC is
made out?
While abduction simpliciter may not technically be an offence under
the IPC, it becomes a punishable offence when it is combined with
another act. For example, abduction in order to commit murder is
an offence under Section 364 IPC. So is abduction an offence if it is
done with an intent to secretly or wrongfully confine a person (Section
365, IPC), or when it is done to compel a woman for marriage etc.
(Section 366, IPC). Similarly, Section 364A is an offence where
kidnapping or abduction is made and a person is put to death or
hurt; or a person is threatened with death or actually murdered, on
demand of ransom.
Section 364A IPC was inserted in the Indian Penal Code by an Act
of Parliament (Act No.42 of 1993 with effect from 22nd May, 1993).
That was a period when kidnapping and abduction for the purposes
of ransom were on the rise and therefore, the Law Commission
of India in its 42nd Report in 1971 had recommended insertion of
Section 364A in IPC, though it was ultimately incorporated in the
year 1993, it reads as under:
“364-A. Kidnapping for ransom, etc.—Whoever kidnaps
or abducts any person or keeps a person in detention after
such kidnapping or abduction, and threatens to cause death
or hurt to such person, or by his conduct gives rise to a
52 [2024] 1 S.C.R.
reasonable apprehension that such person may be put to

death or hurt, or causes hurt or death to such person in
order to compel the Government or [any foreign State or
international inter-governmental organisation or] any other
person to do or abstain from doing any act or to pay a
ransom, shall be punishable with death, or imprisonment
for life, and shall also be liable to fine.”
This Court in the case of Vikram Singh v. Union of India (2015) 9
SCC 502 has observed as follows:
“53. Applying the above to the case at hand, we find that the
need to bring in Section 364-A IPC arose initially because
of the increasing incidence of kidnapping and abduction
for ransom. This is evident from the recommendations
made by the Law Commission to which we have made
reference in the earlier part of this judgment. While those
recommendations were pending with the Government, the
spectre of terrorism started raising its head threatening not
only the security and safety of the citizens but the very
sovereignty and integrity of the country, calling for adequate
measures to curb what has the potential of destabilising any
country. With terrorism assuming international dimensions,
the need to further amend the law arose, resulting in the
amendment to Section 364-A IPC, in the year 1994. The
gradual growth of the challenges posed by kidnapping and
abductions for ransom, not only by ordinary criminals for
monetary gain or as an organised activity for economic
gains but by terrorist organisations is what necessitated
the incorporation of Section 364-A IPC and a stringent
punishment for those indulging in such activities.”
It needs to be clarified, as it was done in Vikram Singh (supra), that
Section 364A IPC does not merely cover acts of terrorism against
the Government or Foreign State but it also covers cases where the
demand of ransom is made not as a part of a terrorist act but for
monetary gains for a private individual.
13. In the present case, the evidence placed by the prosecution to
establish a case under Section 364-A is in the form of a phone call to
the father of the victim at 12 noon by Ravi Kumar Dwivedi (the third
accused who was acquitted by the Trial Court). Although, according
[2024] 1 S.C.R. 53
to the prosecution the number has been traced to Ashwani Kumar

Yadav, one of the two accused here, but no evidence to this effect,
as required under Section 165 of the Evidence Act, has been placed
before the Court.
The supplementary statement given by the complainant before the
police on 21.03.2013, (his first statement is on 03.01.2013), has little
relevance as PW-6 never speaks of this in his examination in chief.
14. This court in the case of Shaik Ahmed v. State of Telangana (2021)
9 SCC 59 has held that in order to make out an offence under Section
364 A, three conditions must be met:
A) There should be a kidnapping or abduction of a person or
a person is to be kept in detention after such kidnapping or
abduction;
B) There is a threat to cause death or hurt to such a person or the
accused by their conduct give rise to a reasonable apprehension
that such person may be put to death or hurt
C) Or cause death or hurt to such a person in order to compel
the Government or any foreign state or intergovernmental
organisation or any other person to do or abstain from doing
any act or to pay a ransom.
The necessary ingredients which the prosecution must prove, beyond
a reasonable doubt, before the Court are not only an act of kidnapping
or abduction but thereafter the demand of ransom, coupled with the
threat to life of a person who has been kidnapped or abducted, must
be there. It was reiterated by this Court in the case of Ravi Dhingra
v. State of Haryana (2023) 6 SCC 76.
In the present case, what the prosecution has miserably failed to
establish is the demand of ransom. As per the prosecution, the
complainant’s father i.e., Praneet Sharma (PW-5) received a phone
call from which a demand of ransom was made. The phone call
was allegedly traced as being of one Ravi Kumar Dwivedi but no
evidence was placed on record to establish the demand of ransom
before the Court which was absolutely necessary in view of the law
laid done by this Court in Rajesh v. State of Madhya Pradesh,
2023 SCC OnLine SC 1202.
54 [2024] 1 S.C.R.
15. For making out a case under Section 364-A, the first condition i.e.,
kidnapping or abduction must be coupled with either the second or
the third condition as held by this Court in Shaik Ahmed (supra)2.
Under the said provision, the accused is liable to be punished
either by death or imprisonment for life and is also liable to be fined
considering the gravity of the offence. In the present case, even if it
is presumed for the sake of argument that an offence under Section
364 is made out, we do not find that the offence would come under
the ambit of Section 364A.
‘Abduction’ is defined under Section 362 which reads as under:
“362. Abduction.—Whoever by force compels, or by any
deceitful means induces, any person to go from any place,
is said to abduct that person.”
The offence which is made out is definitely under Section 364 which
read as under:
“364. Kidnapping or abducting in order to murder.—
Whoever kidnaps or abducts any person in order that such
person may be murdered or may be so disposed of as
to be put in danger of being murdered, shall be punished
with [imprisonment for life] or rigorous imprisonment for
a term which may extend to ten years, and shall also be
liable to fine.”
16. However, in order to come under the ambit of Section 364A,
something more than abduction is required, which is demand of
ransom. We do not find that there was a demand of ransom as
alleged by the prosecution. There is no worthwhile evidence placed
by the prosecution in this regard.
The demand of ransom does not come in the examination in chief of
the complainant (PW-6). He sticks to his theory of abduction, attempt
to murder, etc., but there is no whisper about any demand of ransom,
though in his supplementary statement before the Police (under
Section 161 of Criminal Procedure Code), on 21.03.2013, he says
that while he was lying on the ground after an attempt to strangulate
him was made by the two accused, he had heard Neeraj Sharma
telling Ashwani Kumar Yadav that they should now demand a ransom
2 Para 33
[2024] 1 S.C.R. 55
from his father. The only deposition in Court regarding demand of

ransom has come as a bald statement by Praneet Sharma (PW-5)
who is the father of the complainant that on 03.01.2013 when he was
in the hospital one Ravi Kumar Dwivedi demanded Rs.8,00,000/- as
ransom. Ravi Kumar Dwivedi the third accused, has already been
acquitted by the Trial Court. There was no evidence at all before the
Trial Court to have convicted the appellants under Section 364A,
IPC. The conviction of the appellants under Section 364A is not
made out and is therefore liable to be set aside.
17. Appellants’ conviction and sentence of life imprisonment under
Section 364A of IPC is therefore set aside. All the same, we do find
that PW-6 was abducted so that he could be murdered. We therefore
convert the findings under Section 364A to that of Section 364.
Appellants are hereby convicted under Section 364 of IPC, instead
of Section 364A IPC.
Both the trial court and the High Court have failed to detect the flaw
in the evidence led by the prosecution under Section 364A IPC.
The trial court as well as the appellate court have completely relied
upon the evidence of PW-5 (Praneet Sharma, father of the victim)
and PW-6 his son, the victim. As far as the evidence of PW-6 is
concerned, he makes no mention of any demand or ransom in the
court as a prosecution witness. In his first statement given to the
Executive Magistrate on 03.01.2013, again he makes no mention of
any ransom. He only mentions about ransom in his supplementary
statement recorded by the Police after two months on 21.03.2013.
The High Court believes it and calls it a “dying declaration”. The
statement given to the Police on 21.03.2023 cannot be called a
dying declaration. Dying declaration is defined under Section 32 of
Indian Evidence Act, 1872 which is reproduced below:
32. Cases in which statement of relevant fact by person
who is dead or cannot be found, etc., is relevant.—
Statements, written or verbal, of relevant facts made by a
person who is dead, or who cannot be found, or who has
become incapable of giving evidence, or whose attendance
cannot be procured without an amount of delay or expense
which under the circumstances of the case appears to the
Court unreasonable, are themselves relevant facts in the
following cases:—
56 [2024] 1 S.C.R.
(1) When it relates to cause of death.—When the

statement is made by a person as to the cause of
his death, or as to any of the circumstances of the
transaction which resulted in his death, in cases in
which the cause of that person’s death comes into
question.
Such statements are relevant whether the person who
made them was or was not, at the time when they were
made, under expectation of death, and whatever may be
the nature of the proceeding in which the cause of his
death comes into question.
(2) Or is made in course of business.—When the
statement was made by such person in the ordinary
course of business, and in particular when it
consists of any entry or memorandum made by him
in books kept in the ordinary course of business,
or in the discharge of professional duty; or of an
acknowledgment written or signed by him of the
receipt of money, goods, securities or property of
any kind; or of a document used in commerce written
or signed by him; or of the date of a letter or other
document usually dated, written or signed by him.
(3) Or against interest of maker.—When the statement
is against the pecuniary or proprietary interest of the
person making it, or when, if true, it would expose him
or would have exposed him to a criminal prosecution
or to a suit for damages.
(4) Or gives opinion as to public right or custom, or
matters of general interest.—When the statement
gives the opinion of any such person, as to the
existence of any public right or custom or matter of
public or general interest, of the existence of which,
if it existed, he would have been likely to be aware,
and when such statement was made before any
controversy as to such right, custom or matter had
arisen.
[2024] 1 S.C.R. 57
(5) Or relates to existence of relationship.—When the

statement relates to the existence of any relationship
[by blood, marriage or adoption] between persons as
to whose relationship [by blood, marriage or adoption]
the person making the statement had special means
of knowledge, and when the statement was made
before the question in dispute was raised.
(6) Or is made in will or deed relating to family affairs.—
When the statement relates to the existence of any
relationship [by blood, marriage or adoption] between
persons deceased, and is made in any will or deed
relating to the affairs of the family to which any such
deceased person belonged, or in any family pedigree,
or upon any tombstone, family portrait or other thing
on which such statements are usually made, and
when such statement was made before the question
in dispute was raised.
(7) Or in document relating to transaction mentioned
in Section 13, clause (a).—When the statement is
contained in any deed, will or other document which
relates to any such transaction as is mentioned in
Section 13, clause (a).
(8) Or is made by several persons and expresses feelings
relevant to matter in question.—When the statement
was made by a number of persons, and expressed
feelings or impressions on their part relevant to the
matter in question.
The statement given by the complainant/victim (PW-6) on 03.01.2013
was firstly to the investigating officer (PW-10). But more importantly
it cannot be called “a dying declaration” simply because PW-6
had mercifully survived. This statement cannot be read as a dying
declaration because the person making this statement or declaration
had ultimately survived. This supplementary statement given to the
investigating officer on 21.03.2013 is nothing more than a statement
under Section 162 of Criminal Procedure Code (see: Gentela
Vijayavardhan Rao and Another v. State of A.P. (1996) 6 SCC
58 [2024] 1 S.C.R.
2413; Sunil Kumar and Others v. State of M.P. (1997) 10 SCC

5704; Shrawan Bhadaji Bhirad and Others v. State of Maharashtra
(2002) 10 SCC 565; State of U.P. v. Veer Singh and Others (2004)
10 SCC 1176 and S. Arul Raja v. State of Tamil Nadu (2010) 8
SCC 2337.
18. In our considered opinion both the Trial Court as well as the High
Court were completely misdirected in holding this to be, inter alia,
a case under Section 364A of the IPC. There was no worthwhile
evidence placed by the prosecution on this aspect. The findings
of the Courts on this aspect therefore needs to be set aside. We,
therefore, partly allow the present appeals to the extent that findings
recorded by the Trial Court and the High Court of conviction under
Section 364A of the IPC are hereby set aside. We, however, find
that the accused had committed an offence under Section 364 IPC,
as the offence of abduction in order to murder the victim i.e., PW-6
stands proved. In other words, we convert the findings of conviction
under Section 364A to that of Section 364 IPC and sentence the two
accused (present appellants) for rigorous imprisonment of Ten years
each on this count and a fine of Rs.10,000/- each, and in default
further imprisonment of three months. The rest of the conviction and
sentence that is under Section 307 of the IPC read with Section
120B as well as under Section 392 of IPC read with Section 397 are
hereby affirmed. We are also aware that in addition to the sentence,
a fine of Rs.50,000/- each against the two accused was imposed
by the High Court. We retain the same and direct that the fine be
recovered from the present appellants, in default of payment of the
fine, the appellants shall undergo further imprisonment of one year
each. The above fine shall be thereafter remitted to the victim in
accordance with law.
19. A victim of a crime cannot be treated merely as a prosecution
witness. Section 357(1) of Criminal Procedure Code empowers the
court to order that the fine amount recovered be given to any person
3 Para 13
4 Para 20
5 Para 8
6 Para 5
7 Para 31
[2024] 1 S.C.R. 59
as compensation who has suffered any loss or injury caused due

to that offence. In this case, the victim had suffered burn injuries
of 45-48% and lost one leg, when he was only eighteen years of
age. There may be times when the situation may demand that a
substantive amount of compensation be paid to the victim and the
convict may not be financially that strong to bear that burden. For
such situations, Section 357A was therefore introduced in Criminal
Procedure Code for this reason, where compensation to the victims
may be paid out of State funds, as the State had the responsibility
to protect the victim against the offence that had been committed
against the victim of the crime.
20. In the present case, the victim i.e., PW-6 has suffered grievous
injuries, not only this, his left leg below his knee had to be amputated.
Consequently, we direct that an amount of Rs.5,00,000/- (Five
Lakhs only) be paid by the State of Chhattisgarh to the victim as
compensation under Section 357A of Cr.PC., instead of Rs.1,00,000/-
as directed by the High Court. Let the same be done within a period
of three months from today.
21. Ashwani Kumar Yadav shall be released, subject to the payment
of fine/compensation, provided he has completed his 10 years of
imprisonment and if not required in any other case. Order dated
17.09.2019 of this Court up to the extent of suspending the sentence
of appellant Neeraj Sharma and granting him bail is hereby vacated.
The bail bonds of appellant Neeraj Sharma stand cancelled and he
is directed to surrender within two weeks from today to complete
his remaining sentence.
A copy of this judgment shall also be sent to the victim.
Headnotes prepared by: Divya Pandey Result of the case: Appeals

partly allowed.
[2024] 1 S.C.R. 60 : 2024 INSC 9
Case Details
Brij Narayan Shukla (D) Thr. Lrs.

v.
Sudesh Kumar Alias Suresh Kumar (D)
Thr. Lrs. & Ors.
03 January 2024
Whether the High Court was justified in dismissing the suit filed
by the appellant for the relief of injunction with alternative relief for
possession on the ground of limitation as the respondent perfected
their rights by adverse possession.
Headnotes
Adverse possession – Suit by the appellant for the relief of
injunction with alternative relief for possession – Dismissed by
the High Court on the ground of limitation as the respondent
perfected their rights by adverse possession having continued
so since 1944 when the first suit for arrears of rent was filed
– Justification:
Held: Appellants got their ownership/title under the registered sale
deed in 1966 – Dispute for possession vis-à-vis the respondents
would arise only after the said date and not on any date prior
to it – From the date of the sale deed, the suit was filed within
the period of 12 years in 1975 – Even if it is assumed that the
respondents were in possession from prior to 1944, their possession
could not have been adverse even to the Zamindars as they were
tenants and their tenancy would be permissible in nature and
not adverse – There were no proceedings for possession prior
to 1966 – First appellate court having recorded a specific finding
that the land in suit was not covered by Zamindari Abolition as it
was non-agricultural land, the claim of ownership from the date of
abolition of Zamindari was also without any merit – Respondents
thus having failed to establish their title, would have no right to
retain the possession – Impugned judgment and order of the High
Court is set aside and that of the First Appellate Court decreeing
the suit for possession is maintained. [Paras 9.5-9.6]
* Author
[2024] 1 S.C.R. 61
BRIJ NARAYAN SHUKLA (D) THR. LRS. v. SUDESH KUMAR ALIAS

SURESH KUMAR (D) THR. LRS. & ORS.

Appearances
CIVIL APPELLATE JURISDICTION : Civil Appeal No.7502 of 2012.

of Judicature at Allahabad Bench at Lucknow in SA No.202 of 1980.
Appearances:
Shubhranshu Padhi, Ashish Yadav, Ms. Rimjhim Agnihotri, Shashwat
Goel, Advs. for the Appellants.
Judgment
Vikram Nath, J.
1. The plaintiff is in appeal assailing the correctness of the judgment
and order dated 15.05.2012 passed by the Lucknow Bench of the
Allahabad High Court allowing Second Appeal No.202 of 1980,
Sudesh Kumar and others vs. Brij Narayan Shukla and others,
whereby, both the judgments of the First Appeal Court and the
Trial Court were set aside and the suit of the plaintiff appellant was
dismissed on the ground of limitation being barred by time.
2. Dispute relates to an area of 3500 sq. ft. (70 ft. x 50 ft.) (2 Biswa 12
Biswani) of Plot No.1019 situated in Village Hardoi within the limits
of Nagar Palika Hardoi, Uttar Pradesh. The plaintiff claimed title
through a registered sale deed dated 21.01.1966 from the erstwhile
Zamindar Rai Bahadur Mohan Lal. They also claimed to have
received possession pursuant to the sale deed. It is also relevant
to mention that the land purchased was an open piece of land. In
1975, when the appellant tried to raise the construction over the land
purchased, the defendants objected and caused hindrance giving
rise to the filing of the suit in question on 28.05.1975, registered as
O.S.No.161 of 1975 praying for the relief of injunction with alternative
relief for possession.
3. The defendant respondent filed their written statement primarily
alleging that there had been prior proceedings between Rai Bahadur
Mohan Lal and his co-sharers and their tenants (ancestors of the
respondent) in the year 1944 where a suit was filed for arrears of
rent with respect to Plot No.1019, 1022 and 1023.
62 [2024] 1 S.C.R.
3.1 Further under the settlement between the Zamindar and co-
sharers, the land in question came to Siddheshwari Narain
and Deep Chandra in a private partition and as such these
co-sharers became the owners of the land.
3.2 The defendant respondents having continued in possession at
the time of abolition of Zamindari, became the owners.
3.3 Lastly, it was contended that soon after the sale deed of January,
1966 in favour of plaintiff appellant, there was proceedings under
section 145 of the Code of Criminal Procedure, 19731 in May,
1966. In the said proceedings, it was found that the defendant
respondents were in possession.
4. Both the parties led evidence, both documentary and oral. The Trial
Court found the plaintiff appellant to be the owner of the land in
dispute as also in possession and accordingly decreed the suit for
injunction vide judgment dated 19.09.1979.
5. The Trial Court had placed reliance upon the sale deed, the Mutation
and the Khasra and Khewat entries. Further, the Trial Court had
held that the proceedings under section 145 CrPC would not be of
any benefit to the defendant respondents as it was not clear from
the material placed that the said proceedings related to the land in
question.
6. The defendant respondent preferred appeal before the District Judge
which was registered as Civil Appeal No.14 of 1979. The District
Judge, Hardoi, vide judgment dated 29.11.1979 dismissed the appeal.
It however did not agree with a couple of findings recorded by the
Trial Court and accordingly, recorded its own findings. According to
the appellate court, the proceedings under section 145 CrPC were
related to the land in dispute and that the possession of the defendant
respondent was found over the land in dispute. It accordingly decreed
the suit for possession and not for injunction as had been done by
the Trial Court. The Appellate Court further held that the plaintiff-
appellants were the owners of the land in dispute and they had been
successful in establishing their title.
1 CrPC
[2024] 1 S.C.R. 63
BRIJ NARAYAN SHUKLA (D) THR. LRS. v. SUDESH KUMAR ALIAS

SURESH KUMAR (D) THR. LRS. & ORS.
7. Another finding recorded by the Appellate Court was that the land
in dispute was a non-agricultural land and there was no question of
abolition of Zamindari with respect to the said land and therefore the
claim of the defendants of becoming the owners on the abolition of
Zamindari was not correct. It further found that the suit for arrears of
rent filed in 1944 was with respect to some other land and not the
land in dispute in as much as the suit land was vacant open piece
of land whereas the 1944 suit for arrears of rent was with respect
to the house of the defendants. Even the plot areas in the two suits
were different. The Plot No.1019 being a huge piece of land where
as the plaintiff appellant had purchased only a part of it, they had
derived valid title from the Zamindars, the erstwhile owners.
8. It accordingly held that the period of 12 years for perfecting rights on
the basis of adverse possession would commence from 1966 and
the suit having been filed in 1975 was well within time.
9. The defendant respondent preferred Second Appeal before the High
Court which was registered as Second Appeal No.202 of 1980. It
is this appeal which has been allowed by the impugned judgment
giving rise to the present appeal. The High Court dismissed the suit
of the appellant on the ground of limitation as according to it, the
defendant respondent had matured their rights or rather perfected
their rights by adverse possession having continued so since 1944
when the first suit for arrears of rent was filed. We are, however, of
the firm view that the High Court fell in serious error in holding so,
for the following reasons:
9.1 It has not dealt with the findings recorded by the Trial Court and
the First Appeal Court with respect to the issue of Limitation
and the evidence considered by them.
9.2 The High Court was hearing the Second Appeal under section
100 of Code of Civil Procedure, 19082 and it having reappreciated
the findings to disturb findings of fact, committed an error.
9.3 The High Court has not recorded any finding that the plaintiff
appellants were not the owners or that they have failed to prove
the ownership.
2 CPC
64 [2024] 1 S.C.R.
9.4 The suit of the year 1944 was for the arrears of rent and not
relating to any dispute of possession. The defendant respondents
were tenants and therefore their possession was permissive
as against the then landlords. There was no question of them
claiming any adverse possession from 1944.
9.5 In our considered view, the plaintiff appellants got their
ownership/title under the registered sale deed on 21.01.1966.
The dispute for possession vis-à-vis the defendant respondents
would arise only after the said date and not on any date prior
to it. Admittedly from the date of the sale deed, the suit was
filed within the period of 12 years in May, 1975. Even if it is
assumed that the defendant respondents were in possession
from prior to 1944, their possession could not have been adverse
even to the Zamindars as they were tenants and their tenancy
would be permissible in nature and not adverse. There were
no proceedings for possession prior to 1966.
9.6 Further, the first appellate court having recorded a specific
finding that the land in suit was not covered by Zamindari
Abolition as it was non-agricultural land, the claim of ownership
from the date of abolition of Zamindari was also without any
merit. The finding has not been disturbed by the High Court.
The defendant-respondents thus having failed to establish their
title, would have no right to retain the possession.
10. Accordingly, the appeal is allowed, the impugned judgment and order
of the High Court is set aside and that of the First Appellate Court
decreeing the suit for possession is maintained.
12. Pending application(s), if any, is/are disposed of.
[2024] 1 S.C.R. 65 : 2024 INSC 10
Case Details
Reliance Life Insurance Company Ltd. & Anr.

v.
Jaya Wadhwani
03 January 2024
What would be the date from which the policy becomes effective;
whether it would be the date on which the policy is issued or the
date of the commencement mentioned in the policy or it would
be the date of the issuance of the deposit receipt or cover note.
Headnotes
Insurance – Insurance Policy – Date from which the policy
becomes effective – Assured persons committed suicide –
Claims filed by respondent, allowed – Revision filed by the
appellant was dismissed, NCDRC affirmed the orders passed
by the District Forum and the State Commission holding that
the appellant was liable to pay the amount of the sum assured
on the death of the assured – Forums below proceeded on the
basis that the date of issuance of the initial deposit receipt
of premium is the date of commencement of the Policy –
Propriety:
Held: Date of issuance of the policy would be the relevant date
for all the purposes and not the date of proposal or the date of
issuance of the receipt – Date of proposal cannot be treated to
be the date of policy until and unless on the date of proposal,
initial deposit as also the issuance of policy happens on the
same date – Merely tendering a cheque may not be enough as
till such time the cheque is encashed, the contract would not
become effective – Clause 9 of the terms and conditions inter alia
stated that the Company will not pay any claim on death if the
Life Assured committed suicide within 12 months from the date of
issue of the Policy or the date of any reinstatement of the Policy
– Once it is mentioned in the Policy that the 12 months period is
to commence from the date of the issuance of the policy or the
date of any reinstatement of the policy, the reinstatement aspect
* Author
66 [2024] 1 S.C.R.
ought to have been considered – In the case of ‘US’, the date of

reinstatement of the policy was clearly stated to be 25.02.2014
and that was also the date of commencement of policy, both the
dates being the same – Thus, the date of incidence of suicide
being 03.06.2014, it was well within 12 months – Further, in the
case of ‘JW’, proposal form was submitted on 14.07.2012 with
respect to the cheque dated 13.07.2012 – 14.07.2012 cannot be
taken to be the date of issuance of policy – The date of issue of
policy being 16.07.2012 was actually the date from which the policy
commences and becomes effective – Period of 12 months from
16.07.2012 would complete on 15.07.2013 – It would be the last
day of 12 months as from the next day, i.e., 16.07.2013 the next
month will start – Incidence of suicide was on 15.07.2013, the
last day of 12 months – Stand taken by the appellant approved –
Impugned orders set aside – Claims of the respondent rejected.
[Para 5, 8, 9-11, 15 and 16]

Life Insurance Corporation of India and Another vs.
Dharam Vir Anand [1998] 2 Suppl. SCR 295:(1998)
7 SCC 348; Life Insurance Corpn. of India vs. Mani
Ram [2005] 2 Suppl. SCR 342:(2005) 6 SCC 274 –
referred to.
List of Keywords
Consumer Protection; Insurance; Insurance Policy; Effective date
of policy; Suicide.

Appearances

From the Judgment and Order dated 06.02.2019 of the National
Consumers Disputes Redressal Commission, New Delhi in RP
No.2909 of 2018.
With
Civil Appeal No.36 of 2024.
Appearances:
Sachin Subhash Daga, Rajesh Kandari, Vikas Upadhyay, Arjun Singh
Tomar, Ms. Ankita Kashyap, Advs. for the Appellants.
[2024] 1 S.C.R. 67
RELIANCE LIFE INSURANCE COMPANY LTD. & ANR. v.

JAYA WADHWANI
Nitin S. Tambwekar, Seshatalpa Sai Bandaru, Advs. for the

Respondent.

Judgment
Vikram Nath, J.
Leave granted.
2. These two appeals raise a common question of law. As such they are
being analogously dealt with by this common order. The challenge in
both these appeals is to the orders passed by the National Consumer
Disputes Redressal Commission1, New Delhi, whereby the revision
filed by the appellant has since been dismissed and the orders
passed by the District Forum as also the State Commission have
been affirmed holding that the appellant is liable to pay the amount
of the sum assured on the death of the assured.
3. The sole question involved in these appeals is as to what would
be the date from which the policy becomes effective; whether it
would be the date on which the policy is issued or the date of the
commencement mentioned in the policy or it would be the date of the
issuance of the deposit receipt or cover note. The District Consumer
Disputes Redressal Forum2, the State Consumer Disputes Redressal
Commission3 and the National Commission have proceeded on the
basis that the date of issuance of the initial deposit receipt of premium
is the date of commencement of the Policy and have accordingly
allowed the complaint filed by the respondent.
4. The relevant dates in both the cases are summarised hereunder:
4.1 In the appeal of Jaya Wadhwani, the quotation of Policy was
issued on 14.07.2012. The proposal form was submitted by
the life assured on 14.07.2012. Receipt of the Cheque dated
13.07.2012 was also issued on 14.07.2012. On 16.07.2012, the
Policy was issued and at all relevant places, it was mentioned in
the policy that the date of commencement of the policy would be
16.07.2012. On 15.07.2013, the life assured committed suicide.
1 NCDRC
2 District Forum
3 State Commission
68 [2024] 1 S.C.R.
4.2 In the appeal of Usha Soni, the date of submission of proposal

form by the life assured is 26.09.2012. The date of issue of policy
as also the date of commencement of policy was 28.09.2012.
The date of next premium due was 28.09.2013. As the next
premium was not paid, the policy lapsed. The assured paid
the next premium on 25.02.2014 and the lapsed policy was
reinstated from that date. On 03.06.2014, the life assured
committed suicide.
5. The Clause relevant for consideration is clause 9 of the Policy
conditions and privileges and the terms and conditions mentioned
therein. Clause 9 reads as follows:
“9. Suicide: The Company will not pay any claim on death
if the Life Assured, whether sane or insane, commits suicide
within 12 months from the date of issue of this Policy or
the date of any reinstatement of this Policy.”
6. From the documents on record in the case of Usha Soni, we find
that the first cheque was issued on 26.09.2012. The policy issuance
and commencement date in the Policy is mentioned as 28.09.2012.
Further, the next premium due was on 28.09.2013. Grace period
is 30 days under Clause 1(iv) of the terms and conditions. Clause
5 mentions that the policy would lapse. Clause 6 provides for
reinstatement. However, since the renewal amount was not paid within
the time allowed, the policy stood lapsed and subsequently, upon
payment of the premium against the lapsed policy on 25.02.2014, the
policy was reinstated from the said date. The life assured committed
suicide on 03.06.2014, which was well within the period of 12 months.
7. On a perusal of the orders passed by the District Forum, the State
Commission, and the National Commission, we find that although
clause 9 of the terms and conditions has been referred to but the
aspect of reinstatement of a lapsed Policy has not been considered.
They have wrongly taken the date of issue of policy only as the
relevant date to count 12 months, i.e., from 28.09.2012.
8. Once it is mentioned in the Policy that the 12 months period is to
commence from the date of the issuance of the policy or the date of
any reinstatement of the policy, the reinstatement aspect ought to have
[2024] 1 S.C.R. 69

JAYA WADHWANI
been considered. The date of reinstatement of the policy is clearly

stated to be 25.02.2014 and that is also the date of commencement
of policy, both the dates being the same. Thus, the date of incidence
of suicide being 03.06.2014, it was well within 12 months.
9. Now, coming to the case of Jaya Wadhwani, the proposal form, no
doubt, was submitted on 14.07.2012 with respect to the cheque dated
13.07.2012 of the premium amount wherein also it was mentioned that
the receipt is issued subject to the clearance of the cheque and further
that the insurance protection shall only be provided effective from
the date of acceptance of the risk, which happened on 16.07.2012,
when the policy was issued and the date of commencement was
notified to be the same date.
10. 14th July 2012, therefore, cannot be taken to be the date of issuance
of policy. It is only the date of issue of receipt of the initial premium.
The date of issue of policy being 16.07.2012 is actually the date
from which the policy commences and becomes effective.
11. In the present case, period of 12 months from 16.07.2012 will complete
on 15.07.2013. It would be the last day of 12 months as from the
next day, i.e., 16.07.2013 the next month will start. Unfortunately, the
incidence of suicide is on 15.07.2013, the last day of 12 months. The
date of proposal cannot be treated to be the date of policy until and
unless on the date of proposal, initial deposit as also the issuance of
policy happens on the same date where, for example, the premium
is paid in cash then, immediately, the policy could be issued. Merely,
tendering a cheque may not be enough as till such time the cheque
is encashed, the contract would not become effective. The drawer
of the cheque may, at any time, after issuing, stop its payment or
there may not be enough funds in the account of which the cheque is
issued and there could be many other reasons for which the cheque
could be returned without being encashed.
12. We may also refer to the two judgments relied upon by the counsel
for the appellants, in support of his submission that the terms and
conditions of the contract as contained in the policy should be strictly
adhered to. Otherwise mentioning of the terms and conditions would
be a futile exercise, if any other interpretation is given or terms and
conditions are relaxed.
70 [2024] 1 S.C.R.
13. In this connection, it would be useful to reproduce the extract which

form part of paragraph 6 in the case of Life Insurance Corporation
of India and Another vs. Dharam Vir Anand4. It reads as follows:
“6. Having examined the rival submissions and having
examined the policy of insurance which is nothing but
a contract between the parties and having considered
the expressions used in Clause 4-B of the terms of the
policy, we are persuaded to accept the submissions made
by Mr. Salve, the learned Senior Counsel appearing for
the appellant. In construing a particular Clause of the
Contract, it is only reasonable to construe that the words
and the terms used therein must be given effect to. In other
words, one part of the Contract cannot be made otiose by
giving a meaning to the policy of the contract. Then again,
when the same Clause of a contract uses two different
expressions, ordinarily those different expressions convey
different meanings and both the expressions cannot be
held to be conveying one and the same meaning. Bearing
in mind the aforesaid principle of construction, if Clause
4-B of the terms of policy is scrutinized, it become crystal
clear that the date on which the risk under the policy has
commenced is different from the date of the policy. In the
case in hand, undoubtedly the date on which the risk under
the policy has commenced is 10.5.89 but the date of the
policy is 31.03.1990 on which date the policy had been
issued. Even though the Insurer had given the option to
the Insured to indicate as to whether the policy is to be
dated back and the insured indicated that the policy should
be dated back to 10.05.1989 and did pay the premium
for that period, thereby the risk under the policy can be
said to have commenced with effect from 10.5.1989 but
the date of the policy still remains the date on which the
policy was issued i.e. 31.03.1990. The death of the life
assured having occurred as a result of suicide committed
by the assured before the expiry of three years from the
4 (1998) 7 SCC 348

[2024] 1 S.C.R. 71

JAYA WADHWANI
date of the policy, the terms contained in Clause 4-B of the

policy would be attracted and, therefore, the liability of the
Corporation would be limited to the sum equal to the total
amount of premium paid under the policy without interest
and not the entire sum for which the life had been insured.
The Forums under the Consumer Protection Act committed
gross error in construing Clause 4-B of the policy and giving
the same meaning to the two expressions in the aforesaid
Clause 4-B namely “the date on which the risk under the
policy has commenced” and “the date of the policy”. The
construction given by us to the provisions contained in
Clause 4-B get support, if the proviso to Clause 4-B is
looked into. Under the proviso, if the life assured commits
suicide before expiry of one year reckoned from the date
of the policy, then the provisions of the Clause under the
heading “suicide” printed on the back of the policy would
apply. In a case therefore where a policy is dated back for
one year prior to the date of the issue of the policy, the
proviso contained in Clause 4-B cannot be operated at all.
When parties had agreed to the terms of the contract, it
is impermissible to hold that a particular term was never
intended to be acted upon. The proviso to Clause 4-B will
have its full play if the expression “the date of the policy”
is interpreted to mean the date on which the policy was
issued and not the date on which the risk under the policy
has commenced. In the aforesaid premises, we are of the
considered opinion that under Clause 4-B of the policy the
date of the policy is the date on which the policy had been
issued and not the date on which the risk under the policy
had commenced by way of allowing it to be dated back.
In view of our aforesaid construction to Clause 4-B, in the
case in hand, the respondent in law would be entitled to
only the sum equal to the total amount of premium paid
under the policy without any interest inasmuch as the
death of the life assured has occurred before the expiry
of three years from the date of the policy, i.e., 31.3.1990…
………”
72 [2024] 1 S.C.R.
14. Relying upon the above judgment in the case of Dharam Vir Anand
(supra), this Court again in the case of Life Insurance Corpn. of
India vs. Mani Ram5, reiterated the same view and held that the
date of issue of policy would be the relevant date even if there was
backdating as has been done in the case of Dharam Vir Anand
(supra).
15. In the present appeals, we do not find any such issue of back
dating but the date of issuance of the policy would be the relevant
date for all the purposes and not the date of proposal or the date
of issuance of the receipt. In view of the above, the stand taken
by the appellant is approved. The impugned orders are thus liable
to be set aside.
16. Accordingly, the orders passed by the District Forum, the State
Commission, and the National Commission are set aside and the
claims of the respondent are rejected. The appeals are accordingly,
allowed as above.
Headnotes prepared by: Divya Pandey Result of the case: Appeals allowed.
5 (2005) 6 SCC 274

[2024] 1 S.C.R. 73 : 2024 INSC 11
Case Details
State of NCT of Delhi

v.
Raj Kumar @ Lovepreet @Lovely
(Criminal Appeal No.43 of 2024)
03 January 2024
The High Court granted default bail to the respondent u/s. 167(2)
of the Code of Criminal Procedure, 1973. Whether the High Court
committed an error in allowing the petition and granting default
bail to the respondent.
Headnotes
Unlawful Activities (Prevention) Act, 1967 – Penal Code, 1860 –
ss.201/120-B – Arms Act, 1959 – ss. 13/18/20 – The High Court
had relied upon the judgment in the case of Hitendra Vishnu
Thakur and others vs. The State of Maharashtra and others
wherein the Supreme Court was dealing with the provisions
of s.20(4) (bb) of the Terrorist and Disruptive Activities
(Prevention) Act, 1987 and had observed that the period for
granting extension of investigation could not be extended in
a casual manner – Propriety:
Held: In the instant case, the period of 90 days expired on
15.09.2020 – Before the expiry of the said period on the
request of the Investigating Officer, the time for investigation
was extended by order dated 11.09.2020 for a further period of
two months till 11.11.2020 – Investigation was not completed –
Public Prosecutor moved another application dated 07.11.2020
requesting for further extension of time for investigation for a
period of 30 days as per the provisions contained in s. 43D (2)
(b) of UAPA – The said application was allowed by the Trial
Court on 10.11.2020 and the period of investigation was further
extended till 30.11.2020 – The respondent moved an application
on 11.11.2020 itself u/s. 167 of the CrPC for release on bail –
The said application was rejected by the Trial Court vide order
dated 17.11.2020 – However, the High Court granted the default
* Author
74 [2024] 1 S.C.R.
bail – Reliance placed upon the judgment in the case of Hitendra

Vishnu Thakur by the High Court was misplaced – It was a case
relating to TADA, whereas the present case related to UAPA –
The provisions under UAPA s.43D(2)(b) are different and give
other reasons also for extension of time for investigation – The
High Court also committed an error in recording a finding that
sanction had already been received prior to the date of making
the application for extension in November 2020 – The recording
of the said fact is not correct – The Public Prosecutor in the
application had clearly mentioned that the sanction u/s. 45(1)
of UAPA had been obtained from Government of India, Ministry
of Home Affairs and was attached with the case file – However,
the sanction u/s. 45(2) of UAPA was awaited from GNCT Delhi
and that the sanction u/s. 39 of the Arms Act was to be obtained
after the results from the FSL was received – The High Court
also fell in error in not taking into consideration the reasons
given u/s. 43D(2) (b) were clearly made out and explained in
the extension letter dated 07.11.2020 giving the details of the
progress of the investigation as also the reasons for detaining
the respondent – The High Court also failed to consider that
after completing the investigation, Police report u/s. 173(2) CrPC
had already been submitted prior to 30.11.2020 which was the
last date of the extended period – The High Court committed
an error in allowing the petition and granting default bail to the
respondent – The impugned order passed by the High Court is
set aside. [Paras 3.2, 3.3, 3.4, 3.5, 5, 8, 10, 12]
Unlawful Activities (Prevention) Act, 1967 – s.43D(2)(b):
Held: From a perusal of the provision i.e. 43 D(2)(b), the extension
for investigation could be granted up to a maximum period of 180
days for the following reasons: (i) Completion of the investigation;
(ii) Progress in the investigation was explained; and (iii) Specific
reasons for detention beyond a period of 90 days. [Para 6]

Hitendra Vishnu Thakur and others vs. The State
of Maharashtra and others [1994] 1 Suppl. SCR
360:(1994) 4 SCC 602 – held inapplicable.
State of Maharashtra vs. Surendra Pundlik Gadling
and others [2019] 3 SCR 310:(2019) 5 SCC 178 –
referred to.
[2024] 1 S.C.R. 75
STATE OF NCT OF DELHI v.

RAJ KUMAR @ LOVEPREET @LOVELY
List of Acts
Unlawful Activities (Prevention) Act, 1967 – s.43D(2)(b); Penal

Code, 1860 – ss.201/120-B; Arms Act, 1959 – ss. 25/54/59;
Code of Criminal Procedure, 1973 – s. 167(2).
List of Keywords
Default bail; Extension of time for investigation.

Appearances
of 2024.
of Delhi at New Delhi in CRLMC No.2312 of 2020.
Appearances:
Suryaprakash V. Raju, ASG, Ms. Sairica Raju, Ashutosh Ghade,
Guntur Pramod Kumar, Dr. Arun Kumar Yadav, Shreekant Neelappa
Terdal, Advs. for the Appellant.
Ms. Tara Narula, Ms. Supriya Juneja, Advs. for the Respondent.
Judgment
Vikram Nath, J.
Leave granted.
2. The State of NCT of Delhi1 is in appeal assailing the correctness
of the order dated 11.02.2021 passed by the High Court of Delhi
granting default bail to the respondent under section 167(2) of the
Code of Criminal Procedure, 19732.
3. Relevant facts for appropriate application of this controversy are
briefly stated here under:
1 GNCTD
2 CrPC
76 [2024] 1 S.C.R.
3.1 A First Information Report3 No.154 of 2020 was registered on

16.06.2020 with Police Station, Special Cell, New Delhi against
the respondent for offences under Sections 13/18/20 of the
Unlawful Activities (Prevention) Act, 19674, Sections 201/120-
B of the Indian Penal Code, 18605, Sections 25/54/59 of the
Arms Act, 19596. Pursuant to the said FIR, the respondent was
arrested on 18.06.2020.
3.2 He was initially remanded to Police Custody for a period of three
days and thereafter to Judicial Custody and has since been in
Mandoli Jail, New Delhi. The period of 90 days expired on 15th
September, 2020. Before the expiry of the said period on the
request of the Investigating Officer7, the time for investigation
was extended by order dated 11.09.2020 for a further period of
two months till 11.11.2020. The investigation was not complete
till 11.11.2020 and no Police report under section 173(2) CrPC
was filed.
3.3 Before the expiry of the extended period of investigation which
was valid until 11.11.2020, the Public Prosecutor moved another
application dated 07.11.2020 requesting for further extension of
time for investigation for a period of 30 days as per the provisions
contained in section 43D (2) (b) of UAPA. The reasons given
for moving the said application were manifold which are noted
as follows:
i) Sanction under section 45(2) of UAPA was awaited from
GNCTD.
ii) FSL results of arms recovered from accused persons were
also awaited; and
iii) Sanction under section 39 of the Arms Act was to be
obtained.
3.4 The said application was allowed by the Trial Court on
10.11.2020 and the period of investigation was further extended
3 FIR
4 UAPA
5 IPC
6 The Arms Act
7 IO
[2024] 1 S.C.R. 77

till 30.11.2020. In the said order of 10.11.2020, although all the

reasons mentioned in the application dated 07.11.2020 seeking
extension of the period of investigation were mentioned but in
the operative portion, the Trial Court noted that the extension
had been sought on the ground of obtaining mandatory
sanction which was still pending before the GNCT Delhi and
had accordingly granted the extension till 30.11.2020. The
investigation has since been completed and Police report under
section 173(2) CrPC was submitted on 26.11.2020 before the
expiry of the period of extension for concluding the investigation
up to 30.11.2020.
3.5 The respondent moved an application on 11.11.2020 itself
under section 167 of the CrPC for release on bail. The said
application was rejected by the Trial Court vide order dated
17.11.2020. Aggrieved by the same, the respondent preferred
a petition under section 482 CrPC for setting aside the order
dated 11.09.2020 and 10.11.2020 which was registered as Crl.
M.C. No.2312 of 2020. This petition has since been allowed by
the impugned order giving rise to the present appeal.
4. Having heard learned counsel for the parties, we are of the view that
the High Court committed an error in allowing the petition and granting
default bail to the respondent. In this connection, the High Court had
relied upon the judgment in the case of Hitendra Vishnu Thakur
and others vs. The State of Maharashtra and others8 wherein
this Court was dealing with the provisions of section 20(4) (bb) of
the Terrorist and Disruptive Activities (Prevention) Act, 19879 and
had observed that the period for granting extension of investigation
could not be extended in a casual manner for reasons other than
those mentioned in the above noted provision which stated that it
could be for completion of investigation only.
5. Reliance placed upon the said judgment in the case of Hitendra
Vishnu Thakur (supra) by the Delhi High Court was misplaced. It
was a case relating to TADA, whereas the present case related to
UAPA. The provisions under UAPA section 43D(2)(b) are different
and give other reasons also for extension of time for investigation.
8 (1994) 4 SCC 602

9 TADA
78 [2024] 1 S.C.R.
Section 43D(2) reads as under:

“43D. Modified application of certain provisions of the Code.-
(1) Notwithstanding anything contained in the Code or any other
law, every offence punishable under this Act shall be deemed
to be a cognizable offence within the meaning of clause (c) of
section 2 of the Code, and “cognizable case” as defined in that
clause shall be construed accordingly.
(2) Section 167 of the Code shall apply in relation to a case involving
an offence punishable under this Act subject to the modification
that in sub-section (2),-
(a) the references to “fifteen days”, “ninety days” and “sixty
days”, wherever they occur, shall be construed as
references to “thirty days”, “ninety days” and “ninety days”
respectively; and
(b) After the proviso, the following provisos shall be inserted,
namely: -
“Provided further that if it is not possible to complete the investigation
within the said period of ninety days, the Court may if it is satisfied
with the report of the Public Prosecutor indicating the progress of
the investigation and the specific reasons for the detention of the
accused beyond the said period of ninety days, extend the said
period up to one hundred and eighty days:
Provided also that if the police officer making the investigation under
this Act, requests, for the purposes of investigation, for police custody
from judicial custody of any person in judicial custody, he shall file
an affidavit stating the reasons for doing so and shall also explain
the delay, if any, for requesting such police custody.
xxxxxx ”
6. From a perusal of the above provision i.e. 43 D(2)(b), the extension
for investigation could be granted up to a maximum period of 180
days for the following reasons:
● Completion of the investigation;
● Progress in the investigation was explained; and
● Specific reasons for detention beyond a period of 90 days.
[2024] 1 S.C.R. 79

7. Provisions of section 43D(2)(b) were considered by this Court in the

case of State of Maharashtra vs. Surendra Pundlik Gadling and
others10. In the said case, the FSL report was awaited and it also
required the detention of the accused wherein financial details of the
respondent were still being ascertained in view of the huge conspiracy
spreading over a number of cities were being investigated. The High
Court failed to take into consideration the above judgment of 2019
relating to UAPA. It had relied upon a judgment of 1994 relating to
provisions of TADA.
8. The High Court also committed an error in recording a finding that
sanction had already been received prior to the date of making the
application for extension in November 2020. The recording of the
said fact is not correct. The Public Prosecutor in the application had
clearly mentioned that the sanction under section 45(1) of UAPA had
been obtained from Government of India, Ministry of Home Affairs
and was attached with the case file. However, the sanction under
section 45(2) of UAPA was awaited from GNCT Delhi and that the
sanction under section 39 of the Arms Act was to be obtained after
the results from the FSL was received.
9. We are, therefore, of the view that the reason mentioned in the
impugned order that the application had been filed for extension
without any valid basis as the sanction had already been granted,
was not correct.
10. The High Court also fell in error in not taking into consideration
the reasons given under section 43D(2) (b) were clearly made out
and explained in the extension letter dated 07.11.2020 giving the
details of the progress of the investigation as also the reasons for
detaining the respondent. The Public Prosecutor had mentioned in
the request that major investigation of the case had been completed
and the draft chargesheet had been prepared. However, for want of
remaining sanctions and FSL report some more time was required
for completing the investigation.
11. Insofar as the reasons for detention are concerned, it was mentioned
that during the course of investigation one Mr. Gurtej Singh had
been arrested who had links with Pakistan based terrorists and had
been planning to go to Pakistan for weapons training along with his
associate respondent No.2 Rajkumar alias Lovely and others.
10 (2019)5 SCC 178

80 [2024] 1 S.C.R.
12. The High Court also failed to consider that after completing the
investigation, Police report under section 173(2) CrPC had already
been submitted prior to 30.11.2020 which was the last date of the
extended period.
13. One more aspect to be considered is the nature of offence which
involved terrorist activities having not only Pan India impact but also
impact on other enemy States. The matter should not have been
taken so lightly.
14. Accordingly, the appeal is allowed. The impugned order passed
by the High Court is set aside. The respondent No.2 be taken into
custody forthwith, if not already in custody.
Headnotes prepared by: Ankit Gyan Result of the case: Appeal allowed.
[2024] 1 S.C.R. 81 : 2024 INSC 12
Case Details
Rajendhiran
v.
Muthaiammal @ Muthayee & Ors.
(Civil Appeal No.37 of 2024)
03 January 2024
Whether the High Court was justified in allowing the Second
Appeal filed by the respondents and setting aside the concurrent
judgments of the trial court and the Sub-Judge dismissing the suit
of the respondents and decreeing the suit.
Headnotes
Suit – Suit for declaration – Decreed by the High Court –
Sustainability of, when on perverse findings and ignoring
relevant material findings – Suit by the respondent seeking
declaration that the sale deed executed was null and void;
that suit property belonged to the respondents and for relief
of an injunction against the defendants, on the basis of
an oral partition whereby property was bequeathed to the
respondents whereas the defendants denied the oral partition
– Suit dismissed by the trial court and subordinate court –
However, the High Court allowed the second appeal relying
on certain documents, to support the existence of an oral
partition – Correctness:
Held: Trial court and the first appellate court dealt with the sale
deeds, and found that those were not sufficient to prove the oral
partition or in any manner establish the oral partition with respect to
the survey number in question – High Court failed to consider the
oral as also the documentary evidence – Only on the basis of the
two sale deeds and one mortgage deed, which relate to different
piece and parcels of land, the High Court recorded a perverse
finding that oral partition had taken place – It also did not deal
with the other findings recorded by the courts below – Thus, the
impugned judgment cannot be sustained as it does not conform to
the scope of s. 100 CPC as also it was perverse on appreciated
evidence, and also ignored material evidence – Impugned judgment
and order of the High Court is set aside and that of the trial court
* Author
82 [2024] 1 S.C.R.
and the first appellate court is confirmed, dismissing the suit of

the respondent. [Paras 12-15]

Appearances

of Judicature at Madras in SA No.351 of 2021.
Appearances:
M. A. Chinnasamy, K. S. Gnanasambandan, Mrs. C. Rubavathi,
C. Raghavendren, Saurabh Gupta, Ch. Leela Sarveswar, Vinod
Kumar Teng, Manoj Kumar Chowdhary, V. Senthil Kumar, Advs. for
the Appellant.

Judgment
Vikram Nath, J.
1. Leave granted.
2. This appeal, by the defendants, assails the correctness of the
judgment and order dated 28.07.2022 of the High Court of Judicature
at Madras whereby the Second Appeal No.351/2021 filed by the
plaintiff was allowed and the concurrent judgments of the Trial Court
and the Sub-Judge dismissing the suit of the plaintiff-respondents
were set aside and the suit was decreed.
3. Facts in nutshell are :
3.1 The respondent instituted a suit before the Munsiff Court,
Tiruchengode registered as OS No.200/2011 claiming relief of
declaration that the sale deed dated 10.02.2011 executed by
the first defendant in favour of second defendant was null and
void and to declare that suit property belonged to the plaintiffs
and further for relief of an injunction against the defendants.
3.2 According to the plaint case, the property in question originally
belonged to one Avinashi Gounder who had four sons namely,
Arunachalam, Arumugam, Ramasamy and Palaniyappan.
Plaintiff No.1 is the wife and plaintiff no.2 is the adopted
son of Arunachalam. The first defendant is the daughter of
[2024] 1 S.C.R. 83
RAJENDHIRAN v. MUTHAIAMMAL @ MUTHAYEE & ORS.
Palaniyappan and the second defendant is the vendee of the

suit property from defendant no.1.
3.3 According to the plaintiffs, the four brothers had entered into
an oral partition and the suit property came to the share of
Arunachalam. Subsequently Arunachalam on 16.07.2003, had
executed a will whereby the suit property and other properties
belonging to Arunachalam were bequeathed in favour of the
plaintiffs. Upon the death of Arunachalam on 30.04.2006, the
plaintiffs became the absolute owners of the property in suit.
Further case of the plaintiffs was that plaintiff no.2 and defendant
no.2 were running a partnership business and the property in
suit was offered as a security to the Karur Vysya Bank. It was
the second defendant who had signed the loan papers and
the security papers with the Bank. As the loan amount could
not be repaid by defendant no.2, it was plaintiff no.2 who had
cleared the outstanding loan of the Bank. Further it is claimed
that defendant no.2 clandestinely obtained the sale deed on
10.02.2011 in respect of the suit property from the first defendant.
It was further the case of the plaintiff that the entire property
which was allotted to Palaniyappan (father of defendant no.1)
had been sold by defendant no.1 on 15.07.1981 with specific
boundaries to one Mathiyalagan. It was thus the claim of the
plaintiffs that the defendants would not have any right over
the properties of Avinashi Gounder and that the plaintiffs were
in possession and were cultivating the land in suit but as the
defendant no.2 tried to trespass the suit property on 24.07.2011,
the necessity for filing the suit arose.
3.4 The defendants filed their written statement denying that there
was any oral partition between the sons of Avinashi Gounder
with respect to the suit property. They also denied that plaintiff
no.2 was the adopted son of Arunachalam. The defendants
had further pleaded that survey number in question had a total
area of 2.17 cents in which Avanashigounder’s family had 1/3rd
share i.e. 72 cents. These 72 cents were partitioned amongst
the three sons of Avanashigounder namely, Arunachalam,
Ramasamy and Palaniyappan. The fourth son Arumugam had
died issueless and his share was equally shared by the three
brothers. Thus, each brother became entitled to 24 cents.
Palaniyappan, father of defendant no.1 had 24 cents in this
84 [2024] 1 S.C.R.
property, out of which 12 cents fell to the share of defendant

no.1, out of which, she sold 11 cents to the second defendant.
Plaintiffs had set up a case without any basis only in order to
deprive the defendants of their property. It was also pleaded
that there were other co-owners in survey number in question
who had not been impleaded as defendants, as such the suit
was bad in law for non-joinder of necessary parties.
4. The Trial Court framed the following six issues on the basis of the
pleadings of the parties:
(i). Whether the plaintiff is entitled for decree of declaration as
prayed for?
(ii). Whether the plaintiff is entitled for decree of permanent injunction
as prayed for?
(iii). Whether the husband of the 1st plaintiff executed a will on
16.07.2003?
(iv). Whether the 2nd plaintiff is the legal heir of the deceased
Arunachalam?
(v). Whether the suit is bad for non-joinder of necessary parties?
(vi). To what other relief?
5. The parties led oral and documentary evidence. Both the plaintiffs
examined themselves as PW 1 and PW 2 and one Mathiyalagan
was examined as PW 3 and they proved six papers Exh.A1 to A6.
On behalf of the defendants one Balarajendra was examined as
DW1 and he proved six papers Exh.B1 to B6. Both the defendants
did not enter the witness box.
6. The Trial Court discussed the evidence threadbare and recorded
the following findings:
(i). Both the plaintiffs had pleaded that Arunachalam had executed
a will on 16.07.2003 but they failed to prove the said will deed
in accordance to the statutory provisions contained in Section
68 of the Indian Evidence Act, 1872 and also under Section
63 of the Indian Succession Act, 1956. Thus, their claim on the
basis of the will was not found to be substantiated;
(ii). The suit was bad for non-joinder of necessary parties as the
co-owners/co-sharers were not impleaded as defendants;
[2024] 1 S.C.R. 85
RAJENDHIRAN v. MUTHAIAMMAL @ MUTHAYEE & ORS.
(iii). The plaintiffs were not the owners of the property in suit, they
had not been able to prove the oral partition and as such were
found to be not entitled to any relief.
7. Accordingly, it dismissed the suit, vide judgment dated 08.09.2015.
8. The plaintiffs preferred an appeal which was registered as Appeal Suit
No.55/2016. The Subordinate Court, Tiruchengodu, vide judgment
dated 27.11.2020, after considering the evidence on record, approved
the findings recorded by the Trial Court and, accordingly, dismissed
the appeal. Once again specific findings were recorded that the oral
partition had not been proved by the plaintiffs. For the said purpose,
both the Courts below had relied upon the evidence led by the parties,
both oral and documentary.
9. The First Appellate Court also approved the finding regarding non-
joinder of necessary parties.
10. Aggrieved by the same, the plaintiffs preferred Second Appeal before
the High Court, registered as Second Appeal No.351/2021. The
High Court proceeded on the premise that the only dispute was with
respect to the oral partition, as to whether oral partition had taken
place or not and if yes, whether it was duly proved? The High Court
relied upon Ex.A-3, A-4 and Ex.B-3 to hold that there had been an
oral partition. Ex.A-3 is the Mortgage Deed dated 13.10.2009. Ex.A-4
is the Sale Deed dated 15.07.1981. Ex.B-3 is the Sale Deed dated
02.05.2008. All these three documents were relied upon only for the
reason that they mentioned boundaries. Based only on the finding
that oral partition was proved, the High Court allowed the second
appeal and after setting aside the judgments of the Courts below
decreed the suit.
11. Heard counsel for the appellants. Despite service of notice, no one
appeared on behalf of the respondents.
12. The two sale deeds relate to different properties and not to survey
number in question. Whether any partition with respect to the survey
number in question had taken place or not, is not borne out from
the record. The suit property was never recorded in the name of
the plaintiffs or for that matter, husband of plaintiff no.1, at any time.
The will which was the basis of the claim of the plaintiff, had not
been found to be proved in accordance to law. The Trial Court and
the First Appellate Court had dealt with the documents Exh.A-4 and
86 [2024] 1 S.C.R.
B-3, the two sale deeds, and found that these were not sufficient to
prove the oral partition or in any manner establish the oral partition
with respect to the survey number in question.
13. Interestingly although the plaintiffs set up a case that the land in suit
was coming from Avinashi Gounder but on record, two pattas were
filed which establish that the survey number in question had been
allotted in the name of plaintiff no.1 and eight others jointly with respect
to which there was no partition. This fact had been admitted by the
plaintiffs in their deposition. All these aspects had been considered
by the Trial Court and the First Appellate Court but the High Court
failed to consider the oral as also the documentary evidence. Only
on the basis of the two sale deeds and one mortgage deed, which
relate to different piece and parcels of land, the High Court recorded
a perverse finding that oral partition had taken place. It also did not
deal with the other findings recorded by the Courts below.
14. In view of the above discussion and on the findings recorded above,
the impugned judgment cannot be sustained as it not only does not
conform to the scope of Section 100 of the Code of Civil Procedure,
1908 but also as it was perverse on appreciated evidence, and also
ignoring material evidence.
15. The appeal is, accordingly, allowed. The impugned judgment and
order of the High Court is set aside and that of the Trial Court and
the First Appellate Court is confirmed. The suit of the respondent-
plaintiff stands dismissed.
[2024] 1 S.C.R. 87 : 2024 INSC 13
Case Details
Perumal Raja @ Perumal

v.
State, Rep. by Inspector of Police
(Special Leave Petition (Criminal) No. 863 of 2019)
03 January 2024
[Sanjiv Khanna* and S. V. N. Bhatti, JJ.]
Accused not formally arrested at the time of giving information if
can be deemed to be in the ‘custody’ of the police, admissibility
of evidence in terms of s.27, Evidence Act, 1872. Conviction and
sentence of the appellant u/ss.302 and 201, Penal Code, 1860,
if justified.
Headnotes
Evidence Act, 1872 – s.27 – “in the custody of a police officer”
– Interpretation – Case based on circumstantial evidence
– Appellant was taken into custody during the course of
investigation for the murder of his Uncle – However, he made a
disclosure statement – Appellant along with other co-accused
had murdered his uncle’s son-deceased (appellant’s cousin)
who was missing for months and his body was first dumped
in the sump tank and later retrieved, cut into two parts,
put in sack bags, and thrown in the river/canal – Appellant
subsequently arrested in the present case – On the basis of
the disclosure statement, parts of the dead body and sack
bags were recovered – Other articles were also recovered –
Appellant’s conviction and sentence u/ss.302 and 201, Penal
Code, 1860, challenged:
Held: The pre-requisite of police custody, within the meaning of
s.27, ought to be read pragmatically and not formalistically or
euphemistically – “custody” u/s.27 does not mean formal custody
– It includes any kind of restriction, restraint or even surveillance
by the police– Even if the accused was not formally arrested at
the time of giving information, the accused ought to be deemed,
for all practical purposes, in the custody of the police – Words
“person accused of an offence” and “in the custody of a police
* Author
88 [2024] 1 S.C.R.
officer” in s.27 are separated by a comma and thus, have to be

read distinctively – The wide and pragmatic interpretation of the
term “police custody” is supported by the fact that if a narrow
or technical view is taken, it will be very easy for the police to
delay the time of filing the FIR and arrest, and thereby evade the
contours of ss.25 to 27 – A person giving word of mouth information
to police, which may be used as evidence against him, may be
deemed to have submitted himself to the “custody” of the police
officer – In the present case, the disclosure statement was made
by the appellant when he was detained in another case relating
to the murder of his Uncle– He was subsequently arrested in the
present case – Body parts of the deceased were recovered on the
pointing out of appellant in his disclosure statement – Deceased had
been missing for months and was untraceable – His whereabouts
were unknown– The perpetrator(s) were also unknown – It is only
consequent to the disclosure statement by the appellant that the
police came to know that the Deceased had been murdered – The
homicidal death of Deceased, the disclosure statement and the
consequent recoveries of the motorcycle and other belongings at
the behest of the appellant proved beyond doubt – These facts,
in the absence of any other material to doubt them, establish that
the appellant committed murder of Deceased – The presence
of motive, inter se family property disputes, reinforces the said
conclusion – Conviction of the appellant upheld. [Paras 25, 28,
29, 31, 41]
Evidence Act, 1872 – ss.25-27 – s.27, an exception to ss.25,
26 – Doctrine of confirmation by subsequent events:
Held: s.27 is an exception to ss.25 and 26 – s.27 makes that part
of the statement which distinctly leads to discovery of a fact in
consequence of the information received from a person accused
of an offence, to the extent it distinctly relates to the fact thereby
discovered, admissible in evidence against the accused – The fact
which is discovered as a consequence of the information given is
admissible in evidence – Further, the fact discovered must lead
to recovery of a physical object and only that information which
distinctly relates to that discovery can be proved – s.27 is based
on the doctrine of confirmation by subsequent events- a fact is
actually discovered in consequence of the information given, which
results in recovery of a physical object – The facts discovered and
the recovery is an assurance that the information given by a person
[2024] 1 S.C.R. 89
PERUMAL RAJA @ PERUMAL v.

STATE, REP. BY INSPECTOR OF POLICE
accused of the offence can be relied – However, s.27 does not

lay down the principle that discovery of a fact is to be equated to
the object produced or found. [Paras 19, 22]
Evidence Act, 1872 – s.27 – Conditions necessary for
bringing s.27 into operation, discussed – Facts proved by
the prosecution – Duty of the Court – Evidence produced in
terms of s.27 – Evidentiary value:
Held: The facts proved by the prosecution, particularly the
admissible portion of the statement of the accused, would give
rise to two alternative hypotheses, (i) that the accused had
himself deposited the physical items which were recovered; or
(ii) only the accused knew that the physical items were lying at
that place – The second hypothesis is wholly compatible with the
innocence of the accused, whereas the first would be a factor
to show involvement of the accused in the offence – The court
has to analyse which of the hypotheses should be accepted in a
particular case – s.27 is frequently used by the police, and the
courts must be vigilant about its application to ensure credibility
of evidence, as the provision is vulnerable to abuse – However,
this does not mean that in every case invocation of s.27 must
be seen with suspicion and is to be discarded as perfunctory
and unworthy of credence – Evidentiary value to be attached on
evidence produced before the court in terms of s.27 cannot be
codified or put in a straightjacket formula – It depends upon the
facts and circumstances of the case – A holistic and inferential
appreciation of evidence is required to be adopted in a case of
circumstantial evidence. [Paras 23, 24]
Evidence Act, 1872– ss.24-27 – “accused person”, “a person
accused of any offence”:
Held: The bar u/s.25 applies equally whether or not the person
against whom evidence is sought to be led in a criminal trial was
in custody at the time of making the confession – For the ban to
be effective the person need not have been accused of an offence
when he made the confession – The reason is that the expression
“accused person” in s.24 and the expression “a person accused
of any offence” in ss.26 and 27 have the same connotation, and
describe the person against whom evidence is sought to be led
in a criminal proceeding – The adjectival clause “accused of any
offence” is, therefore, descriptive of the person against whom a
90 [2024] 1 S.C.R.
confessional statement made by him is declared not provable,

and does not predicate a condition of that person at the time of
making the statement. [Para 26]
Criminal Law – Appellant was accused of the murder of his
Uncle and his son – Acquitted in the case relating to the murder
of Uncle – Judgment of acquittal – Evidentiary value, if any:
Held: Except for the fact that the appellant was taken into custody
during the course of investigation for the murder of his Uncle and
thereupon his disclosure statement (Exhibit P-37) was recorded,
there is no connection between the two offences – Murders were
committed on two different dates – Murder trial of his Uncle
was primarily based upon an entirely different set of evidence –
Conviction of the appellant is sustainable in view of the evidence
placed on record in the present case – The judgment of acquittal
would not qualify as relevant and of evidentiary value so as to
acquit the appellant in the present case. [Para 42]
Evidence Act, 1872 – s.27 – Disclosure statement (Exhibit
P-37) made by the appellant, convicted – Acquittal of the co-
accused – Application of s.27:
Held: Acquittal of the co-accused was for want of evidence against
them – At best, they were found in possession of the articles
connected with the crime on the basis of the disclosure statement
(Exhibit P-37) made by the appellant – s.27 of the Evidence Act
could not have been applied to the other co-accused as the provision
pertains to information that distinctly relates to the discovery of
a ‘fact’ that was previously unknown, as opposed to fact already
disclosed or known – Once information is given by an accused,
the same information cannot be used, even if voluntarily made
by a co-accused who is in custody – s.27 does apply to joint
disclosures, but this is not one such case – This was precisely the
reason given by the trial court to acquit the co-accused – Further,
even if Section 8 of the Evidence Act was to apply, it would not
have been possible to convict the co-accused – The trial court
rightly held other co-accused not guilty. [Para 43]
Evidence – Case based on circumstantial evidence – Five
golden principles to be satisfied as laid down in Sharad
Birdhichand Sarda v. State of Maharashtra [1985] 1 SCR 88
– Conditions to be fulfilled before the false explanation or a
false defence can be used by the Court as an additional link
to lend an assurance to the court, stated – A distinction has
[2024] 1 S.C.R. 91

to be drawn between incomplete chain of circumstances and

a circumstance after a chain is complete and the defence or
explanation given by the accused is found to be false, in which
event the said falsehood is added to reinforce the conclusion
of the court. [Paras 37, 38]
Evidence Act, 1872 – s.106 – Code of Criminal Procedure,
1973 – s.313:
Held: Appellant in his statement u/s.313 denied all accusations
without furnishing any explanation regarding his knowledge of the
places from which the dead body was recovered – The failure of
the appellant to present evidence on his behalf or to offer any
cogent explanation regarding the recovery of the dead body by
virtue of his special knowledge must lead to a reasonable adverse
inference, by application of the principle u/s.106 of the Evidence Act
thus forming an additional link in the chain of circumstances – The
additional link further affirms the conclusion of guilt as indicated
by the prosecution evidence. [Para 40]
Words and Phrases – ‘distinctly’ in s.27, Evidence Act, 1872:
Held: The word ‘distinctly’ is used to limit and define the scope
of the information and means ‘directly’, ‘indubitably’, ‘strictly’ or
‘unmistakably’ – Only that part of the information which is clear,
immediate and a proximate cause of discovery is admissible.
[Para 22]

State of U.P. v. Deoman Upadhyaya (1961) 1 SCR
14 – followed.
State (NCT of Delhi) v. Navjot Sandhu alias Afsan
Guru [2005] 2 Suppl. SCR 79:(2005) 11 SCC 600;
Mohmed Inayatullah v. State of Maharashtra [1976] 1
SCR 715:(1976) 1 SCC 828; Aghnoo Nagesia v. State
of Bihar [1966] SCR 134:AIR 1966 SC 119; Dharam
Deo Yadav v. State of Uttar Pradesh [2014] 8 SCR
650:(2014) 5 SCC 509; Sharad Birdhichand Sarda v.
State of Maharashtra [1985] 1 SCR 88:(1984) 4 SCC
116 – relied on.
State of A.P. v. Gangula Satya Murthy [1996] 8
Suppl. SCR 808:(1997) 1 SCC 272; A.N.Vekatesh
and Anr. v. State of Karnataka (2005) 7 SCC 714;
92 [2024] 1 S.C.R.
State of Maharashtra v. Suresh [1999] 5 Suppl. SCR

215:(2000) 1 SCC 471; Harivadan Babubhai Patel v.
State of Gujarat [2013] 10 SCR 889:(2013) 7 SCC 45;
Vasanta Sampat Dupare v. State of Maharashtra [2014]
14 SCR 961:(2015) 1 SCC 253; State of Maharashtra
v. Damu S/o Gopinath Shinde and Ors. [2000] 3 SCR
880:(2000) 6 SCC 269; Rumi Bora Dutta v. State of
Assam [2013] 3 SCR 801:(2013) 7 SCC 417; Rajesh
& Anr. v. State of Madhya Pradesh 2023 SCC OnLine
SC 1202; Khatri Hemraj Amulakh v. State of Gujarat
(1972) 3 SCC 671; Vikram Singh and Ors. v. State of
Punjab [2010] 2 SCR 22:(2010) 3 SCC 56; Sandeep
v. State of U.P. [2012] 5 SCR 952:(2012) 6 SCC 107;
Hanumant v. State of Madhya Pradesh (1952) 2 SCC
71; Deonandan Mishra v. State of Bihar (1955) 2 SCR
570; Central Board of Dawoodi Bohra Community and
Anr. v. State of Maharashtra and Anr., [2004] 6 Suppl.
SCR 1054:(2005) 2 SCC 673; Union of India and
Anr. v. Raghubir Singh (Dead) By Lrs., [1989] 3 SCR
316:(1989) 2 SCC 754; Trimurthi Fragrances (P) Ltd.
v. Government of N.C.T. of Delhi, 2022 SCC OnLine
SC 1247 – referred to.
List of Acts
Evidence Act, 1872; Penal Code, 1860; Code of Criminal Procedure,
1973.
List of Keywords
Circumstantial evidence; Disclosure statement; Police custody;
Formal custody; Doctrine of confirmation by subsequent events;
Special knowledge; Adverse inference; Additional link in chain of
circumstances.

Appearances
CRIMINAL APPELLATE JURISDICTION : Special Leave Petition

(Criminal) No.863 of 2019.
of Judicature at Madras in CRLA No.280 of 2016.
[2024] 1 S.C.R. 93

Appearances:
Col R. Balasubramanian, Sr. Adv., D. Kumanan, Raghav Gupta, Y.
William Vinoth Kumar, Advs. for the Appellant.
Aravindh S., Abbas, Advs. for the Respondent.

Judgment
Sanjiv Khanna, J.
Leave granted.
2. The impugned judgment1 by the High Court of Judicature at Madras
affirms the conviction of the appellant – Perumal Raja @ Perumal for
murder of Rajini @ Rajinikanth under Section 302 of the Indian Penal
Code, 18602 and Section 201 of the IPC, by the Principal Sessions
Judge, Puducherry in SC No. 22 of 20143, in the charge sheet
arising from the First Information Report4 No. 80 of 2008 registered
on 24.04.2008 in Police Station5 Odiansalai, District – Puducherry.
3. The appellant – Perumal Raja @ Perumal stands sentenced to
imprisonment for life and fine of Rs.5,000/- for the offence under
Section 302 of the IPC and rigorous imprisonment for three years
and fine of Rs.3,000/- for the offence under Section 201 of the IPC.
4. The other co-accused, namely, Saravanan @ Krishnan, Mohan
@ Mohankumar, and Ravi @ Ravichandran were acquitted by the
trial court, which acquittal has become final. One ‘N’ was tried as a
juvenile and acquitted. On 15.02.2013, the case of another co-accused
– Chella @ Mugundhan was split up since he was absconding.
Subsequently, vide judgment dated 04.06.2019, which has been
placed on record as additional evidence, Chella @ Mukundhan has
been acquitted.
5. The prosecution case in brief is as follows:
1 Dated 31.08.2016 passed in Criminal Appeal No.280/2016.

2 For short, “IPC”.
3 Dated 07.04.2016.
4 For short, “FIR”.
5 For short, “PS”.
94 [2024] 1 S.C.R.
(i) On 20.04.2008, Rajaram, who was settled in France, returned

to Puducherry as his son Rajini @ Rajinikanth, who was living
in India, had gone missing.
(ii) On 20.04.2008, Rajaram had approached PS Odiansalai,
Puducherry, and made an oral complaint stating that when he
had opened his house No. 13, Chinna Vaikkal Street, Puducherry,
he had found articles to be scattered all over the place. His
motorcycle was missing. He had suspected that his son – Rajini
@ Rajinikanth and his sister’s husband Krishnamurthy could
have taken the bike. He requested the Police to make inquiries.
However, in spite of being asked, he did not make any written
complaint. He stated that he was exhausted and would come
back to lodge written complaint afterwards.
(iii) Next day on 21.04.2008, Rajaram was murdered. FIR No. 204 of
2008 was registered at PS Grand Bazaar, District – Puducherry
under Sections 147, 148, 341 and 302 of the IPC read with
Section 149 of the IPC.
(iv) On 24.04.2008, Arumugam, father of Rajaram, had made a
written complaint at Odiansalai PS, Puducherry that his grandson
Rajini @ Rajinikanth was missing. The complaint was registered
as Diary No. 80 of 2008 for a ‘missing man’ and was taken up
for investigation.
(v) The appellant – Perumal Raja @ Perumal, son of Krishnamurthy
(husband of the sister of Rajaram), was detained and taken
into custody during the course of investigation in FIR No. 204
of 2008 for murder of Rajaram.
(vi) On 25.04.2008, the appellant – Perumal Raja @ Perumal made
a disclosure statement (Exhibit P-37).6
(vii) The appellant – Perumal Raja @ Perumal, along with other
co-accused, had committed murder of Rajini @ Rajinikanth
on 23.11.2007 at Rajaram’s house at Chinna Vaikkal Street,
Puducherry. His dead body was thrown in the sump tank located
in the same house.
6 We shall be subsequently referring to the admissible portions of the disclosure statement under
Section 27 of the Indian Evidence Act, 1872, and also to a limited extent in terms of Section 8 of the Indian
Evidence Act, 1872.
[2024] 1 S.C.R. 95

(viii) The appellant – Perumal Raja @ Perumal had also removed

various belongings from the same house, including iron box,
home theatre, CD player, documents of the house, motorcycle,
RC book, key, Rajini @ Rajinikanth’s passport, Rajini @
Rajinikanth’s passport size photograph, birth registration of the
grandmother, ration card, etc.
(ix) Later on, the appellant – Perumal Raja @ Perumal, and other
co-accused, decided to remove the dead body of Rajini @
Rajinikanth from the sump tank as they had learnt that Rajaram
was returning to India as his son Rajini @ Rajinikanth was
missing.
(x) Accordingly, the appellant – Perumal Raja @ Perumal had
bought a knife and sack bags. They opened the sump tank
and took out Rajini @ Rajinikanth’s body, which was in a
decomposed state. They had cut Rajini @ Rajinikanth’s body
into two pieces and put it in two sack bags. The knife and rope
were put in another sack bag. The three sack bags were taken
by them from Chinna Vaikkal Street, and after passing through
Gandhi Street they threw the sack bags in the canal/river from
the Uppanaru Bridge near the railway crossing.
(xi) On the basis of the disclosure statement (Exhibit P-37), the sack
bags with the decomposed dead body of Rajini @ Rajinikanth
were recovered on 26.04.2008 from the Uppanaru canal/river.
Knife was also recovered.
(xii) The body parts which were in a decomposed state were sent
for post mortem, which was conducted by Dr. S. Diwakar (PW-
24), Senior Medical Officer, Department of Forensic Medicine,
Government General Hospital, Puducherry on 26.04.2008.
(xiii) On 30.04.2008, eight articles were recovered from the water
sump tank at the house of the deceased, namely, gloves, lower
jaw, rib, cervical vertebrae, tarsal and metatarsal, small and big
size bone pieces, and knee cap.
(xiv) The skull recovered from the canal/river and the lower part of the
jaw recovered from the sump tank were sent for superimposition
test to ascertain whether they belong to the deceased Rajini
@ Rajinikanth. C. Pushparani, Scientific Assistant Grade II,
96 [2024] 1 S.C.R.
Anthropology Division, Forensic Sciences Department, Chennai,

who had deposed as PW-29, proves the superimposition test
report dated 20.01.2009 (Exhibit P-25), which confirms that the
skull and mandible were of the deceased – Rajini @ Rajinikanth.
(xv) On the basis of the disclosure statement, various articles,
including the motorcycle, ignition key, original RC book were
recovered from the co-accused Mohan Kumar @ Mohan and
a juvenile.
(xvi) The motive for the crime was inter se family property disputes
and the appellant – Perumal Raja @ Perumal’s desire to acquire
and become owner of the property No. 13, Chinna Vaikkal
Street, Puducherry.
6. Several public witnesses turned hostile and did not support the
prosecution case. This includes Arumugam (PW-20), the grandfather
of the deceased Rajini @ Rajinikanth, who had filed the ‘missing
man’ complaint for Rajini @ Rajinikanth, vide Diary No. 80 of 2008.
However, Arumugam (PW-20) did accept that his son, Rajaram,
who was living abroad had come home when he was murdered
on 21.04.2008. Arumugam (PW-20) also accepts that his grandson
Rajini @ Rajinikanth had not attended crematorial rites of his father
Rajaram and was missing.
7. Narayanasamy (PW-12), then head constable, PS Odiansalai, has
testified that he had received the oral complaint of Rajaram on
20.04.2008, in connection with the scattered articles in his house,
and the missing motorcycle. Rajaram had assumed that his son
Rajini @ Rajinikanth could have taken it away.
8. Kaniyakumaran (PW-10), involved in real estate business, did not
specifically implicate the appellant – Perumal Raja @ Perumal, but
has accepted that Punitha (PW-3), a relative of the deceased Rajini
@ Rajinikanth, had tried to sell the property in Kurumbapet. Reliance
can be also placed on the documentary evidence to establish that
the property in question in the name of Rajaram was dealt with by
Porkilai (PW-4), mother of the appellant – Perumal Raja @ Perumal.
In support, the following documents are relied:
(i) sale deed in favour of Rajaram executed on 26.06.1990 (Exhibit
P-66);
[2024] 1 S.C.R. 97

(ii) sale agreement between Porkilai (PW-4) and accused no.5 -

Ravi @ Ravichandran executed on May, 2007 (Exhibit P-66);
(iii) release deed in favour of Rajaram by Porkilai (PW-4), executed
on 27.06.1990 (Exhibit P-68);
(iv) sale agreement in favour of Thangaveni Ammal, mother of
Rajaram, executed on 19.08.1981 (Exhibit P-69).
9. Chinta Kodanda Rao (PW-30), Inspector of Police, PS Grand Bazaar,
the investigating officer in FIR No. 204 of 2008 relating to the murder
of Rajaram by unknown persons, has testified on the disclosure
statement made by the appellant – Perumal Raja @ Perumal (Exhibit
P-37). The relevant portion of the disclosure statement reads:
“…myself and xxx pull Rajni’s xxx, put him in the sump
tank near the bathroom and closed it…
…took xxx, Iron box, Home theatre, xxx, xxx, rental
documents of my uncle’s house at Chittankudi, Hero Honda
CD Dawn motorcycle, RC book and key, Rajini’s passport
book, Rajini’s passport size photo, birth registration of
grandmother, family ration card of uncle and the copy of
documents written in English, bunch of keys of the house
and my uncle Ranjith’s notebook, xxx xxx xxx, took Hero
Honda CD Dawn motorbike of my uncle Rajaram…..one
bag was put by Mohan xxx xxx xxx the house of Mohan
nearby to the Tollgate of Ariyankuppam, kept 2 bags in
Mohan’s house…
…I, immediately, went to N (name withheld) house and
gave him document, ration card, bunch of keys, Rajini’s
passport, by keeping them in Ranjith notebook and stated
to keep them safe…
…I took the already kept 3 sack bags, rope, curry knife,
showed the sump tank to xxx. When he opened the cover
of the sump tank, he bend down and lifted the hand of the
body of Rajini, who was already killed and put in the sump
by us, since Rajini’s body was in decomposed stage, his
hand had alone come. I put the hand in sack bag. Then we
tied rope in chest, myself and xxx pulled the body outside
from sump. Then, head has come alone. I put head in the
98 [2024] 1 S.C.R.
sack bag. Then xxx took knife from me and cut Rajini’s
body into two pieces and put them in two sack bags, then
put knife and xxx in another sack bag and kept the sack
bags near kitchen, then xxx closed the sump…
…via Chinnavaikal Street and Gandhi Street, turned on
the left side of the street, in front of small clock tower,
via Varnarapettai Billu Shop, on the centre of the bridge
of Railway Crossing on the left side, threw the two bags,
containing the decomposed body of Rajini, on the right
side threw the sack bag, containing knife and xxx…
…Also, I gave statement that if I was taken, I would identify
the Chinnavaikal street, which is the place of occurrence,
my maternal uncle’s house which is in the same street..
the place where I had left the motor cycle of my (nc) and
the place where I had put the body of Rajini... ”
10. On the aspect of the recovery of two nylon sack bags with body
parts, we have affirmative depositions of Chinta Kodanda Rao (PW-
30), Inspector of Police, PS Grand Bazaar, public witness Devadass
(PW-21) and Satyamurthy (PW-11). The recovery was photographed
by Selvaganapathy (PW-26), police photographer vide photographs
marked Exhibit P-19. The recovery was duly recorded in the rough
sketch plan (Exhibit P-30) and the mahazar (Exhibit P-31).
11. On 29.04.2008, accused no. 4 - Mohan Kumar @ Mohan was
arrested. On the same day, stolen items including, the motorcycle
and ignition key of motorcycle, original registration book, insurance
certificate of the motorcycle, iron box, home theatre and speaker
box belonging to the deceased were recovered, as recorded vide
seizure mahazar (Exhibits P-44, P-45, P-46 and P-47).
12. On 30.04.2008, eight articles were recovered from the water sump
tank at the house of the deceased, namely, gloves, lower jaw, rib,
cervical vertebrae, tarsal and metatarsal, small and big size bone
pieces, and knee cap. T. Bairavasamy (PW-32), Circle Inspector, PS
Odiansalai has deposed about the recovery and proved the Mahazar
(Exhibit P-48). The recovery was photographed by Subburayan (PW-
25), police photographer vide photographs marked Exhibit P-18 and
duly witnessed by public witness Devadass (PW-21).
[2024] 1 S.C.R. 99

13. To determine the identity of the deceased person, some of the

body parts were sent for a superimposition test to C. Pushparani
(PW-29), who was working as a Scientific Assistant Grade II,
Anthropology Division, Forensic Sciences Department, Chennai.
She has deposed about having received the case properties,
consisting of a skull with mandible on 10.09.2008. The mandible
was attached with the skull by means of a spring. For the purpose
of identification, she had two identical colour photographs of a
male individual sent to her in a sealed envelope as Item Nos.
2 and 3. The photographs were enlarged to the size of a self-
portrait. Using the computer aided video superimposition technique,
she had examined the skull and mandible viz. the photographs.
For the purposes of the examination, the flesh thickness and
the anthroposcopic landmarks in the face were also taken into
consideration. C. Pushparani (PW-29), Scientific Assistant Grade
II, Anthropology Division, Forensic Sciences Department, Chennai
opined that the landmarks on the face matched well with those of
the skull. She submitted her forensic report dated 20.01.2009 with
analysis on the anthroposcopy and superimposition test (Exhibit
P-25). The skull, as per C. Pushparani (PW-29), Scientific Assistant
Grade II, Anthropology Division, Forensic Sciences Department,
Chennai belonged to the male individual seen in the photograph
at serial no.4. With the report, Exhibit P-25, C. Pushparani (PW-
29), Scientific Assistant Grade II, Anthropology Division, Forensic
Sciences Department, Chennai had enclosed the computer laser
printouts taken by her at the time of examination to establish and
prove that the photographs of deceased – Rajini @ Rajinikanth
match with the mandible and the skull (Exhibits P-26 to P-28).
We have carefully examined the computer laser print outs, and
are of the opinion that the findings of the High Court affirming the
judgment of the trial court are justified.
14. On behalf of the appellant – Perumal Raja @ Perumal, it is submitted
that as per Dr. S. Diwakar (PW-24), Senior Medical Officer, Department
of Forensic Medicine, Government General Hospital, Puducherry no
definite cause of death could be ascertained due to decomposition
of the body. However, it is pertinent to note that Dr. S. Diwakar
(PW-24), Senior Medical Officer, Department of Forensic Medicine,
Government General Hospital, Puducherry has also deposed that
the deceased could be between 25-30 years of age and probable
100 [2024] 1 S.C.R.
death could have occurred six months prior to the autopsy. It must
be further noted that the deceased – Rajini @ Rajinikanth was about
30 years of age and he had been missing for about six months prior
to the date on which the autopsy was conducted.
15. It has been submitted with considerable emphasis that Dr. S. Diwakar
Government General Hospital, Puducherry has accepted that the
lower jaw (mandible) was not found. Whereas, deposition of C.
Pushparani (PW-29), Scientific Assistant Grade II, Anthropology
Division, Forensic Sciences Department, Chennai and the photo
superimposition done by her specifically refer to the lower jaw. We
have examined this contention. Dr. S. Diwakar (PW-24), Senior
Medical Officer, Department of Forensic Medicine, Government
General Hospital, Puducherry, in his examination-in-chief, has testified
that the police had sent the skull, sternum and right femur which
were preserved by him from the autopsy material. Dr. S. Diwakar
Government General Hospital, Puducherry has also stated that the
lower jaw and the left lower first premolar tooth were preserved by
him from the skeleton remains for onward transmission to Central
Forensic Science Laboratory, Hyderabad, for necessary photo
superimposition and DNA test through the Judicial Magistrate-II,
Puducherry. The mahazar dated 21.5.2008 (Exhibit P-15) was
prepared after collecting the aforesaid body parts.
16. We do not find that any confusion or doubt arises from the deposition
of Dr. S. Diwakar (PW-24), Senior Medical Officer, Department of
Forensic Medicine, Government General Hospital, Puducherry.
He had conducted the post mortem examination (Exhibit P-16) on
26.04.2008, wherein he had examined the remains/body parts of the
deceased which were found in the two nylon sack bags on the same
day. Other body parts including, the lower part of the skull i.e. the
mandible and the tooth were found subsequently in the sump tank
on 30.04.2008. Therefore, Dr. S. Diwakar (PW-24), Senior Medical
Officer, Department of Forensic Medicine, Government General
Hospital, Puducherry, in his deposition, while referring to Exhibit
P-17 dated 19.05.2008, has referred to the lower jaw (mandible)
and the left lower first premolar tooth, to send the said body parts
to the Central Forensic Science Laboratory at Hyderabad.
[2024] 1 S.C.R. 101

17. It has been submitted on behalf of the appellant – Perumal Raja

@ Perumal that Dr. S. Diwakar (PW-24), Senior Medical Officer,
Department of Forensic Medicine, Government General Hospital,
Puducherry, in his cross-examination, has accepted that body parts
were sent to him in two nylon sack bags only once, and nothing was
sent thereafter. The post mortem was completed on 26.04.2008, vide
the post mortem report (Exhibit P-16) of the same date.
18. Dr. S. Diwakar (PW-24), Senior Medical Officer, Department of
Forensic Medicine, Government General Hospital, Puducherry had
issued bone-case certificate (Exhibit P-17) on 19.05.2008. Dr. S.
Diwakar (PW-24), Senior Medical Officer, Department of Forensic
Medicine, Government General Hospital, Puducherry has clarified that
while he did not mention the lower jaw in the post mortem 26.04.2008
(Exhibit P-16), he had mentioned that the lower jaw was preserved
in the bone-case certificate (Exhibit P-17) dated 19.05.2008. 7
Further, the aforesaid deposition of Dr. S. Diwakar (PW-24), Senior
Medical Officer, Department of Forensic Medicine, Government
General Hospital, Puducherry has to be read with the testimony
of T. Bairavasamy (PW-32), Circle Inspector, PS Odiansalai, who
had deposed that he had taken the letter written by Dr. S. Diwakar
Government General Hospital, Puducherry and had obtained the
signatures of Judicial Magistrate-II, Puducherry for conducting DNA
test. Thereafter, the material objects were sent through Form 95
No. 02876 (Exhibit P-60) to the Judicial Magistrate-II, Puducherry.
The skull and the mandible were sent for photo superimposition test
after addressing a letter to Judicial Magistrate-II, Puducherry which
was signed by Dr. S. Diwakar (PW-24), Senior Medical Officer,
Department of Forensic Medicine, Government General Hospital,
Puducherry (Exhibit P-61).
19. The prosecution’s case, in the absence of eye witnesses, is based
upon circumstantial evidence. As per Section 25 of the Indian
Evidence Act, 1872 8, a confession made to a police officer is
prohibited and cannot be admitted in evidence. Section 26 of the
Evidence Act provides that no confession made by any person whilst
7 The recovery of lower jaw from the sump took place on 30.04.2008. Thus, it could not have been men-
tioned in the post mortem report dated 26.04.2008.
8 For short ‘the Evidence Act’.
102 [2024] 1 S.C.R.
he is in the custody of a police officer shall be proved against such

person, unless it is made in the immediate presence of a Magistrate.
Section 279 of the Evidence Act is an exception to Sections 25
and 26 of the Evidence Act. It makes that part of the statement
which distinctly leads to discovery of a fact in consequence of the
information received from a person accused of an offence, to the
extent it distinctly relates to the fact thereby discovered, admissible
in evidence against the accused. The fact which is discovered as
a consequence of the information given is admissible in evidence.
Further, the fact discovered must lead to recovery of a physical object
and only that information which distinctly relates to that discovery can
be proved. Section 27 of the Evidence Act is based on the doctrine
of confirmation by subsequent events – a fact is actually discovered
in consequence of the information given, which results in recovery
of a physical object. The facts discovered and the recovery is an
assurance that the information given by a person accused of the
offence can be relied.
20. In Pulukuri Kottaya v. King Emperor10, the Privy Council held that
the fact discovered embraces the place from which the physical object
is produced and the knowledge of the accused as to this, and the
information given, must distinctly relate to this fact.
21. In State (NCT of Delhi) v. Navjot Sandhu alias Afsan Guru11, this
Court affirmed that the fact discovered within the meaning of Section
27 of the Evidence Act must be some concrete fact to which the
information directly relates. Further, the fact discovered should refer
to a material/physical object and not to a pure mental fact relating
to a physical object disassociated from the recovery of the physical
object.
22. However, we must clarify that Section 27 of the Evidence Act, as held
in these judgments, does not lay down the principle that discovery
of a fact is to be equated to the object produced or found. The
discovery of the fact resulting in recovery of a physical object exhibits
9 27. How much of information received from accused may be proved. – Provided that, when any
fact is deposed to as discovered in consequence of information received from a person accused of any of-
fence, in the custody of a police officer, so much of such information, whether it amounts to a confession or
not, as relates distinctly to the fact thereby discovered, may be proved.
10 AIR 1947 PC 67.
11 (2005) 11 SCC 600.
[2024] 1 S.C.R. 103

knowledge or mental awareness of the person accused of the offence

as to the existence of the physical object at the particular place.
Accordingly, discovery of a fact includes the object found, the place
from which it was produced and the knowledge of the accused as to
its existence. To this extent, therefore, factum of discovery combines
both the physical object as well as the mental consciousness of the
informant accused in relation thereto. In Mohmed Inayatullah v.
State of Maharashtra12, elucidating on Section 27 of the Evidence
Act, it has been held that the first condition imposed and necessary
for bringing the section into operation is the discovery of a fact which
should be a relevant fact in consequence of information received from
a person accused of an offence. The second is that the discovery of
such a fact must be deposed to. A fact already known to the police
will fall foul and not meet this condition. The third is that at the time
of receipt of the information, the accused must be in police custody.
Lastly, it is only so much of information which relates distinctly to
the fact thereby discovered resulting in recovery of a physical object
which is admissible. Rest of the information is to be excluded. The
word ‘distinctly’ is used to limit and define the scope of the information
and means ‘directly’, ‘indubitably’, ‘strictly’ or ‘unmistakably’. Only that
part of the information which is clear, immediate and a proximate
cause of discovery is admissible.
23. The facts proved by the prosecution, particularly the admissible
portion of the statement of the accused, would give rise to two
alternative hypotheses, namely, (i) that the accused had himself
deposited the physical items which were recovered; or (ii) only the
accused knew that the physical items were lying at that place. The
second hypothesis is wholly compatible with the innocence of the
accused, whereas the first would be a factor to show involvement
of the accused in the offence. The court has to analyse which of the
hypotheses should be accepted in a particular case.
24. Section 27 of the Evidence Act is frequently used by the police, and
the courts must be vigilant about its application to ensure credibility
of evidence, as the provision is vulnerable to abuse. However, this
does not mean that in every case invocation of Section 27 of the
Evidence Act must be seen with suspicion and is to be discarded
as perfunctory and unworthy of credence.
12 (1976) 1 SCC 828.

104 [2024] 1 S.C.R.
25. The pre-requisite of police custody, within the meaning of Section

27 of the Evidence Act, ought to be read pragmatically and not
formalistically or euphemistically. In the present case, the disclosure
statement (Exhibit P-37) was made by the appellant – Perumal Raja
@ Perumal on 25.04.2008, when he was detained in another case,
namely, FIR No. 204/2008, registered at PS Grand Bazar, Puducherry,
relating to the murder of Rajaram. He was subsequently arrested
in this case, that is FIR.No.80/2008, which was registered at PS
Odiansalai, Puducherry. The expression “custody” under Section 27 of
the Evidence Act does not mean formal custody. It includes any kind
of restriction, restraint or even surveillance by the police. Even if the
accused was not formally arrested at the time of giving information,
the accused ought to be deemed, for all practical purposes, in the
custody of the police.
26. Reference is made to a recent decision of this Court in Rajesh
& Anr. v. State of Madhya Pradesh13, which held that formal
accusation and formal police custody are essential pre-requisites
under Section 27 of the Evidence Act. In our opinion, we need not
dilate on the legal proposition as we are bound by the law and ratio
as laid down by the decision of a Constitution Bench of this Court
in State of U.P. v. Deoman Upadhyaya14. The law laid down by
this Court in a decision delivered by a Bench of larger strength is
binding on any subsequent Bench of lesser or coequal strength.15
This Court in Deoman Upadhyay (supra) observed that the bar
under Section 25 of the Evidence Act applies equally whether or not
the person against whom evidence is sought to be led in a criminal
trial was in custody at the time of making the confession. Further,
for the ban to be effective the person need not have been accused
of an offence when he made the confession. The reason is that
the expression “accused person” in Section 24 and the expression
“a person accused of any offence” in Sections 26 and 27 have the
same connotation, and describe the person against whom evidence
13 2023 SCC OnLine SC 1202.

14 (1961) 1 SCR 14.
15 See Judgments of the Constitution Bench of this Court in Central Board of Dawoodi Bohra Community
and Anr. v. State of Maharashtra and Anr., (2005) 2 SCC 673 and Union of India and Anr. v. Raghubir Singh
(Dead) By Lrs., (1989) 2 SCC 754. Raghubir Singh (supra) and Central Board of Dawoodi Bohra Commu-
nity (supra) have been subsequently followed and applied by this Court in Trimurthi Fragrances (P) Ltd. v.
Government of N.C.T. of Delhi, 2022 SCC OnLine SC 1247.
[2024] 1 S.C.R. 105

is sought to be led in a criminal proceeding. The adjectival clause

“accused of any offence” is, therefore, descriptive of the person
against whom a confessional statement made by him is declared
not provable, and does not predicate a condition of that person at
the time of making the statement.
27. Elaborating on this aspect, a three judge Bench of this Court in
Aghnoo Nagesia v. State of Bihar16 has held that if the FIR is given
by the accused to a police officer and amounts to a confessional
statement, proof of the confession is prohibited by Section 25 of the
Evidence Act. The confession includes not only the admission of the
offence but all other admissions of incriminating facts related to the
offence, except to the extent that the ban is lifted by Section 27 of the
Evidence Act. While dealing with the admission of part of confession
report dealing with motive, subsequent conduct and opportunity, this
Court rejected the severability test adopted by some High Courts. The
statement can, however, be relied upon and admitted to identify the
accused as the maker, and the portion within the purview of Section
27 of the Evidence Act is admissible. Aghnoo Nagesia (supra) has
been applied and followed by this Court in Khatri Hemraj Amulakh
v. State of Gujarat.17
28. The words “person accused of an offence” and the words “in the
custody of a police officer” in Section 27 of the Evidence Act are
separated by a comma. Thus, they have to be read distinctively.
The wide and pragmatic interpretation of the term “police custody”
is supported by the fact that if a narrow or technical view is taken, it
will be very easy for the police to delay the time of filing the FIR and
arrest, and thereby evade the contours of Sections 25 to 27 of the
Evidence Act. Thus, in our considered view the correct interpretation
would be that as soon as an accused or suspected person comes
into the hands of a police officer, he is no longer at liberty and is
under a check, and is, therefore, in “custody” within the meaning of
Sections 25 to 27 of the Evidence Act. It is for this reason that the
expression “custody” has been held, as earlier observed, to include
surveillance, restriction or restraint by the police.
16 AIR 1966 SC 119.

17 (1972) 3 SCC 671.
106 [2024] 1 S.C.R.
29. This Court in Deoman Upadhyay (supra), while rejecting the

argument that the distinction between persons in custody and persons
not in custody violates Article 14 of the Constitution of India, observed
that the distinction is a mere theoretical possibility. Sections 25 and
26 were enacted not because the law presumed the statements to
be untrue, but having regard to the tainted nature of the source of
the evidence, prohibited them from being received in evidence. A
person giving word of mouth information to police, which may be
used as evidence against him, may be deemed to have submitted
himself to the “custody” of the police officer. Reference can also be
made to decision of this Court in Vikram Singh and Ors. v. State
of Punjab18, which discusses and applies Deoman Upadhyay
(supra), to hold that formal arrest is not a necessity for operation of
Section 27 of the Evidence Act. This Court in Dharam Deo Yadav
v. State of Uttar Pradesh19, has held that the expression “custody”
in Section 27 of the Evidence Act does not mean formal custody,
but includes any kind of surveillance, restriction or restraint by the
police. Even if the accused was not formally arrested at the time of
giving information, the accused is, for all practical purposes, in the
custody of the police and the bar vide Sections 25 and 26 of the
Evidence Act, and accordingly exception under Section 27 of the
Evidence Act, apply. Reliance was placed on the decisions in State
of A.P. v. Gangula Satya Murthy20 and A.N.Vekatesh and Anr. v.
State of Karnataka21.
30. However, evidentiary value to be attached on evidence produced
before the court in terms of Section 27 of the Evidence Act cannot be
codified or put in a straightjacket formula. It depends upon the facts
and circumstances of the case. A holistic and inferential appreciation
of evidence is required to be adopted in a case of circumstantial
evidence.
31. When we turn to the facts of the present case, the body parts of
the deceased Rajini @ Rajinikanth were recovered on the pointing
out of appellant – Perumal Raja @ Perumal in his disclosure
18 (2010) 3 SCC 56.

19 (2014) 5 SCC 509.
20 (1997) 1 SCC 272.
21 (2005) 7 SCC 714.
[2024] 1 S.C.R. 107

statement. Rajini @ Rajinikanth had been missing for months and

was untraceable. In the present case, as discussed above, the
homicidal death of Rajini @ Rajinikanth, the disclosure statement
marked Exhibit P-37, and the consequent recovery as elucidated
above have been proved beyond doubt and debate.
32. In State of Maharashtra v. Suresh22, this Court in the facts therein
held that recovery of a dead body, which was from the place pointed
out by the accused, was a formidable incriminating circumstance.
This would, the Court held, reveal that the dead body was concealed
by the accused unless there is material and evidence to show that
somebody else had concealed it and this fact came to the knowledge
of the accused either because he had seen that person concealing
the dead body or was told by someone else that the dead body was
concealed at the said location. Here, if the accused declines and
does not tell the criminal court that his knowledge of the concealment
was on the basis of the possibilities that absolve him, the court can
presume that the dead body (or physical object, as the case may be)
was concealed by the accused himself. This is because the person
who can offer the explanation as to how he came to know of such
concealment is the accused. If the accused chooses to refrain from
telling the court as to how else he came to know of it, the presumption
is that the concealment was by the accused himself.
33. The aforesaid view has been followed subsequently and reiterated in
Harivadan Babubhai Patel v. State of Gujarat23, Vasanta Sampat
Dupare v. State of Maharashtra24, State of Maharashtra v. Damu
S/o Gopinath Shinde and Ors.25, and Rumi Bora Dutta v. State
of Assam26.
34. Our reasoning, which places reliance on Section 106 of the Evidence
Act, does not in any way dilute the burden of proof which is on the
prosecution. Section 106 comes into play when the prosecution is
able to establish the facts by way of circumstantial evidence. On
this aspect we shall delve upon subsequently.
22 (2000) 1 SCC 471.

23 (2013) 7 SCC 45.
24 (2015) 1 SCC 253.
25 (2000) 6 SCC 269.
26 (2013) 7 SCC 417.
108 [2024] 1 S.C.R.
35. Apart from Section 27 of the Evidence Act, Section 8 of the said
Act would be also attracted insofar as the prosecution witnesses,
namely, the investigating officers, Chinta Kodanda Rao (PW-30),
Inspector of Police, PS Grand Bazaar and T. Bairavasamy (PW-
32), Circle Inspector, PS Odiansalai, have referred to the conduct
of the appellant – Perumal Raja @ Perumal with regard to any fact
in issue or a relevant fact when the appellant – Perumal Raja @
Perumal was confronted and questioned.27 Reference in this regard
may also be made to the judgment of this Court in Sandeep v. State
of U.P.28 which held that:
“52. (…) It is quite common that based on admissible
portion of the statement of the accused whenever and
wherever recoveries are made, the same are admissible
in evidence and it is for the accused in those situations
to explain to the satisfaction of the court as to the nature
of recoveries and as to how they came into possession
or for planting the same at the places from where they
were recovered.”
36. On the basis of the prosecution evidence, the following factual
position has been established:
(i) Rajini @ Rajinikanth was missing for months before his father
Rajaram came from France to India, on 20.04.2008.
(ii) On return, Rajaram had noticed that the articles in the property
No.13, Chinna Vaikkal street, Puducherry, where deceased
Rajini @ Rajinikanth used to reside and was owned by Rajaram,
were scattered. The motorcycle owned by Rajaram, which the
deceased Rajini @ Rajinikanth used to use, was missing.
(iii) Rajaram was murdered on 21.04.2008.
(iv) The appellant – Perumal Raja @ Perumal is a close relative of
Rajini @ Rajinikanth and Rajaram (son of sister of Rajaram).
(v) Rajaram as the owner of the immovable property No.13, Chinna
Vaikkal street, Puducherry and Rajini @ Rajinikanth, as the
son of Rajaram, were hindrance in the way of the appellant –
27 See State (NCT of Delhi) v. Navjot Sandhu, (2005) 11 SCC 600, ¶¶ 190, 204-206, 219-223, 225.
28 (2012) 6 SCC 107.
[2024] 1 S.C.R. 109

Perumal Raja @ Perumal acquiring the said property. There

were also inter se family disputes relating to the property in
Kurumbapet. This was the motive for the offence.
(vi) On the basis of the disclosure statement made by the appellant
– Perumal Raja @ Perumal on 25.04.2008 (Exhibit P-37) – (a)
two nylon sack bags were recovered containing decomposed
human body parts; and (b) human bones were also recovered
from the sump tank in property bearing No.13, Chinna Vaikkal
street, Puducherry.
(vii) The superimposition report dated 20.01.2009 (Exhibit P-25) by C.
Pushparani (PW-29), Scientific Assistant Grade II, Anthropology
Division, Forensic Sciences Department, Chennai states that
the skull and the mandible which were recovered from the
river and the sump tank were that of the deceased Rajini @
Rajinikanth. The report relies on the computer laser print out of
the skull and the mandible for comparison with the photograph
of the deceased Rajini @ Rajinikanth. It is shown that the skull
and the mandible were of the deceased Rajini @ Rajinikanth.
(viii) As per the post mortem report (Exhibit P-16), though the cause
of death could not be ascertained due to decomposition of the
body, the bones were that of a person between 25-30 years of
age. Further, the death had probably occurred six months prior
to the autopsy. The deceased Rajini @ Rajinikanth was of 30
years in age and he had been missing for about six months.
(ix) Motorcycle bearing registration No. PY 01 X 9857 belonging to
Rajaram (which was then at Rajaram’s house and in possession
of Rajini @ Rajinikanth, as Rajaram was in France), keys,
insurance papers, as well as other personal belongings were
recovered from Mohan Kumar @ Mohan and a juvenile, whose
name is withheld.
37. In Sharad Birdhichand Sarda v. State of Maharashtra29, this
Court referred to Hanumant v. State of Madhya Pradesh30, and
laid down the five golden principles (‘panchsheel’) that should be
satisfied before a case based on circumstantial evidence against an
accused can be said to be fully established:
29 (1984) 4 SCC 116.

30 (1952) 2 SCC 71.
110 [2024] 1 S.C.R.
(i) the circumstances from which the conclusion of guilt is to be

drawn should be fully established;
(ii) the facts so established should be consistent only with the
hypothesis of the guilt of the accused, that is to say, they
should not be explainable on any other hypothesis except that
the accused is guilty;
(iii) the circumstances should be of a conclusive nature and
tendency;
(iv) they should exclude every possible hypothesis except the one
to be proved; and
(v) there must be a chain of evidence so complete as not to leave
any reasonable ground for the conclusion consistent with the
innocence of the accused and must show that in all human
probability the act must have been done by the accused.
38. This Court in Sharad Birdhichand Sarda (supra) rejected the
contention that if the defence case is false it would constitute an
additional link as to fortify the case of the prosecution. However, a
word of caution was laid down to observe that a false explanation
given can be used as a link when:
(i) various links in the chain of evidence laid by the prosecution
have been satisfactorily proved;
(ii) circumstance points to the guilt of the accused with reasonable
definiteness; and
(iii) the circumstance is in proximity to the time and situation.
If these conditions are fulfilled only then the court can use the
false explanation or a false defence as an additional link to lend
an assurance to the court and not otherwise. Thus, a distinction
has to be drawn between incomplete chain of circumstances and a
circumstance after a chain is complete and the defence or explanation
given by the accused is found to be false, in which event the said
falsehood is added to reinforce the conclusion of the court.
39. This Court in Deonandan Mishra v. State of Bihar31 has laid down
the following principle regarding circumstantial evidence and the
failure of accused to adduce any explanation:
31 (1955) 2 SCR 570.

[2024] 1 S.C.R. 111

“It is true that in a case of circumstantial evidence not only

should the various links in the chain of evidence be clearly
established, but the completed chain must be such as to
rule out a reasonable likelihood of the innocence of the
accused. But in a case like this where the various links
as stated above have been satisfactorily made out and
the circumstances point to the appellant as the probable
assailant, with reasonable definiteness and in proximity
to the deceased as regards time and situation, and he
offers no explanation, which if accepted, though not
proved, would afford a reasonable basis for a conclusion
on the entire case consistent with his innocence, such
absence of explanation or false explanation would itself
be an additional link which completes the chain. We are,
therefore, of the opinion that this is a case which satisfies
the standards requisite for conviction on the basis of
circumstantial evidence.”
40. The appellant – Perumal Raja @ Perumal in his statement under
Section 313 of the Code of Criminal Procedure, 1973 plainly denied
all accusations without furnishing any explanation regarding his
knowledge of the places from which the dead body was recovered.
In this circumstance, the failure of the appellant – Perumal Raja @
Perumal to present evidence on his behalf or to offer any cogent
explanation regarding the recovery of the dead body by virtue of his
special knowledge must lead to a reasonable adverse inference, by
application of the principle under Section 106 of the Evidence Act,
thus forming an additional link in the chain of circumstances. The
additional link further affirms the conclusion of guilt as indicated by
the prosecution evidence.
41. The whereabouts of Rajini @ Rajinikanth were unknown. The
perpetrator(s) were also unknown. It is only consequent to the
disclosure statement by the appellant – Perumal Raja @ Perumal,
that the police came to know that Rajini @ Rajinikanth had been
murdered and his body was first dumped in the sump tank and after
some months, it was retrieved, cut into two parts, put in sack bags,
and thrown in the river/canal. The police, accordingly, proceeded on
the leads and recovered the parts of the dead body from the sump
tank and sack bags from the river/canal. It has been also established
that Rajini @ Rajinikanth was murdered. In addition, there have been
112 [2024] 1 S.C.R.
recoveries of the motorcycle and other belongings at the behest

of the appellant – Perumal Raja @ Perumal. These facts, in the
absence of any other material to doubt them, establish indubitable
conclusion that the appellant – Perumal Raja @ Perumal is guilty
of having committed murder of Rajini @ Rajinikanth. The presence
of motive reinforces the above conclusion.
42. It has been contended before us that the appellant – Perumal Raja
@ Perumal had been acquitted in the case arising out of crime No.
204 of 2008 relating to the murder of Rajaram. The judgment passed
by the trial court32 has been taken on record as additional evidence.
However, we do not find this judgment in any way relevant or negating
the prosecution evidence, which we have referred to and elucidated
earlier in the prosecution case against the appellant, because the
murder trial of Rajaram was primarily based upon an entirely different
set of evidence. The evidence we have mentioned in the present case
is not relevant and directly connected with the murder of Rajaram.
The two occurrences are separate, albeit the appellant – Perumal
Raja @ Perumal was accused of the murder of Rajaram and his
son Rajini @ Rajinikanth. The murders certainly were committed
on two different dates – 23.11.2007 (or thereabout) and 21.04.2008
respectively, approximately five months apart. Except for the fact that
the appellant – Perumal Raja @ Perumal was taken into custody
during the course of investigation in FIR No. 204 of 2008 for murder
of Rajaram and thereupon on 25.04.2008 his disclosure statement
(Exhibit P-37) was recorded, there is no connection between the two
offences. The conviction of the appellant is, therefore, sustainable
in view of the evidence placed on record in the present case. The
judgment of acquittal would not qualify as relevant and of evidentiary
value so as to acquit the appellant – Perumal Raja @ Perumal in
the present case.33
43. Acquittal of the co-accused, as noticed in paragraph 4 above, again
is for want of evidence against them. At best, they were found in
possession of the articles connected with the crime on the basis of
the disclosure statement (Exhibit P-37) dated 25.04.2008 made by
the appellant – Perumal Raja @ Perumal. Section 27 of the Evidence
32 Dated 13.06.2017.
33 See §§ 40-43 of the Indian Evidence Act, 1872.
[2024] 1 S.C.R. 113

Act could not have been applied to the other co-accused for the
simple reason that the provision pertains to information that distinctly
relates to the discovery of a ‘fact’ that was previously unknown, as
opposed to fact already disclosed or known. Once information is
given by an accused, the same information cannot be used, even if
voluntarily made by a co-accused who is in custody. Section 27 of
the Evidence Act does apply to joint disclosures, but this is not one
such case.34 This was precisely the reason given by the trial court
to acquit the co-accused. Even if Section 8 of the Evidence Act is
to apply, it would not have been possible to convict the co-accused.
The trial court rightly held other co-accused not guilty. For the same
reason, acquittal of co-accused Chella @ Mukundhan, who was
earlier absconding, is also of no avail.
44. As far as acquittal of the juvenile is concerned, reference can be
made to the provisions of Sections 40 to 43 of the Evidence Act.
45. In view of the above discussion, we have no difficulty in upholding
the conviction of the appellant – Perumal Raja @ Perumal. The
appeal is dismissed.
Headnotes prepared by: Divya Pandey Result of the case: Appeal

dismissed.
34 See State (NCT of Delhi) v. Navjot Sandhu, (2005) 11 SCC 600, ¶ 145.
[2024] 1 S.C.R. 114 : 2024 INSC 14
Case Details
DBS Bank Limited Singapore

v.
Ruchi Soya Industries Limited and Another
03 January 2024
[Sanjiv Khanna* and S.V.N. Bhatti, JJ.]
Whether s.30(2)(b)(ii) of the Insolvency and Bankruptcy Code,
2016, as amended in 2019, entitles the dissenting financial creditor
to be paid the minimum value of its security interest; whether the
amendments made in the substantive portion of s.30(2), in terms
of Explanation 2 will be applicable when the first appeal was heard
by NCLAT.
Headnotes
Insolvency and Bankruptcy Code, 2016 – s.30(2)(b)(ii) –
Interpretation:
Held: s.30(2)(b)(ii) forfends the dissenting financial creditor from
settling for a lower amount payable under the resolution plan – A
financial creditor can dissent if the resolution plan is discriminatory
or against a provision of law– However, a dissenting financial
creditor cannot take advantage of s.30(2)(b)(ii) – A secured creditor
cannot claim preference over another secured creditor at the stage
of distribution on the ground of a dissent or assent, otherwise
the distribution would be arbitrary and discriminative – Purpose
of the amendment was only to ensure that a dissenting financial
creditor does not get anything less than the liquidation value, but
not for getting the maximum of the secured assets – There is a
contradiction in the reasoning given in the judgment of this Court
in India Resurgence ARC Private Limited v. Amit Metaliks Limited
& Another [2021] 6 SCR 611, which is in discord with the ratio
decidendi of the decisions of the three Judge Bench in Committee
of Creditors of Essar Steel India Limited v. Satish Kumar Gupta
& Ors [2019] 16 SCR 275 and Jaypee Kensington Boulevard
Apartments Welfare Association & Others. v. NBCC (India) Limited
& Others [2021] 12 SCR 603 – Provisions of s.30(2)(b)(ii) by
* Author
[2024] 1 S.C.R. 115
DBS BANK LIMITED SINGAPORE v. RUCHI SOYA INDUSTRIES

LIMITED AND ANOTHER
law provides assurance to the dissenting creditors that they will

receive as money the amount they would have received in the
liquidation proceedings – This rule also applies to the operational
creditors – This ensures that dissenting creditors receive the
payment of the value of their security interest – Paragraph 17
in India Resurgence is correct in its observations when it refers
to the provisions of s.30(4) and that the voting is essentially a
matter which relates to commercial wisdom of the CoC – The
observation that a dissenting secured creditor cannot suggest
that a higher amount be paid to it is also correct – However, this
does not affect the right of a dissenting secured creditor to get
payment equal to the value of the security interest in terms of
s.30(2)(b)(ii) – Further, Paragraph 21 is partially correct – It is
incorrect to state that the dissenting financial creditor would not
be entitled to receive the liquidation value, the amount payable to
him in terms of s.53(1) – Reasoning given in the earlier portion of
paragraph 22 in conflict with the ratio in Committee of Creditors
of Essar Steel India Limited as it does not take into account
the legal effect of s.30(2)(b)(ii) – Present view taken different
from India Resurgence ARC Private Limited on interpretation of
s.30(2)(b)(ii) – Matter referred to larger Bench. [Paras 26, 27,
31, 33, 36 and 49]
Insolvency and Bankruptcy Code, 2016 – s.30(2), Explanation 2
– IBC (Amendment) Act, 2019 – Appellant had preferred the first
appeal before the NCLAT on 31.07.2019 – The Amendment Act
was notified and came into effect on 16.08.2019 – Applicability
of the Amendment Act:
Held: Explanation 2(ii) clearly states that an appeal preferred
u/s.61 or 62, when it is not barred by time under any provision of
law, shall be heard and decided after considering the amended
s.30(2)(b) under the Amendment Act – Clauses (i), (ii) and (iii) of
Explanation 2 reflect the wide expanse and width of the legislative
intent viz. the application of the Amendment Act, whether
proceedings are pending before the adjudicating authority, the
appellate authority, or before any court in a proceeding against
an order of the adjudicating authority in respect of a resolution
plan – Only when the resolution plan, as approved, has attained
finality as no proceedings are pending, that the amendments will
not apply to re-write the settled matter. [Para 22]
116 [2024] 1 S.C.R.

Committee of Creditors of Essar Steel India Limited v.
Satish Kumar Gupta & Ors [2019] 16 SCR 275: (2020)
8 SCC 531; Jaypee Kensington Boulevard Apartments
Welfare Association & Others. v. NBCC (India) Limited
& Others [2021] 12 SCR 603:(2022) 1 SCC 401 –
relied on.
Swiss Ribbons Private Limited and Another v. Union
of India and Others [2019] 3 SCR 535: (2019) 4 SCC
17; Vallal RCK v. Siva Industries and Holdings Limited
and Other (2022) 9 SCC 803; India Resurgence ARC
Private Limited v. Amit Metaliks Limited & Another [2021]
6 SCR 611:2021 SCC Online SC 409; Vistra ITCL
(India) Limited & Ors. v. Dinkar Venkatasubramanian
& Anr. (2023) 7 SCC 324 – referred to.
List of Acts
Insolvency and Bankruptcy Code, 2016; IBC (Amendment) Act,
2019.
List of Keywords
Dissenting financial creditor; Minimum value of security interest.

Appearances

Company Law Appellate Tribunal, New Delhi in Comp. App. (AT)
(Ins.) No.788 of 2019.
With
Civil Appeal No.787 Of 2020.
Appearances:
Krishnendu Datta, Sr. Adv., Ms. Anindita Roychowdhury, Raghav
Chadda, Bharat Makkar, Ms. Anannya Ghosh, Brian Henry Moses,
Advs. for the Appellant.
[2024] 1 S.C.R. 117

LIMITED AND ANOTHER
Krishnan Venugopal, Sr. Adv., Nakul Sachdeva, Aakarshan Sahay,

Sagar Arora, Abhinandan Sharma, Krishnan Agarwal, Faisal
Sherwani, M/s. Cyril Amarchand Mangaldas, N.P.S. Chawla, Sujoy
Datta, Surekh Kant Baxy, Ms. Kinjal Goyal, Gaurav Varma, Advs.
for the Respondents.

Judgment
Sanjiv Khanna, J.
The issue that arises for consideration in the present appeals is:
Whether Section 30(2)(b)(ii) of the Insolvency and Bankruptcy Code,
20161, as amended in 2019, entitles the dissenting financial creditor
to be paid the minimum value of its security interest?
2. Appellant - DBS Bank Limited Singapore had extended financial
debt of around USD 50,000,000 (fifty million dollars only) or Rs.
243,00,00,000 (rupees two hundred forty three crore only) to M/s.
Ruchi Soya Industries Limited2, the corporate debtor.
3. The financial debt was secured by: (i) a sole and exclusive first
charge over certain immovable and fixed assets of the Corporate
Debtor in Kandla, Gujarat; and (ii) sole and exclusive first charge
over assets of the Corporate Debtor in Baran, Rajasthan; Guna,
Madhya Pradesh; Dalauda, Madhya Pradesh; Gadarwara, Madhya
Pradesh; and a commercial office space at Nariman Point, Mumbai.
4. On 15.12.2017, Corporate Insolvency Resolution Process 3 was
initiated against the Corporate Debtor under the provisions of the
Code. The company petition seeking to initiate CIRP was admitted
and a Resolution Professional4 was appointed.
5. The appellant had submitted its claim, which was admitted by the
RP at Rs. 242,96,00,000 (rupees two hundred forty two crore ninety
six lakh only).
1 For short, “IBC” or “the Code”, as the case may be.

2 For short, “Corporate Debtor”.
3 For short, “CIRP”.
4 For short, “RP”.
118 [2024] 1 S.C.R.
6. On 20.03.2019, Patanjali Ayurvedic Limited submitted a resolution

plan for Rs. 4134,00,00,000 (rupees four thousand one hundred
thirty four crore only) against the aggregate claims of around Rs.
8398,00,00,000 (rupees eight thousand three hundred ninety eight
crore only), representing approximately 49.22% of the total admitted
claims of the financial creditors.
7. On 12.04.2019, by a communication, the appellant informed the
Committee of Creditors 5 that the sole and exclusive nature of
security held by the appellant by way of mortgage/hypothecation over
immovable and fixed assets of the Corporate Debtor was of greater
value compared to collaterals held by other creditors. Emphasising
the specific treatment of the exclusive and superior security, the
appellant requested the CoC to take into account the liquidation value
of such security while considering the distribution of proceeds and
to make such distribution in a “fair and equitable” manner.
8. In the 21st and 22nd CoC meetings held on 15.04.2019 and 23.04.2019
respectively, the appellant’s concern regarding treatment/proposed
pay-out was noted. However, in the meeting held on 23.04.2019, the
CoC approved pari passu distribution of the resolution plan proceeds.
9. On 30.04.2019, the resolution plan was approved by 96.95% of the
CoC. The appellant had voted against the resolution plan, thereby
becoming a dissenting financial creditor.
10. The resolution plan was filed for approval before the National Company
Law Tribunal6, Mumbai. Separately, the appellant challenged the
distribution mechanism of the resolution plan proceeds by way of
an application before the NCLT, Mumbai.
11. On 24.07.2019, the NCLT granted provisional/conditional approval to
the resolution plan. By the same order dated 24.07.2019, the NCLT
dismissed the appellant’s application challenging the distribution
mechanism of the resolution plan proceeds.
12. On 31.07.2019, the appellant challenged the dismissal of its
application before the National Company Law Appellate Tribunal7.
5 For short, “CoC”.

6 For short, “NCLT”.
7 For short, “NCLAT”.
[2024] 1 S.C.R. 119

LIMITED AND ANOTHER
13. During pendency of the appeal, Section 6 of the Insolvency and

Bankruptcy Code (Amendment) Act, 20198, was notified by way of
a gazette notification dated 16.08.2019. It amended Section 30(2)(b)
of the Code. Amended Section 30(2)(b)(ii) of the Code provides that
operational and dissenting financial creditors shall not be paid an
amount lesser than the amount to be paid to creditors in the event of
liquidation of the Corporate Debtor under Section 53(1) of the Code.
Explanation 2 added thereby makes the amended Section 30(2)(b)
applicable to pending proceedings. Section 30(4) was also amended
to state the CoC shall take into account “the order of priority” amongst
creditors as laid down in Section 53(1) of the Code.
14. On 30.08.2019, at the 26th CoC meeting, the appellant requested the
CoC to reconsider the distribution of the resolution proceeds in light
of the amendments to the Code. The appellant had submitted that
if the amendments were considered, it would be entitled to receive
Rs. 217,86,00,000 (rupees two hundred seventeen crore eighty six
lakh only) which is the liquidation value of the security interest. The
CoC, however, did not accept the prayer, observing inter alia that
the appellant had already filed an appeal before the NCLAT, which
was pending. The CoC was of the view that there was a fair amount
of ambiguity in the amendments, and no view should be expressed
by them.
15. The NCLT vide order dated 04.09.2019 finally approved the resolution
plan, which was already provisionally approved vide order dated
24.07.2019.
16. On 11.10.2019, the appellant challenged the final approval order dated
04.09.2019 by way of an appeal before the NCLAT. The first NCLAT
appeal preferred by the appellant on 31.07.2019 was still pending.
17. The two appeals preferred by the appellant against the orders/
judgments of the NCLT dated 24.07.2019 and dated 04.09.2019
were taken up for hearing by the NCLAT. By order dated 18.11.2019,
the first appeal preferred by the appellant was dismissed. By the
subsequent order dated 09.12.2019, the NCLAT dismissed the second
appeal filed by the appellant.
8 For short, “Amendment Act”.

120 [2024] 1 S.C.R.
18. The orders dated 18.11.2019 and 09.12.2019 passed by the NCLAT
are in challenge before us. This Court, vide order dated 06.12.2019,
was pleased to issue notice in the appeal preferred against the
order dated 18.11.2019 and by way of an interim order, has directed
that Rs. 99,74,00,000 (rupees ninety nine crore seventy four lakh
only), being the difference between the amount which the appellant
would have received in terms of the amendments noticed above
and the amount received by the appellant on pro rata distribution of
proceeds, should be deposited in an escrow account. Accordingly,
Rs. 99,74,00,000 (rupees ninety nine crore seventy four lakh only)
had been set aside and kept in an escrow account.
19. The appellant, it should be stated, has made no claims against
Patanjali Ayurvedic Limited.
20. As per the appellant, the pro rata distribution of proceeds does not
give regard to the sole, exclusive and higher value of their security
interest. The appellant will receive approximately Rs. 119,00,00,000
(rupees one hundred nineteen crore only) as against the liquidation
value of the security interest of Rs. 217,86,00,000 (rupees two
hundred seventeen crore eighty six lakh only). The admitted claim
of the appellant is Rs. 242,96,00,000 (rupees two hundred forty two
crore ninety six lakh only). Thus, the appellant, notwithstanding the
amendments to Section 30 of the Code, has been deprived of its
due share given its superior security assets. Equating the appellant
with financial creditors having inferior security interest has resulted
in unjust enrichment and windfall benefits to the dissimilarly placed
creditors to the detriment of the appellant.
21. To appreciate the legal question, which requires an answer, we would
like to reproduce Section 30(2) and Section 30(4) of the Code, with
the amendments made vide the IBC (Amendment) Act, 2019, which
for clarity have been highlighted in italics and bold. Relevant portions
of the two sections read:
“30. Submission of resolution plan.—
xx xx xx
(2) The resolution professional shall examine each
resolution plan received by him to confirm that each
resolution plan—
[2024] 1 S.C.R. 121

LIMITED AND ANOTHER
(a) provides for the payment of insolvency resolution

process costs in a manner specified by the Board in
priority to the payment of other debts of the corporate
debtor;
(b) provides for the payment of debts of operational
creditors in such manner as may be specified by
the Board which shall not be less than—
(i) the amount to be paid to such creditors in the
event of a liquidation of the corporate debtor
under Section 53; or
(ii) the amount that would have been paid to such
creditors, if the amount to be distributed under
the resolution plan had been distributed in
accordance with the order of priority in sub-
section (1) of Section 53,
whichever is higher, and provides for the payment of
debts of financial creditors, who do not vote in favour
of the resolution plan, in such manner as may be
specified by the Board, which shall not be less than
the amount to be paid to such creditors in accordance
with sub-section (1) of Section 53 in the event of a
liquidation of the corporate debtor.
Explanation 1.—For the removal of doubts, it is hereby
clarified that a distribution in accordance with the
provisions of this clause shall be fair and equitable
to such creditors.
Explanation 2.—For the purposes of this clause,
it is hereby declared that on and from the date of
commencement of the Insolvency and Bankruptcy
Code (Amendment) Act, 2019, the provisions of this
clause shall also apply to the corporate insolvency
resolution process of a corporate debtor—
(i) where a resolution plan has not been approved
or rejected by the Adjudicating Authority;
122 [2024] 1 S.C.R.
(ii) where an appeal has been preferred under Section

61 or Section 62 or such an appeal is not time
barred under any provision of law for the time
being in force; or
(iii) where a legal proceeding has been initiated in
any court against the decision of the Adjudicating
Authority in respect of a resolution plan;
(c) provides for the management of the affairs of the
corporate debtor after approval of the resolution plan;
(d) the implementation and supervision of the resolution
plan;
(e) does not contravene any of the provisions of the law
for the time being in force;
(f) conforms to such other requirements as may be
specified by the Board.
Explanation.—For the purposes of clause (e), if any
approval of shareholders is required under the Companies
Act, 2013 (18 of 2013) or any other law for the time being in
force for the implementation of actions under the resolution
plan, such approval shall be deemed to have been given
and it shall not be a contravention of that Act or law.
xx xx xx
(4) The committee of creditors may approve a resolution
plan by a vote of not less than sixty-six per cent of
voting share of the financial creditors, after considering
its feasibility and viability the manner of distribution
proposed, which may take into account the order of
priority amongst creditors as laid down in sub-section
(1) of Section 53, including the priority and value of
the security interest of a secured creditor, and such
other requirements as may be specified by the Board:
xx xx xx
22. The first issue that arises for consideration in these appeals is
whether the amendments made in the substantive portion of Section
[2024] 1 S.C.R. 123

LIMITED AND ANOTHER
30(2), in terms of Explanation 2 will be applicable when the first

appeal was heard by the NCLAT. The Amendment Act was notified
and came into effect on 16.08.2019. The appellant had preferred
the first appeal before the NCLAT on 31.07.2019, which appeal was
directed against the provisional approval order passed by the NCLT
on 24.07.2019. In our opinion, Explanation 2(ii) clearly states that
an appeal preferred under Section 61 or 62, when it is not barred
by time under any provision of law, shall be heard and decided after
considering the amended Section 30(2)(b) under the Amendment
Act. In fact, Explanation 2(i) states that the amended clause shall
“also” apply to the CIRP of the corporate debtor where a resolution
plan has not been approved or rejected by the adjudicating authority.
Explanation 2(iii) states that the amended Section 30(2)(b) shall
“also” apply where legal proceedings have been initiated in any
court against the decision of the adjudicating authority. Clauses
(i), (ii) and (iii) of Explanation 2 reflect the wide expanse and width
of the legislative intent viz. the application of the Amendment Act,
whether proceedings are pending before the adjudicating authority,
the appellate authority, or before any court in a proceeding against
an order of the adjudicating authority in respect of a resolution plan.
Only when the resolution plan, as approved, has attained finality as
no proceedings are pending, that the amendments will not apply to
re-write the settled matter.
23. A three Judge Bench of this Court in Committee of Creditors
of Essar Steel India Limited v. Satish Kumar Gupta & Ors.9,
in paragraph 130, has observed that Explanation 2 applies to the
substituted Section 30(2)(b) to pending proceedings either at the
level of the adjudicating authority, appellate authority or in a writ
or civil court. Referring to several decisions, it is observed that
no vested right inheres in any resolution applicant who has plans
approved under the Code. Further, an appellate proceeding is a
continuation of the original proceeding. A change in law can always
be applied to original or appellate proceedings. Thus, Explanation 2
is constitutionally valid and despite having retrospective operation,
it does not impair vested rights.
9 (2020) 8 SCC 531.

124 [2024] 1 S.C.R.
24. We must also take note of the second submission of the appellant in
this regard relying upon Explanation 2(i), inter alia, on the ground that
the final approval to the resolution plan by the NCLT was vide order
dated 04.09.2019, which is after the notification of the Amendment Act
on 16.08.2019. The first order provisionally/ conditionally approving
the resolution plan was dated 24.07.2019 and hence, the effect of
the Amendment Act could not have been considered and applied
by the NCLT. There is merit in the contention of the appellant, but
we need not firmly decide this issue, for we are of the opinion that
the Amendment Act was certainly applicable when the appeals were
heard and decided by the NCLAT on 18.11.2019 and 09.12.2019,
which was post the enforcement of the Amendment Act.
25. The second question relates to the interpretation of Section 30(2)
(b)(ii) of the Code. As we read Section 30(2)(b)(ii), the dissenting
financial creditor is entitled to payment, which should not be less
than the amount payable under Section 53(1), in the event of the
liquidation of the corporate debtor. The provision recognises that all
financial creditors need not be similarly situated. Secured financial
creditors may have distinct sets of securities. There are a number
of decisions of this Court, viz. Committee of Creditors of Essar
Steel India Limited (supra), Swiss Ribbons Private Limited and
Another v. Union of India and Others10, and Vallal RCK v. Siva
Industries and Holdings Limited and Others11, which have held that
the commercial wisdom of the CoC must be respected. Therefore,
the resolution plan accepted by the requisite creditors/members of
the CoC upon voting, is enforceable and binding on all creditors. The
CoC can decide the manner of distribution of resolution proceeds
amongst creditors and others, but Section 30(2)(b) protects the
dissenting financial creditor and operational creditors by ensuring
that they are paid a minimum amount that is not lesser than their
entitlement upon the liquidation of the corporate debtor.
26. The Code had been enacted to balance the interests of various
stakeholders, inter alia, by facilitating the resolution of insolvency,
promoting investment, maximising the value of assets, and increasing
the availability of credit. Secured credit is important for commerce
10 (2019) 4 SCC 17.

11 (2022) 9 SCC 803.
[2024] 1 S.C.R. 125

LIMITED AND ANOTHER
as it reduces credit risk and carries lower interest due to lower loss
value in the event of failure. On the resolution plan being approved,
an unwilling secured creditor does and must forgo the security, albeit
such an unwilling secured creditor is entitled to the value of the
security as payable on the liquidation of the corporate debtor. The
provision is enacted to protect the minority autonomy of creditors. It
should not be read down to nullify the minimum entitlement. Section
30(2)(b)(ii) forfends the dissenting financial creditor from settling for
a lower amount payable under the resolution plan.
27. The order passed by the NCLAT dated 18.11.2019 noticing
the amendments states that Section 30(4) had not been given
retrospective effect but is prospective in nature. While it was
open to the CoC to follow the amended Section 30(4), it was not
mandatory to follow the same. A financial creditor can dissent if
the resolution plan is discriminatory or against a provision of law.
However, a dissenting financial creditor cannot take advantage of
Section 30(2)(b)(ii). A secured creditor cannot claim preference over
another secured creditor at the stage of distribution on the ground
of a dissent or assent, otherwise the distribution would be arbitrary
and discriminative. The purpose of the amendment was only to
ensure that a dissenting financial creditor does not get anything
less than the liquidation value, but not for getting the maximum of
the secured assets.
28. In India Resurgence ARC Private Limited v. Amit Metaliks Limited
& Another.12, a two Judge Bench of this Court has referred to a
judgment by a three Judge Bench of this Court in Jaypee Kensington
Boulevard Apartments Welfare Association & Others. v. NBCC
(India) Limited & Others.13, to observe and hold:
“18. In the case of Jaypee Kensington (supra), the proposal
in the resolution plan was to the effect that if the dissenting
financial creditors would be entitled to some amount in the
nature of liquidation value in terms of Sections 30 and 53
of IBC read with Regulation 38 of the CIRP Regulations,
they would be provided such liquidation value in the form
of proportionate share in the equity of a special purpose
12 2021 SCC Online SC 409.

13 (2022) 1 SCC 401.
126 [2024] 1 S.C.R.
vehicle proposed to be set up and with transfer of certain

land parcels belonging to corporate debtor. Such method
of meeting with the liability towards dissenting financial
creditors in the resolution plan was disapproved by the
Adjudicating Authority; and this part of the order of the
Adjudicating Authority was upheld by this Court with the
finding that the proposal in the resolution plan was not in
accord with the requirement of ‘payment’ as envisaged by
clause (b) of Section 30(2) of the Code. In that context,
this Court held that such action of ‘payment’ could only
be by handing over the quantum of money or allowing
the recovery of such money by enforcement of security
interest, as per the entitlement of a dissenting financial
creditor. This Court further made it clear that in case a valid
security interest is held by a dissenting financial creditor, the
entitlement of such dissenting financial creditor to receive
the amount could be satisfied by allowing him to enforce
the security interest, to the extent of the value receivable
by him and in the order of priority available to him. This
Court clarified that by enforcing such a security interest,
a dissenting financial creditor would receive payment to
the extent of his entitlement and that would satisfy the
requirement of Section 30(2)(b) of the Code. This Court,
inter alia, observed and held as under:
“121.1. Therefore, when, for the purpose of discharge
of obligation mentioned in the second part of clause
(b) of Section 30(2) of the Code, the dissenting
financial creditors are to be “paid” an “amount”
quantified in terms of the “proceeds” of assets
receivable under Section 53 of the Code; and the
“amount payable” is to be “paid” in priority over
their assenting counterparts, the statute is referring
only to the sum of money and not anything else.
In the frame and purport of the provision and also
the scheme of the Code, the expression “payment”
is clearly descriptive of the action of discharge of
obligation and at the same time, is also prescriptive
of the mode of undertaking such an action. And, that
action could only be of handing over the quantum of
[2024] 1 S.C.R. 127

LIMITED AND ANOTHER
money, or allowing the recovery of such money by

enforcement of security interest, as per the entitlement
of the dissenting financial creditor.
121.2. We would hasten to observe that in case a
dissenting financial creditor is a secured creditor
and a valid security interest is created in his favour
and is existing, the entitlement of such a dissenting
financial creditor to receive the “amount payable”
could also be satisfied by allowing him to enforce the
security interest, to the extent of the value receivable
by him and in the order of priority available to him.
Obviously, by enforcing such a security interest, a
dissenting financial creditor would receive “payment”
to the extent of his entitlement and that would satisfy
the requirement of Section 30(2)(b) of the Code….”
29. Thereafter, this Court in India Resurgence ARC Private Limited
(supra) has observed:
“19. In Jaypee Kensington (supra), this Court repeatedly
made it clear that a dissenting financial creditor would be
receiving the payment of the amount as per his entitlement;
and that entitlement could also be satisfied by allowing
him to enforce the security interest, to the extent of the
value receivable by him. It has never been laid down
that if a dissenting financial creditor is having a security
available with him, he would be entitled to enforce the
entire of security interest or to receive the entire value of
the security available with him. It is but obvious that his
dealing with the security interest, if occasion so arise, would
be conditioned by the extent of value receivable by him.
20. The extent of value receivable by the appellant is
distinctly given out in the resolution plan i.e., a sum of
INR 2.026 crores which is in the same proportion and
percentage as provided to the other secured financial
creditors with reference to their respective admitted claims.
Repeated reference on behalf of the appellant to the value
of security at about INR 12 crores is wholly inapt and is
rather ill-conceived.
128 [2024] 1 S.C.R.
21. The limitation on the extent of the amount receivable by

a dissenting financial creditor is innate in Section 30(2)(b)
of the Code and has been further exposited in the decisions
aforesaid. It has not been the intent of the legislature
that a security interest available to a dissenting financial
creditor over the assets of the corporate debtor gives him
some right over and above other financial creditors so as
to enforce the entire of the security interest and thereby
bring about an inequitable scenario, by receiving excess
amount, beyond the receivable liquidation value proposed
for the same class of creditors.”
30. Our attention is also drawn to paragraph 17 and 22 of India
Resurgence ARC Private Limited (supra), wherein after elucidating
on the ratio in Jaypee Kensington (supra), the Bench has observed:
“17. Thus, what amount is to be paid to different classes
or subclasses of creditors in accordance with provisions
of the Code and the related Regulations, is essentially the
commercial wisdom of the Committee of Creditors; and
a dissenting secured creditor like the appellant cannot
suggest a higher amount to be paid to it with reference
to the value of the security interest.
xx xx xx
22. It needs hardly any emphasis that if the propositions
suggested on behalf of the appellant were to be accepted,
the result would be that rather than insolvency resolution
and maximisation of the value of assets of the corporate
debtor, the processes would lead to more liquidations,
with every secured financial creditor opting to stand on
dissent. Such a result would be defeating the very purpose
envisaged by the Code; and cannot be countenanced. We
may profitably refer to the relevant observations in this
regard by this Court in Essar Steel as follows:
“85. Indeed, if an “equality for all” approach recognising
the rights of different classes of creditors as part of
an insolvency resolution process is adopted, secured
financial creditors will, in many cases, be incentivised
to vote for liquidation rather than resolution, as they
[2024] 1 S.C.R. 129

LIMITED AND ANOTHER
would have better rights if the corporate debtor was

to be liquidated rather than a resolution plan being
approved. This would defeat the entire objective of
the Code which is to first ensure that resolution of
distressed assets takes place and only if the same
is not possible should liquidation follow.””
31. We believe that there is a contradiction in the reasoning given in the
judgment of this Court in India Resurgence ARC Private Limited
(supra), which is in discord with the ratio decidendi of the decisions
of the three Judge Bench in Committee of Creditors of Essar Steel
India Limited (supra) and Jaypee Kensington (supra).
32. In Committee of Creditors of Essar Steel India Limited (supra),
this Court had referred to the UNCITRAL Legislative Guide on the
treatment of dissenting creditors to observe that it is essential to
provide a way of imposing a plan agreed upon by a majority of a
class upon the dissenting minority to increase the chances of success
of the reorganisation. However, it is also necessary depending upon
the mechanism that is chosen for voting on the plan and whether the
creditors vote in class, to consider whether the plan can be made
binding upon dissenting classes of creditors and other affected parties.
To the extent that the plan can be approved and enforced upon the
dissenting parties, there is a need to ensure that the plan provides
appropriate protection for the dissenting parties and, in particular,
the rights may not be unfairly affected. Thereupon, the UNCITRAL
Legislative Guide states:
“…The law might provide, for example, that dissenting
creditors cannot be bound unless assured of certain
treatment. As a general principle, that treatment might
be that the creditors will receive at least as much under
the plan as they would have received in liquidation
proceedings. If the creditors are secured, the treatment
required may be that the creditor receives payment of the
value of its security interest, while in the case of unsecured
creditors it may be that any junior interests, including equity
holders, receive nothing…”
33. In our opinion, the provisions of Section 30(2)(b)(ii) by law provides
assurance to the dissenting creditors that they will receive as money
the amount they would have received in the liquidation proceedings.
130 [2024] 1 S.C.R.
This rule also applies to the operational creditors. This ensures

that dissenting creditors receive the payment of the value of their
security interest.
34. In paragraph 128 in the case of Committee of Creditors of Essar
Steel India Limited (supra), it has been clearly held:
“128. When it comes to the validity of the substitution
of Section 30(2)(b) by Section 6 of the Amending Act
of 2019, it is clear that the substituted Section 30(2)(b)
gives operational creditors something more than was
given earlier as it is the higher of the figures mentioned
in sub-clauses (i) and (ii) of sub-clause (b) that is now to
be paid as a minimum amount to operational creditors.
The same goes for the latter part of sub-clause (b) which
refers to dissentient financial creditors. Ms Madhavi Divan
is correct in her argument that Section 30(2)(b) is in fact a
beneficial provision in favour of operational creditors and
dissentient financial creditors as they are now to be paid
a certain minimum amount, the minimum in the case of
operational creditors being the higher of the two figures
calculated under sub-clauses (i) and (ii) of clause (b), and
the minimum in the case of dissentient financial creditor
being a minimum amount that was not earlier payable. As a
matter of fact, pre-amendment, secured financial creditors
may cram down unsecured financial creditors who are
dissentient, the majority vote of 66% voting to give them
nothing or next to nothing for their dues. In the earlier
regime it may have been possible to have done this but
after the amendment such financial creditors are now to
be paid the minimum amount mentioned in sub-section (2).
Ms Madhavi Divan is also correct in stating that the order
of priority of payment of creditors mentioned in Section 53
is not engrafted in sub-section (2)(b) as amended. Section
53 is only referred to in order that a certain minimum figure
be paid to different classes of operational and financial
creditors. It is only for this purpose that Section 53(1) is to
be looked at as it is clear that it is the commercial wisdom
of the Committee of Creditors that is free to determine what
amounts be paid to different classes and sub-classes of
creditors in accordance with the provisions of the Code
and the Regulations made thereunder.”
[2024] 1 S.C.R. 131

LIMITED AND ANOTHER
35. The reasoning and the ratio in Jaypee Kensington (supra) is also
the same:
“164.2. We would hasten to observe that in case a
dissenting financial creditor is a secured creditor and a valid
security interest is created in his favour and is existing,
the entitlement of such a dissenting financial creditor to
receive the “amount payable” could also be satisfied by
allowing him to enforce the security interest, to the extent
of the value receivable by him and in the order of priority
available to him. Obviously, by enforcing such a security
interest, a dissenting financial creditor would receive
“payment” to the extent of his entitlement and that would
satisfy the requirement of Section 30(2)(b) of the Code.”
36. We have reservation on portions of the view expressed in paragraphs
17, 21 and 22 in the judgment of India Resurgence ARC Private
Limited (supra). Paragraph 17 is respectfully correct in its observations
when it refers to the provisions of Section 30(4) and that the voting is
essentially a matter which relates to commercial wisdom of the CoC.
The observation that a dissenting secured creditor cannot suggest
that a higher amount be paid to it is also correct. However, this does
not affect the right of a dissenting secured creditor to get payment
equal to the value of the security interest in terms of Section 30(2)
(b)(ii) of the Code. Paragraph 21 in India Resurgence ARC Private
Limited (supra) again in our respectful view is partially correct. It
is correct to the extent that the legislature has not stipulated that
the dissenting financial creditor shall be entitled to enforce the
security interest. However, it is incorrect to state that the dissenting
financial creditor would not be entitled to receive the liquidation
value, the amount payable to him in terms of Section 53(1) of the
Code. Paragraph 22 refers to the Committee of Creditors of Essar
Steel (supra), which we have already quoted and is apposite to the
view expressed by us. The reasoning given in the earlier portion of
paragraph 22 in our respectful opinion is in conflict with the ratio
in Committee of Creditors of Essar Steel India Limited (supra)
as it does not take into account the legal effect of Section 30(2)(b)
(ii) of the Code. While it is important to maximise the value of the
assets of the corporate debtor and prevent liquidation, the rights of
operational creditors or dissenting financial creditors also have to
be protected as stipulated in law.
132 [2024] 1 S.C.R.
37. In Jaypee Kensington (supra), it has been held that the dissenting
financial creditor, if the occasion arises, is entitled to receive the
extent of value in money equal to the security interest held by him.
It would not be proper to read Jaypee Kensington (supra), as laying
down that the dissenting financial creditor would be entitled to the
extent of amounts receivable by him in the resolution plan. This
would undo the very object and purpose of the amendment. It would
make the portion of Section 30(2)(b)(ii) specifying the amount to be
paid to such creditor in accordance with Section 53(1), redundant
and meaningless.
38. Our reasoning finds resonance in the reasoning given in Jaypee
Kensington (supra), which states that for the purpose of discharge
of obligation mentioned in the second part of Section 30(2)(b) of the
Code, the dissenting financial creditors are to be paid an amount
quantified in terms of the proceeds of assets receivable under Section
53 of the Code. This amount payable is to be paid on priority over
the dissenting counterparts. However, Section 30(2) refers only to
the sum of money and nothing else, that is, it does not permit the
dissenting financial creditor to enforce the security and sell the same.
This would be counterproductive and may nullify the resolution plan.
What the dissenting financial creditor is entitled to is the payment,
which should not be less than the amount/value of the security interest
held by them. The security interest gets converted from the asset
to the value of the asset, which is to be paid in the form of money.
This is clear from the relevant portions of paragraphs 164.1, 164.2,
166.4, and 167 in Jaypee Kensington (supra), which read as under:
“164.1. Therefore, when, for the purpose of discharge of
obligation mentioned in the second part of clause (b) of
Section 30(2) of the Code, the dissenting financial creditors
are to be “paid” an “amount” quantified in terms of the
“proceeds” of assets receivable under Section 53 of the
Code; and the “amount payable” is to be “paid” in priority
over their assenting counterparts, the statute is referring
only to the sum of money and not anything else. In the
frame and purport of the provision and also the scheme of
the Code, the expression “payment” is clearly descriptive
of the action of discharge of obligation and at the same
time, is also prescriptive of the mode of undertaking such
[2024] 1 S.C.R. 133

LIMITED AND ANOTHER
an action. And, that action could only be of handing over

the quantum of money, or allowing the recovery of such
money by enforcement of security interest, as per the
entitlement of the dissenting financial creditor.
164.2. We would hasten to observe that in case a
dissenting financial creditor is a secured creditor and a valid
security interest is created in his favour and is existing,
the entitlement of such a dissenting financial creditor to
receive the “amount payable” could also be satisfied by
allowing him to enforce the security interest, to the extent
of the value receivable by him and in the order of priority
available to him. Obviously, by enforcing such a security
interest, a dissenting financial creditor would receive
“payment” to the extent of his entitlement and that would
satisfy the requirement of Section 30(2)(b) of the Code [
Though it is obvious, but is clarified to avoid any ambiguity,
that the “security interest” referred herein for the purpose
of money recovery by dissenting financial creditor would
only be such security interest which is relatable to the
“financial debt” and not to any other debt or claim.] . In
any case, that is, whether by direct payment in cash or by
allowing recovery of amount via the mode of enforcement of
security interest, the dissenting financial creditor is entitled
to receive the “amount payable” in monetary terms and
not in any other term.
xx xx xx
166.4. The suggestion about prejudice being caused to
the assenting financial creditors by making payment to the
dissenting one has several shortcomings. As noticeable, in
the scheme of IBC, a resolution plan is taken as approved,
only when voted in favour by a majority of not less than
66% of the voting share of CoC. Obviously, the dissenting
sect stands at 34% or less of the voting share of CoC.
Even when the financial creditors having a say of not less
than 2/3rd in the Committee of Creditors choose to sail
with the resolution plan, the law provides a right to the
remainder (who would be having not more than 34% of
134 [2024] 1 S.C.R.
voting share) not to take this voyage but to disembark,

while seeking payment of their outstanding dues. Even
this disembarkment does not guarantee them the time
value for money of the entire investment in the corporate
debtor; what they get is only the liquidation value in terms
of Section 53 of the Code. Of course, in the scheme of
CIRP under the Code, the dissenting financial creditors
get, whatever is available to them, in priority over their
assenting counterparts. In the given scheme of the statutory
provisions, there is no scope for comparing the treatment
to be assigned to these two divergent sects of financial
creditors. The submissions made on behalf of assenting
financial creditors cannot be accepted.
xx xx xx
167. To sum up, in our view, for a proper and meaningful
implementation of the approved resolution plan, the
payment as envisaged by the second part of clause (b)
of sub-section (2) of Section 30 could only be payment in
terms of money and the financial creditor who chooses to
quit the corporate debtor by not putting his voting share in
favour of the approval of the proposed plan of resolution (i.e.
by dissenting), cannot be forced to yet remain attached to
the corporate debtor by way of provisions in the nature of
equities or securities. In the true operation of the provision
contained in the second part of sub-clause (ii) of clause
(b) of sub-section (2) of Section 30 (read with Section
53), in our view, the expression “payment” only refers to
the payment of money and not anything of its equivalent
in the nature of barter; and a provision in that regard is
required to be made in the resolution plan whether in
terms of direct money or in terms of money recovery with
enforcement of security interest, of course, in accordance
with the other provisions concerning the order of priority as
also fair and equitable distribution. We are not commenting
on the scenario if the dissenting financial creditor himself
chooses to accept any other method of discharge of its
payment obligation but as per the requirements of law, the
resolution plan ought to carry the provision as aforesaid.”
[2024] 1 S.C.R. 135

LIMITED AND ANOTHER
39. Similar view has been taken by a two Judge Bench of this Court in
Vistra ITCL (India) Limited & Ors. v. Dinkar Venkatasubramanian
& Anr.14, wherein it was observed in paragraphs 34, 41.2 and 42
as under:
“34. The amendment introduced by Act 26 of 2019 ensures
that the operational creditors under the resolution plan
should be paid the amount equivalent to the amount which
they would have been entitled to, in the event of liquidation
of the corporate debtor under Section 53 of the Code. In
other words, the amount payable under the resolution plan
to the operational creditors should not be less than the
amount payable to them under Section 53 of the Code,
in the event of liquidation of the corporate debtor. The
amended provision also provides that the financial creditors
who have not voted in favour of the resolution plan shall
be paid not less than the amount which would be paid
to them in accordance with sub-section (1) to Section 53
of the Code, in the event of liquidation of the corporate
debtor. Explanation (1) to clause (b) of Section 30(2) of
the Code, for the removal of doubts, states and clarifies
that the distribution in accordance with this clause shall
be fair and equitable to such creditors.
xx xx xx
41.2. The second option is to treat Appellant 1-Vistra as a
secured creditor in terms of Section 52 read with Section
53 of the Code. In other words, we give the option to the
successful resolution applicant — DVI (Deccan Value
Investors) to treat Appellant 1-Vistra as a secured creditor,
who will be entitled to retain the security interest in the
pledged shares, and in terms thereof, would be entitled
to retain the security proceeds on the sale of the said
pledged shares under Section 52 of the Code read with
Rule 21-A of the Liquidation Process Regulations. The
second recourse available, would be almost equivalent
in monetary terms for Appellant 1-Vistra, who is treated
14 (2023) 7 SCC 324.

136 [2024] 1 S.C.R.
as a secured creditor and is held entitled to all rights

and obligations as applicable to a secured creditor under
Sections 52 and 53 of the Code. This to our mind would
be a fair and just solution to the legal conundrum and
issue highlighted before us.
42. We wish to clarify that the directions given by us would
not be a ground for the successful resolution applicant —
DVI to withdraw the resolution plan which has already been
approved by Nclat and by us. The reason is simple. Any
resolution plan must meet with the requirements/provisions
of the Code and any provisions of law for the time being
in force. What we have directed and the option given by
us ensures that the resolution plan meets the mandate
of the Code and does not violate the rights given to the
secured creditor, who cannot be treated as worse off/
inferior in its claim and rights viz an operational creditor
or a dissenting financial creditor.”
40. One of the contentions raised by the respondent no. 2 - the CoC is
that Section 30(2)(b)(ii) refers only to Section 53 of the Code and
not to Section 52. We find it difficult to accept the said submission
to read down Section 30(2)(b)(ii) of the Code. Reference to Section
53 of the Code in Section 30(2)(b)(ii) is made with a specific purpose
and objective and accordingly, we have to understand and give a
cogent and effective meaning to the words to effectuate the intent.
Section 53 of the Code refers to Section 52 thereof. We would not
isolate Section 53, when we refer to Section 30(2)(b)(ii) and make
it meaningless and undo the legislative intent behind the amended
provision, which is clear and apparent. Whenever required, in a
reference made to Section 53 of the Code, we would have to refer
to Section 52 to give meaning to Section 30(2)(b)(ii) of the Code. A
dissenting financial creditor is entitled to not partake the proceeds
in the resolution plan, unless a higher amount in congruence with its
security interest is approved in the resolution plan. The “amount” to
be paid to the dissenting financial creditor should be in accordance
with Section 53(1) in the event of liquidation of the corporate debtor.
In other words, in our opinion, the dissenting financial creditor is
entitled to a minimum value in monetary terms equivalent to the
value of the security interest.
[2024] 1 S.C.R. 137

LIMITED AND ANOTHER
41. The submission that the secured creditor’s entitlement to distribution

under Section 53(1)(b)(ii) is applicable where the secured creditor
relinquishes its security interest under Section 52 of the Code, and,
therefore, is not applicable to dissenting financial creditors like the
appellant is erroneous and unacceptable.
42. Apart from the reasons stated above, a dissenting financial creditor,
as held in Jaypee Kensington (supra) is only entitled to the monetary
value of the assets. The dissenting financial creditor loses the security
interest, that is, it relinquishes the security interest. Dissenting financial
creditor, therefore, cannot enforce the security interest. It is necessary
to clearly state this position, as in case a dissenting financial creditor
enforces the security interest, the resolution plan itself may fail and
become unworkable. The dissenting financial creditor has to statutorily
forgo and relinquish his security interest on the resolution plan being
accepted, and his position is same and no different from that of a
secured creditor who has voluntarily relinquished security and is to
be paid under Section 53(1)(b)(ii) of the Code.
43. The reasoning also takes care of the argument that the Explanation
to Section 53 incorporates the principle of pari passu distribution
into Section 53(1) with each class of creditors mentioned therein.
We wish to clarify that Section 53(1) is referred to in Section 30(2)
(b)(ii) with the purpose and objective that the dissenting financial
creditor is not denied the amount which is payable to it being equal
to the amount of value of the security interest. The entire Section
53 is not made applicable.
44. We would, for the above reasons, reject the submission on behalf
of the respondents that Section 30(2)(b)(ii) is unworkable because it
involves deeming fiction relating to liquidation, which is inapplicable
during the CIRP period. This would be contrary to the legislative
intent and is unacceptable.
45. Respondent no. 2 – CoC has submitted that the appellant has
dissented because it did not approve the manner of distribution of the
proceeds under the resolution plan. The appellant did not dispute the
resolution plan itself. Accordingly, Section 30(2)(b)(ii) is not applicable.
The argument is fallacious and must be rejected. Section 30(2)(b)(ii)
relates to the proportion of the proceeds mentioned in the resolution
plan or the amount which the dissenting financial creditor would be
entitled to in terms of the waterfall mechanism provided in Section
138 [2024] 1 S.C.R.
53(1), if the corporate debtor goes into liquidation. The dissenting

financial creditor does not have any say when the resolution plan is
approved by a two-third majority of the CoC. The resolution plan will
be accepted when approved by the specified majority in the CoC.
The dissenting financial creditor cannot object to the resolution plan,
but can object to the distribution of the proceeds under the resolution
plan, when the proceeds are less than what the dissenting financial
creditor would be entitled to in terms of Section 53(1) if the corporate
debtor had gone into liquidation. This is the statutory option or choice
given by law to the dissenting financial creditor. The option/choice
should be respected.
46. Respondent no. 2 – CoC had referred to the objections referred to in
the CoC meetings dated 15.04.2019 and 23.04.2019. We are of the
view that the objections raised by the appellant relate to the distribution
of the proceeds in terms of the liquidation plan. According to them,
they were entitled to money of value not less than the amount that
they would have received under Section 53(1) of the Code.
47. It is also argued that the NCLAT had rejected the first appeal on the
ground that the appellant had only challenged the distribution of the
pay-out under the plan inter se the financial creditors of the corporate
debtor and not the resolution plan. Accordingly, the amendment to
Section 30(2)(b) vide the Amendment Act of 2019 was not applicable.
We have already rejected this argument, for the reasons set out
above. In our opinion, the contention that the appellant is not the
dissenting financial creditor is to be rejected.
48. The contention on behalf of the respondent that there is conflict
between sub-section (4), as amended in 2019, and the amended
clause (b) to sub-section (2) to Section 30 of the Code does not
merit a different ratio and conclusion. Section 30(4) states that the
CoC may approve the resolution plan by a vote not less than 66%
of the voting share of the financial creditor. It states that the CoC
shall consider the feasibility and viability, the manner of distribution
proposed, which may take into account the order of priority amongst
creditors under sub-section (1) to Section 53, including the priority
and value of the security interest of the secured creditors, and other
requirements as may be specified by the Board. These are the
aspects that the CoC has to consider. It is not necessary for the CoC
to provide each assenting party with liquidation value. However, a
[2024] 1 S.C.R. 139

LIMITED AND ANOTHER
secured creditor not satisfied with the proposed pay-out can vote
against the resolution plan or the distribution of proceeds, in which
case it is entitled to full liquidation value of the security payable in
terms of Section 53(1) on liquidation of the corporate debtor. The
conflict with sub-clause (ii) to clause (b) to sub-section (2) to Section
30 does not arise as it relates to the minimum payment which is to
be made to an operational creditor or a dissenting financial creditor.
A dissenting financial creditor does not vote in favour of the scheme.
Operational creditors do not have the right to vote.
49. In view of the aforesaid discussion, and as we are taking a different
view and ratio from India Resurgence ARC Private Limited (supra)
on interpretation of Section 30(2)(b)(ii) of the IBC, we feel that it would
be appropriate and proper if the question framed at the beginning of
this judgment is referred to a larger Bench. The matter be, accordingly
placed before the Hon’ble the Chief Justice for appropriate orders.
Headnotes prepared by: Divya Pandey Result of the case: Matter referred
to larger Bench.
[2024] 1 S.C.R. 140 : 2024 INSC 15
Case Details
Bharti Airtel Limited and Another

v.
Vijaykumar V. Iyer and Others
(Civil Appeal Nos. 3088-3089 of 2020)
03 January 2024
[Sanjiv Khanna* and S.V.N. Bhatti, JJ.]
The present appeals raise a question on the right to claim set-off in
the Corporate Insolvency Resolution Process, when the Resolution
Professional proceeds in terms of clause (a) to sub-section (2) of
s.25 of the Insolvency and Bankruptcy Code, 2016 to take custody
and control of all the assets of the corporate debtor.
Headnotes
Insolvency and Bankruptcy Code, 2016 – clause (a) to sub-
section (2) of s.25, s.238, s.243 – Insolvency and Bankruptcy
Board of India (Liquidation Process) Regulations, 2016 – Regn.
29 – The appellant-Airtel entities argued that they are entitled
to statutory set-off or insolvency set-off, in the Corporate
Insolvency Resolution Proceedings under Chapter II Part II
of the IBC:
Held: The IBC is a complete code relying upon the opening part of
the enactment and s.238 and s.243 nullifies the argument raised
by the appellant Airtel entities that they are entitled to statutory
set-off or insolvency set-off, in the Corporate Insolvency Resolution
Proceedings under Chapter II Part II of the IBC – Regulation 29
of the Liquidation Regulations does not apply to Part II of the
IBC – The legislation or even the legislative intent permits neither
statutory set-off, nor insolvency set-off. [Para 37]
Insolvency and Bankruptcy Code, 2016 – Difference between
the Corporate Insolvency Resolution Process and the
liquidation process:
Held: There is a difference between the Corporate Insolvency
Resolution Process and the liquidation process of the IBC – The
Corporate Insolvency Resolution Process focuses on and fosters
rehabilitation, revival and resolution of the corporate debtor,
* Author
[2024] 1 S.C.R. 141
BHARTI AIRTEL LIMITED AND ANOTHER v.

VIJAYKUMAR V. IYER AND OTHERS
whereas the liquidation process focuses on the constellation of

assets of the company in liquidation, and distribution and payment
to the creditors from the liquidation estate in terms of the order of
preference set out in the insolvency statute. [Para 12]
Insolvency and Bankruptcy Code, 2016 – Insolvency and
Bankruptcy Board of India (Liquidation Process) Regulations,
2016 – Regn. 29 – Code of Civil Procedure, 1908 – Or. VIII, r.6 –
Application of the Provisions of statutory set-off to Corporate
Insolvency Resolution Process:
Held: The provisions of statutory set-off in terms of Or. VIII, r. 6
of CPC or insolvency set-off as permitted by Regulation 29 of
the Liquidation Regulations cannot be applied to the Corporate
Insolvency Resolution Process – The aforesaid rule would be,
however, subject to two exceptions or situations – The first, if at
all it can be called an exception, is where a party is entitled to
contractual set-off, on the date which is effective before or on the
date the Corporate Insolvency Resolution Process is put into motion
or commences – The reason is simple – The Corporate Insolvency
Resolution Process does not preclude application of contractual
set-off – The second exception will be in the case of ‘equitable
set-off’ when the claim and counter claim in the form of set-off are
linked and connected on account of one or more transactions that
can be treated as one – The set-off should be genuine and clearly
established on facts and in law, so as to make it inequitable and
unfair that the debtor be asked to pay money, without adjustment
sought that is fully justified and legal – The amount to be adjusted
should be a quantifiable and unquestionable monetary claim, as
the Corporate Insolvency Resolution Process is a time-bound
summary procedure. [Paras 30 and 32]
Words and Phrases – Set-off – Meaning of:
Held: Set-off in generic sense recognises the right of a debtor
to adjust the smaller claim owed to him against the larger claim
payable to his creditor – Set-off is given legal preference for three
reasons – First, in economic terms, set-off is a form of security
recognised in law – It is, however, not a security in a strict sense,
but a right that enhances provision of credit and acts as a stimulus
to trade and commerce by giving a degree of confidence to parties
dealing with each other – Secondly, it helps reduce litigation,
promotes economy of time and is an efficient method in resolving
debt between parties – Thirdly, natural equity requires that cross-
142 [2024] 1 S.C.R.
demands should compensate each other by deducting the lesser

sum from the greater – At least five different meanings can be
ascribed to the term ‘set-off’, namely, (a) statutory or legal set-off;
(b) common law set-off; (c) equitable set-off; (d) contractual set-off;
and (e) insolvency set-off. [Paras 3, 4 and 5]
Words and Phrases – Contractual set-off – Meaning of:
Held: Contractual set-off is a matter of agreement, rather than a
separate application of set-off – The parties are free to mutually
agree on the outcomes they desire – Being consensual, when
expressly stated, the normal rules of set-off regarding mutuality of
credits or debts, liquid debts, and connected debts-aspects relevant
and noticed below while dealing with statutory/legal set-offs or
even insolvency set-off - may not apply – The contract, however,
should be within bounds of legality and public policy – Further,
the normal requirements of the law of contracts, viz. intention to
create legal relationship, acceptance, consideration etc. should
be established for a valid contractual set-off – Ascertaining the
applicability of contractual set-off requires an assessment of the
understanding whether the right is conferred by the agreement, as
the court gives effect to the intention of the parties as to how they
should deal – The right to set-off may be explicit in the words of
the agreement, or can be gathered by existence of oral or implied
agreement to set-off, reflecting an understanding to the said effect.
[Paras 6 and 7]
Words and Phrases – Statutory or legal set-off:
Held: Statutory or legal set-off is created by a statute – For
example, Order VIII Rule 6 of the CPC states that where a suit for
recovery of money is filed, the defendant can claim set-off against
the plaintiff’s demand for any ascertained sum of money legally
recoverable by the defendant from the plaintiff, but not exceeding
the pecuniary limits of the jurisdiction of the court – It requires that
both the parties should fill the same character as they fill in the
plaintiff’s suit. [Para 8]
Insolvency and Bankruptcy Board of India (Liquidation
Process) Regulations, 2016 – Regn. 29 – Mutual dealings:
Held: The expression ‘mutual dealings’ for the purpose of
Regulation 29 of the Liquidation Regulations, is wider than the
statutory set-off postulated under Order VIII Rule 6 of CPC, as
well as, equitable set-off under the common law as applicable in
[2024] 1 S.C.R. 143

India – Insolvency set-off applies when demands are between the

same parties – There must be commonality of identity between
the person who has made the claim and the person against
whom the claim exists – Even when there are several distinct and
independent transactions, mutuality can exist between the same
parties functioning in the same right or capacity – Mutual dealings
are not so much concerned with the nature of the claims, but with
the relationship and apposite identity of the parties giving rise to
the respective claims, such that it would offend one’s sense of
fairness or justice to allow one to be enforced without regard to
the other. [Para 22]
List Of Citations and Other References

Indian Overseas Bank v. RCM Infrastructure Ltd. and
Another:(2022) 8 SCC 516; Innoventive Industries
Limited v. ICICI Bank and Another [2017] 8 SCR
33:(2018) 1 SCC 407; Embassy Property Developments
Private Limited. v. State of Karnataka and Others [2019]
17 SCR 559:(2020) 13 SCC 308; V. Nagarajan v. SKS
Ispat and Power Limited and Others (2022) 2 SCC
244; Career Institute Educational Society v. Om Shree
Thakurji Educational Society, 2023 SCC OnLine SC
586; The Official Liquidator of High Court of Karnataka
v. Smt. V. Lakshmikutty [1981] 2 SCR 349:(1981) 3
SCC 32 – referred to.
Ebix Singapore Private Limited v. Committee of Creditors
of Educomp Solutions Limited and Another. (2022) 2
SCC 401; Swiss Ribbons Private Limited and Another
v. Union of India and Others [2019] 3 SCR 535:(2019)
4 SCC 17 – held inapplicable.
Jurong Aromatics Corporation Pte Ltd. and Others v.
BP Singapore Pte Ltd. and Another, (2018) SGHC 215;
Federal Commerce and Navigation Co. v. Molena Alpha
Inc., (1978) Q.B. 927; Ministre du Revenu national c.
Caisse Populaire du bon Conseil, 2009 SCC 29; Jeffs
v. Wood, [1723] 2 Eq Ca. Ab. 10; Citibank Canada v.
Confederation of Life Insurance Company, 42 CRB (3)
(d) 288; Ramdhari v. Premanand, 19 Cal WN 1183;
Re.: Bank of Credit and Commerce International SA
(No. 8) [1996] Ch. 245; Stein v. Blake [1996] A.C.
243; National Westminster Bank Ltd. v. Halesowen
144 [2024] 1 S.C.R.
Presswork & Assemblies Ltd. 1972 AC 785; Gye v.

McIntyre (1991) 171 CLR 609; BP Singapore Pte Ltd
v. Jurong Aromatics Corp Pte Ltd and Others (2020)
SGCA 09; Belmont Park Investments v. BNY Corporate
Trustee Services Ltd. [2012] 1 AC 383; British Eagle
International Airlines Ltd v. Compagnie Nationale Air
France 1975 1 WLR 758 – referred to.
Maheswari Metals & Metal Refinery, Bangalore v.
Madras State Small Industries Corporation, AIR 1974
Mad 39; Gokul Chit Funds and Trades Private Ltd. v.
Thoundasseri Kochu Ouseph Vareed and Others AIR
1977 Ker 68 – referred to.
Philip R. Wood, Set-off and Netting, Derivatives,
Clearing Systems, (Sweet & Maxwell 2007); Kelly
R. Palmer, The Law of Set Off in Canada (Canada
Law Book 1993); Canadian Encyclopedic Digest,
Release 3, “Personal Property” by Gloria Mintah, §
187, CD-ROM (Thomson Reuters Canada Limited,
August 2009); Rory Derham, Derham on the Law of
Set-Off (Oxford University Press 4th ed. 2010) ;Gerard
McCormack, Set-off under the European Insolvency
Regulation (and English Law), 29 IIR 100, 100-117
(2020); UNCITRAL Legislative Guide on Insolvency
Law, Chapter G. p.155-156 (2005) – referred to.
List of Acts
Insolvency and Bankruptcy Code, 2016 – Insolvency and Bankruptcy
Board of India (Liquidation Process) Regulations, 2016 – Code of
Civil Procedure, 1908.
List of Keywords
Insolvency; Corporate Insolvency Resolution Process; Set-off;
Statutory or legal set-off; Common law set-off; Equitable set-off;
Contractual set-off; Insolvency set-off; Mutual dealings.

Appearances
CIVIL APPELLATE JURISDICTION : Civil Appeal Nos.3088-3089 of

2020.
[2024] 1 S.C.R. 145


Company Law Appellate Tribunal, New Delhi in Company Appeal
(AT) (Insolvency) Nos.530 and 700 of 2019.
Appearances:
Darius Khambata, Sr. Adv., Harsh Kaushik, Sandeep Devashish Das,
Ramakant Rai, Somesh Srivastava, Tushar Hathiramani, Kumar
Gourav, Varun Kumar Tikmani, Advs. for the Appellants.
N Venkataraman, A.S.G., Shyam Divan, Sr. Adv., Rishi Agrawala,
Mahesh Agarwal, Victor Das, E. C. Agrawala, M/s. Cyril Amarchand
Mangaldas, Raunak Dhillon, Ms. Ananya Dhar Choudhury, Ms.
Niharika Shukla, Advs. for the Respondents.

Judgment
Sanjiv Khanna, J.
The present appeals raise an interesting question on the right to claim
set-off in the Corporate Insolvency Resolution Process, when the
Resolution Professional proceeds in terms of clause (a) to sub-section
(2) of Section 25 of the Insolvency and Bankruptcy Code, 20161 to
take custody and control of all the assets of the corporate debtor.
2. In order to decide the issue raised in these appeals, we are required
to refer to the facts in brief:
2.1 In April 2016, Bharti Airtel Limited and Bharti Hexacom Limited2
entered into eight spectrum trading agreements with Aircel
Limited and Dishnet Wireless Limited3 for purchase of the
right to use the spectrum allocated to the latter in the 2300
MHz band. The agreement was contingent on approval of the
Department of Telecommunications 4, Government of India.
The DoT for grant of approval demanded bank guarantees in
relation to certain licence dues and spectrum usage dues from
the Aircel entities. Challenging this direction, the Aircel entities
1 For short, ‘IBC’.

2 For short- ‘The appellants’ or ‘Airtel entities’.
3 For short- ‘Aircel entities’.
4 For short- ‘DoT’.
146 [2024] 1 S.C.R.
approached the Telecom Disputes Settlement and Appellate

Tribunal5. By the interim order dated 3rd June 2016, TDSAT
directed Aircel entities to submit the bank guarantees. As the
Aircel entities did not have the means to procure and submit
the bank guarantees for approximately Rs.453.73 crores, they
approached the Airtel entities to submit bank guarantees on
their behalf to the DoT.
2.2 In terms of the eight spectrum transfer agreements, the Airtel
Entities were to pay Rs.4,022.75 crores to the Aircel entities.
The Airtel entities and Aircel entities entered into three Letters
of Understanding whereby the Airtel entities agreed to furnish
the bank guarantees to the DOT on behalf of the Aircel entities.
The Airtel entities were to deduct Rs.586.37 crores from the
consideration payable to the Aircel entities under the spectrum
transfer agreements. On the Aircel entities replacing the bank
guarantees furnished by the Airtel entities and the Airtel entities
receiving the bank guarantees from the DOT, Rs.411.22 crores
were payable by the Airtel entities to the Aircel entities.
2.3 TDSAT vide order dated 9th January 2018 held that the DOT’s
demand of Rs.298 crores against the Aircel entities was
untenable, and directed the DoT to return the bank guarantees
to the Aircel entities. However, the bank guarantees were not
returned by the DoT, which preferred Civil Appeal No. 5816
of 2018 before this Court. Cross-appeals were filed by Aircel
entities.
2.4 This Court by order dated 28th November 2018 held at the
interim stage, that the order of the TDSAT dated 9th January
2018, insofar as bank guarantees are concerned, shall be given
effect to. However, the DoT did not return the bank guarantees.
2.5 In view of the aforesaid, the Airtel entities wrote to the bank
seeking confirmation of cancellation of the bank guarantees.
As the banks were reluctant, the Airtel entities approached this
Court, which vide order dated 8th January 2019, directed that
the bank guarantees shall be cancelled and shall not be used
for any purpose whatsoever.
5 For short- ‘the TDSAT’.

[2024] 1 S.C.R. 147

2.6 Thereupon the Airtel entities made a payment of Rs.341.80

crores due to the Aircel entities on 10th January 2019. The
balance amount of Rs.145.20 crores was set-off by the Airtel
entities on the ground that this amount was owed by the
Aircel entities to the Airtel entities. According to Airtel entities,
Rs.145.20 crores was the adjusted or the net amount payable
by the Aircel entities towards operational charges, SMS charges
and interconnect usage charges6 to the Airtel entities.
2.7 In the meanwhile, Corporate Insolvency Resolution Process
was initiated against Aircel entities, namely Aircel Limited and
Dishnet Wireless Limited. The Adjudicating Authority7, Mumbai
Bench, admitted the petitions against Aircel Limited and Dishnet
Wireless Limited vide the orders dated 12th March 2018 and
19th March 2018.
2.8 Claims on account of the interconnect charges were filed by
Bharti Airtel Limited, including the claim on behalf of Telenor
(India) Communications Private Limited8, in light of Telenor’s
merger with Bharti Airtel Limited, effective from 14th May 2018.
Claim was also filed by Bharti Hexacom Limited. The total claim
by the Airtel Entities was Rs.203.46 crores. However, the Airtel
entities also owed Rs.64.11 crores towards interconnect charges
to the Aircel entities.
2.9 The claims submitted by the Airtel entities were admitted by the
Resolution Professional to the extent of Rs.112 crores. Claim on
account of receivable of about Rs.5.85 crores owed by Aircel
entities to Telenor India, which had been merged with Bharti
Airtel Limited, was not accepted.
2.10 By the letter dated 12th January 2019, the Resolution
Professional for Aircel Limited, Dishnet Wireless Limited and
Aircel Cellular Limited, wrote to Bharti Airtel Limited, stating that
they had suo moto adjusted an amount of Rs.112.87 crores
from the amount of Rs.453.73 crores payable by Airtel entities
to Aircel entities, consequent to the discharge and cancellation
6 For short- ‘interconnect charges’.

7 Section 5(1) of IBC– “Adjudicating Authority”, for the purposes of this Part, means National Company
Law Tribunal constituted under Section 408 of the Companies Act, 2013 (18 of 2013).
8 For short- ‘Telenor India’.
148 [2024] 1 S.C.R.
of the bank guarantees. Bharti Airtel Limited was asked to pay

Rs.112.87 crores to Aircel entities, which were undergoing
Corporate Insolvency Resolution Process, failing which the
Resolution Professional would be obligated to take steps for
recovery. The Airtel entities objected on several grounds, and
also claimed set-off of the amount due to them by the Aircel
entities from the amount payable by them to the Aircel entities.
Their reply and claim for set-off was rejected by the Resolution
Professional.
2.11 The Airtel entities thereupon approached the Adjudicating
Authority in Mumbai, who, vide order dated 1st May 2019 held
that the Airtel entities had a right to set off Rs.112.87 crores
from the payment, which was retained, and due and payable
to Aircel entities.
2.12 This order was challenged by the Resolution Professional
before the National Company Law Appellate Tribunal9. The
NCLAT vide order dated 17th May 2019 allowed the appeal,
inter alia, holding that set-off is violative of the basic principles
and protection accorded under any insolvency law. Set-off is
antithetical to the objective of the IBC. Reference was made to
the non-obstante provisions in the form of Section 238 of the
IBC. As moratorium under Section 14(4) applies till the date of
completion of the Corporate Insolvency Resolution Process,
which is till the resolution plan is approved or the liquidation
order is passed, to permit set-off will be contrary to law. Further,
the set-off being claimed is in respect of two separate and
unrelated transactions.
Meaning of set-off and types and principles of set-off.
3. Set-off in generic sense recognises the right of a debtor to adjust
the smaller claim owed to him against the larger claim payable to
his creditor.10 Philip R. Wood11 calls it a form of payment. Palmer12
notes a distinction between ‘set-off’ as in accounting, and ‘set-off’ as
a defence. The former focuses on the practical effect of set-off which
9 For short- ‘NCLAT’.

10 Philip R. Wood, Set-off and Netting, Derivatives, Clearing Systems, (Sweet & Maxwell 2007).
11 Ibid.
12 Kelly R. Palmer, The Law of Set Off in Canada (Canada Law Book 1993).
[2024] 1 S.C.R. 149

results in discharge of reciprocal obligations, while the latter focuses

on set-off pleaded as a defence to a claim, albeit not as a ‘sword’.
4. Set-off is given legal preference for three reasons. First, in economic
terms, set-off is a form of security recognised in law. It is, however,
not a security in a strict sense, but a right that enhances provision
of credit and acts as a stimulus to trade and commerce by giving a
degree of confidence to parties dealing with each other. Secondly,
it helps reduce litigation, promotes economy of time and is an
efficient method in resolving debt between parties. Thirdly, natural
equity requires that cross-demands should compensate each other
by deducting the lesser sum from the greater.
5. At least five different meanings can be ascribed to the term ‘set-off’,
namely, (a) statutory or legal set-off; (b) common law set-off; (c)
equitable set-off; (d) contractual set-off; and (e) insolvency set-off.13
It is observed that the streams of common law and equity on the
right of set-off have flown together and have so combined as to be in
the modern era indistinguishable from one another.14 It is necessary
to briefly explain the contours of contractual set-off, statutory/legal
set-off, equitable set-off and insolvency set-off.
6. Contractual set-off is a matter of agreement, rather than a separate
application of set-off. The parties are free to mutually agree on the
outcomes they desire. Being consensual, when expressly stated, the
normal rules of set-off regarding mutuality of credits or debts, liquid
debts, and connected debts – aspects relevant and noticed below
while dealing with statutory/legal set-offs or even insolvency set-off
– may not apply. The contract, however, should be within bounds
of legality and public policy.15 Further, the normal requirements
of the law of contracts, viz. intention to create legal relationship,
acceptance, consideration etc. should be established for a valid
contractual set-off.16
7. Ascertaining the applicability of contractual set-off requires an
assessment of the understanding whether the right is conferred by
13 Jurong Aromatics Corporation Pte Ltd. and Others v. BP Singapore Pte Ltd. and Another, (2018) SGHC
215. (High Court of Republic of Singapore)
14 Federal Commerce and Navigation Co. v. Molena Alpha Inc., (1978) Q.B. 927. (Lord Denning)
15 Palmer, supra note 12, at 263.
16 Palmer, supra note 12, at 263.
150 [2024] 1 S.C.R.
the agreement, as the court gives effect to the intention of the parties
as to how they should deal.17 The right to set-off may be explicit in
the words of the agreement, or can be gathered by existence of oral
or implied agreement to set-off, reflecting an understanding to the
said effect. There are earlier judgments in common law countries
that suggest that courts may rely on the equitable foundations of set-
off to relax the evidentiary burden required to prove an agreement
to set-off.18 It is suggested that courts accept slighter evidence of
agreement to set-off than is usually required in order to establish
disputed facts,19 but this is too broad a statement. Rather, the courts
should consider that netting of cross dues is both legitimate and
equitable, and in that context make an assessment of the relevant
facts to decide whether or not the set-off rights are conferred.
8. Statutory or legal set-off is created by a statute. For example,
Order VIII Rule 6 of the Code of Civil Procedure, 190820 states that
where a suit for recovery of money is filed, the defendant can claim
set-off against the plaintiff’s demand for any ascertained sum of
money legally recoverable by the defendant from the plaintiff, but
not exceeding the pecuniary limits of the jurisdiction of the court. It
requires that both the parties should fill the same character as they
fill in the plaintiff’s suit. The defendant may, at the first hearing of
the suit, and not afterwards, unless permitted by the court, present
the written statement containing particulars of debts sought to be
set-off.21 For set-off in law, the obligations existing between the
17 Ministre du Revenu national c. Caisse Populaire du bon Conseil, 2009 SCC 29 (S.C.C.) (Supreme
Court of Canada)
18 Jeffs v. Wood, [1723] 2 Eq Ca. Ab. 10.
19 Canadian Encyclopedic Digest, Release 3, “Personal Property” by Gloria Mintah, § 187, CD-ROM
(Thomson Reuters Canada Limited, August 2009); See also Palmer, supra note 12, at 263.
20 Order VIII Rule 6. Particulars of set-off to be given in written statement.—(1) Where in a suit for
the recovery of money the defendant claims to set-off against the plaintiff’s demand any ascertained
sum of money legally recoverable by him from the plaintiff, not exceeding the pecuniary limits of the
jurisdiction of the Court, and both parties fill the same character as they fill in the plaintiff’s suit, the
defendant may, at the first hearing of the suit, but not afterwards unless permitted by the Court, present
a written statement containing the particulars of the debt sought to be set-off.
(2) Effect of set-off.—The written statement shall have the same effect as a plaint in a cross-suit so
as to enable the Court to pronounce a final judgment in respect both of the original claim and of the
set-off, but this shall not affect the lien, upon the amount decreed, of any pleader in respect of the costs
payable to him under the decree.
(3) The rules relating to a written statement by a defendant apply to a written statement in answer to a
claim of set-off.
21 For the purpose of the present decision, we need not examine the contours and conditions of Order
VIII Rule 6 CPC.
[2024] 1 S.C.R. 151

two parties must be debts which are for liquidated sums or money
demands which can be ascertained with certainty. Both the debts
must be mutual cross-obligations, that is, cross-claims between the
parties in the same right.22
9. A few judgments of this Court and the High Courts allow the defendant
to claim equitable set-off in respect of an unascertained sum of
money payable as damages. Equitable set-off can also be claimed
in respect of an ascertained sum of money.23 However, the claim for
an equitable set-off must have a connection between the plaintiff’s
claim for the debt and the defendant’s claim to set-off, which would
make it inequitable to drive the defendant to a separate suit.24 It
has been accordingly held that the claim for set-off should arise
out of the same transaction, or transactions which can be regarded
as one transaction. Equitable set-off is allowed in common law, as
distinguished from legal set-off, which is allowed by the court only for
an ascertained sum of money and is a statutory right. We shall be
subsequently examining the right to equitable set-off while examining
the provisions of the IBC.
10. Rory Derham on the law of set-offs observes that insolvency set-
offs should not be equated with equitable set-offs.25 This statement
reflects the development of law in the United Kingdom, which has
resulted in enactment of special provisions on set-off in case of
insolvency. We need not examine in detail the law as applicable to
insolvency set-off in the United Kingdom for the present decision,
albeit it is relevant to state that they are broader and wider than
the provisions of equitable set-off. Insolvency set-off under the law
of the United Kingdom is permitted when there are mutual debts,
mutual credits and other mutual dealings between the parties at the
relevant cut-off time, which is essentially the stage of commencement
of the liquidation process. We shall subsequently examine the term
“mutual dealings” as applicable to liquidation proceedings in India.
22 Citibank Canada v. Confederation of Life Insurance Company, 42 CRB (3)(d) 288.

23 Ramdhari v. Premanand, 19 Cal WN 1183.
24 Maheswari Metals & Metal Refinery, Bangalore v. Madras State Small Industries Corporation, AIR 1974
Mad 39.
25 Rory Derham, Derham on the Law of Set-Off (Oxford University Press 4th ed. 2010).
152 [2024] 1 S.C.R.
Analysis of the provisions of IBC relating to the Corporate

Insolvency Resolution Process, liquidation proceedings and
application to the facts of present case.
11. In the present case we are examining and concerned with the
provisions as applicable to the Corporate Insolvency Resolution
Process in Chapter II Part II of the IBC, which consists of the
compendium of Sections from 6 to 32A of the IBC. In the course of
our discussion, we would also be referring to Section 53 of the IBC,
which is a part of Chapter III Part II, and relates to the liquidation
process.
12. At the outset we should record, that there is a difference between
the Corporate Insolvency Resolution Process and the liquidation
process of the IBC. The Corporate Insolvency Resolution Process
focuses on and fosters rehabilitation, revival and resolution of the
corporate debtor, whereas the liquidation process focuses on the
constellation of assets of the company in liquidation, and distribution
and payment to the creditors from the liquidation estate in terms of
the order of preference set out in the insolvency statute.
13. Unlike the provisions of the Companies Act, 1956 or the Companies
Act, 2013, IBC in the case of Corporate Insolvency Resolution Process
does not give the indebted creditors the right to set-off against the
corporate debtor. The earlier enactments – the Companies Act,
1956 vide Section 529, and the Companies Act, 2013 vide Section
325 (now omitted) – did permit set-off per the Provincial Insolvency
Act, 1920, which enactment is now repealed. Accordingly, under
the Companies Acts, in terms of the provisions of Section 46 of the
Provincial Insolvency Act, 1920, indebted creditors’ right to set-off
against the corporate debtor was statutorily recognised subject
to satisfaction of certain conditions. Significantly, in the case of
partnerships and individual bankruptcies, Section 17326 of the IBC
26 Section 173. Mutual credit and set-off.—(1) Where before the bankruptcy commencement date,
there have been mutual dealings between the bankrupt and any creditor, the bankruptcy trustee shall—
(a) take an account of what is due from each party to the other in respect of the mutual dealings and
the sums due from one party shall be set-off against the sums due from the other; and
(b) only the balance shall be provable as a bankruptcy debt or as the amount payable to the bank-
ruptcy trustee as part of the estate of the bankrupt.
(2) Sums due from the bankrupt to another party shall not be included in the account taken by the
bankruptcy trustee under sub-section (1), if that other party had notice at the time they became due
that an application for bankruptcy relating to the bankrupt was pending.
[2024] 1 S.C.R. 153

permits set-off. Regulation 29 of the Insolvency and Bankruptcy

Board of India (Liquidation Process) Regulations, 201627 provides
for mutual credits and set-off and reads:
“29. Mutual credits and set-off.— Where there are mutual
dealings between the corporate debtor and another party,
the sums due from one party shall be set off against the
sums due from the other to arrive at the net amount payable
to the corporate debtor or to the other party.”
The title of the Liquidation Regulations states that they
shall apply to the process under Chapter III Part II of the
IBC. In other words, the Liquidation Regulations are not
applicable to Chapter II Part II of the IBC, which relates
to the Corporate Insolvency Resolution Process.
14. Section 36(4) in Chapter III Part II of the IBC 28 deals with the
exclusion of assets that do not form part of the liquidation estate.
Section 36(4) permits the Insolvency and Bankruptcy Board of India29
to specify assets which could be subject to set-off on account of
mutual dealings between the corporate debtor and the creditor. When
an asset is excluded from the liquidation estate, it is not available
for distribution in the liquidation process. It follows that if a creditor
exercises and is allowed set-off, then in terms of Section 36(4) of
the IBC this creditor is given a preferred status over others, including
the secured creditors, to the extent of the set-off value.
27 For short- ‘the Liquidation Regulations’.

28 Section 36 (4). The following shall not be included in the liquidation estate assets and shall not
be used for recovery in the liquidation—
(a) assets owned by a third party which are in possession of the corporate debtor, including—
(i) assets held in trust for any third party;
(ii) bailment contracts;
(iii) all sums due to any workman or employee from the provident fund, the pension fund and the gratuity
fund;
(iv) other contractual arrangements which do not stipulate transfer of title but only use of the assets; and
(v) such other assets as may be notified by the Central Government in consultation with any financial sector
regulator;
(b) assets in security collateral held by financial services providers and are subject to netting and set-off in
multilateral trading or clearing transactions;
(c) personal assets of any shareholder or partner of a corporate debtor as the case may be provided such
assets are not held on account of avoidance transactions that may be avoided under this Chapter;
(d) assets of any Indian or foreign subsidiary of the corporate debtor; or
(e) any other assets as may be specified by the Board, including assets which could be subject to set off on
account of mutual dealings between the corporate debtor and any creditor.
29 For short- ‘the Board’.
154 [2024] 1 S.C.R.
15. The Liquidation Regulations have been framed in exercise of powers

conferred on the Board by Sections 5, 33, 34, 35, 37, 38, 39, 40,
41, 43, 45, 49, 50, 51, 52, 54, 196 and 208 read with Section 240 of
the IBC. Notwithstanding the omission in the Liquidation Regulations
to refer to Section 36(4) of the IBC, set-off on account of mutual
dealings is permitted in terms of Regulation 29 of the Liquidation
Regulations. The sums due mutually can be set off to arrive at the
net amount payable to the corporate debtor or the other party. The
exclusion will result in reduction of the liquidation estate and therefore
has consequences as noticed above. In the present case, we are
not concerned with what is to be included and is a part, or not a
part of the liquidation estate.
16. The expression ‘mutual dealings’ is the condition to be satisfied
for insolvency set-off under Regulation 29. We will examine what
is meant by the expression ‘mutual dealings’, and how insolvency
set-off is different from contractual, statutory and equitable set-off.
17. Insolvency set-off under the United Kingdom insolvency law was
examined in Re.: Bank of Credit and Commerce International
SA (No. 8) 30, to imply that the set-off must relate to dealings prior
to bankruptcy. It states in explicit terms that the requirement of
mutuality is central to bankruptcy set-off and must be rigorously
enforced. It is held that it is not the function of an insolvency set-off
to confer a benefit to a debtor who has not been a part of mutual
dealings, or to give preference to a creditor who has secondary or
no liability. The insolvency set-off regime in the United Kingdom is
wider than statutory/legal set-off or equitable set-off. However, there
is a requirement that the debt should have been provable in the
insolvency process.
17.1 An earlier decision in Stein v. Blake 31 had held that the
bankruptcy set-off applies to all claims from mutual credits or
dealings prior to bankruptcy, including claims, which at the
time of bankruptcy were due but not payable, unascertained
or contingent. This is supplemented by the United Kingdom
insolvency set-off regime permitting the estimation of liabilities
and calculation of trends. The parties are not required at any
30 [1996] Ch. 245. (Appeal Committee of the House of Lords)

31 [1996] A.C. 243. (House of Lords)
[2024] 1 S.C.R. 155

particular time to meet and calculate the extent of each other’s

liabilities. Further, the account is a deemed account by which
the claim and counterclaim are automatically reduced to a net
balance. The original choses in action, that is, the claim and
the counterclaim, are in effect replaced by a claim to a net
balance. We must also note that the provisions of Section 323
of the Insolvency Act, 1986, as applicable in the United Kingdom
uses the expressions “mutual credits, mutual debts, or other
mutual dealings between the bankrupt and any creditor of the
bankrupt, proving or claiming to prove for a bankruptcy debt.”
Further, Rule 2.85 of the Insolvency Rules, 1986, applicable to
the administration, which is similar to the Corporate Insolvency
Resolution Process, states that at the time of distribution,
only the balance (if any) of the account held by the creditor
is provable in the administration. Alternatively, the balance (if
any) owed to the company is payable to the administrator as
a part of the assets, subject to the exceptions as provided.
17.2 There are also decisions as in the case of National Westminster
Bank Ltd. v. Halesowen Presswork & Assemblies Ltd.32,
which highlight the mandatory nature of insolvency set-off in the
United Kingdom. The Insolvency Rules, 1986 imply that the right
to set-off co-exists with the moratorium during administration,
because of the time at which the dues owed to each party are
calculated.33 The set-off does not occur automatically once
the company enters into the administration process. It applies
once the intention to distribute the assets is announced by
the administrator. Also, the doctrine of set-off does not apply
in case of company voluntary arrangement under Part I of
the Insolvency Act, 1986. Rory Derham observes that the
insolvency set-off section not being expressly applicable to a
company voluntary arrangement, any set-off, in the absence
of contractual right of set-off, does not apply. He observes that
the right to set-off in the absence of contractual right to set-off
depends on the statute of set-off and equitable set-off. Further, a
claim against the corporate debtor incurred after initiation of the
administration cannot be set-off against the debtor’s cross-claim
32 1972 AC 785.
33 Derham, supra note 25, ¶6.124.
156 [2024] 1 S.C.R.
for lack of mutuality. A claim against the debtor after initiation

of administration is not against the corporate debtor itself.
18. The High Court of Australia in Gye v. McIntyre34 states that the
word ‘mutual’ conveys the notion of reciprocity rather than that of
correspondence. Mutuality means that the demands must be between
the same parties and they must be held in the same capacity, or
right or interest. Mutuality is concerned with the status of the parties
and their relationship with each other, and not with the nature of the
claims themselves. There must be identity between the persons
beneficially interested in the claims and the person against whom the
claim existed. Therefore, an obligation arising out of an instrument
may be set-off against a simple contract debt, and a secured debt
may be set-off against an unsecured creditor. The court, however,
expressed that the requirement of same parties means that A’s
right to sue B cannot be set-off against A’s debt to C or that a joint
demand cannot be set-off against a separate demand.
19. The Court of Appeal of Republic of Singapore in BP Singapore Pte
Ltd v. Jurong Aromatics Corp Pte Ltd and Others35 observes
that the requirement of mutuality will fail in respect of prior claims
against the debtor company, where the receiver (read – Resolution
Professional) carries on business of the debtor company under a
specific agreement to which the creditor and the corporate debtor
are also parties.
20. The Court of Appeal of Republic of Singapore in BP Singapore
Pte Ltd. (supra) had also examined whether the claim of set-off in
the said case was available under the head ‘equitable set-off’. The
court observed that it is not necessary that the claim and cross-claim
should arise on the same contract, albeit it should be a close and
inseparable relationship or connection between the dealings and
the transactions which give rise to the respective claims, such that it
would offend one’s sense of fairness or justice to allow one’s claim to
be enforced without regard to the other. The law relating to equitable
set-off in India is explained in paragraph 9 supra. Claim for equitable
set-off should arise out of the same transaction, or transactions that
can be regarded as one transaction. There should be a connection
34 (1991) 171 CLR 609.

35 (2020) SGCA 09.
[2024] 1 S.C.R. 157

between the plaintiff’s claim for the debt and the defendant’s claim
for set-off, which would make it inequitable to drive the defendant
to a separate suit.
21. On the question of mutual dealings, Airtel entities have referred to
the judgment of the High Court of Kerala in Gokul Chit Funds and
Trades Private Ltd. v. Thoundasseri Kochu Ouseph Vareed and
Others36, which we believe allows set-off in terms of the Kerala
Insolvency Act, 1955. In the context of mutual dealings, it observes
that mutuality can exist when there are even several distinct and
independent transactions, albeit between the same parties functioning
in the same right or capacity. It is not necessary that the same should
arise out of a single transaction. When the transactions between
the parties, which are connected, give rise to reciprocal claims and
demands on account of the parties acting on the same right or
capacity, principle of mutuality will be satisfied. Thus, the contention
that each kuri is a distinct and separate transaction was not accepted
so as to defeat the mandatory right to set-off observing that rights
and liabilities arising out of the different chit fund transactions should
be allowed to be adjusted against each other.
22. In light of the aforesaid discussion, the expression ‘mutual dealings’
for the purpose of Regulation 29 of the Liquidation Regulations, is
wider than the statutory set-off postulated under Order VIII Rule
6 of CPC, as well as, equitable set-off under the common law as
applicable in India. Insolvency set-off applies when demands are
between the same parties. There must be commonality of identity
between the person who has made the claim and the person against
whom the claim exists. Even when there are several distinct and
independent transactions, mutuality can exist between the same
parties functioning in the same right or capacity. Mutual dealings
are not so much concerned with the nature of the claims, but with
the relationship and apposite identity of the parties giving rise to the
respective claims, such that it would offend one’s sense of fairness
or justice to allow one to be enforced without regard to the other.
23. The relationship and the nature of identity of the Corporate Debtor
undergo a change on the commencement of the Corporate Insolvency
Resolution Process. Set-off of the dues payable by the Corporate
36 AIR 1977 Ker 68.

158 [2024] 1 S.C.R.
Debtor for a period prior to the commencement of the Corporate

Insolvency Resolution Process cannot be made and is not permitted
in law from the dues payable to the Corporate Debtor post the
commencement of the Corporate Insolvency Resolution Process.37
Further, a debtor cannot, after notice of assignment of his debt by
the creditor, improve his position as regards set-off by acquiring
debts incurred by the assignor creditor which are payable to a third
party. This will not meet the mandate of mutual dealing. This will be
contrary to equity and would amount to misuse of the provision for
insolvency set-off.38 One must also be on guard against misuse of
insolvency set-off in case of voluntary winding up.
24. Insolvency set-off as a proposition mitigates against the doctrine of
pari passu. Insolvency set-off gives primacy and an overriding effect
to the creditor who is entitled to set-off mutual credits. When cross
demands are set-off, the assets available for distribution amongst
the general body of creditors, would be depleted in favour of a
single creditor with a set-off entitlement. This consequently results in
reduction of the dividend payable. In other words, it puts and grants
priority to the creditor, even an operational creditor, to the extent of
the set-off. Some jurists have doubted the efficacy of the justification
that right to set-off acts as a stimulus to trade and commerce on the
ground that rarely any party would treat the possibility of set-off as
a form of security. The principle of pari passu though not explicitly
mentioned in the IBC, is apparent as the edifice of Section 53 read
with Section 52 of the IBC, as these provisions create a liquidation
hierarchy with the stipulation that each class of creditors shall rank
equally among each other. The same class of creditors should be
given equal treatment. As set-offs can mitigate against the pari
passu principle, they should be allowed when mandated, or can be
justified by law.
25. Apart from the pari passu principle which refers to treating creditors of
the same class in the same manner, the United Kingdom insolvency
37 The position may be different where the dues are payable by the debtor to the Corporate Debtor, in
which case the liquidator may seek adjustment as a form of payment by the debtor. The reason is that
the liquidator is under a statutory obligation to recover the dues from the debtor. Adjustment in such
cases is statutory or legal set-off under the IBC/Companies Act. Insolvency set-off in Regulation 29 will
not apply for want of mutuality.
38 This will not satisfy the requirements of legal/statutory set-off and equitable set-off under the Code of
Civil Procedure, 1908.
[2024] 1 S.C.R. 159

law also relies on the common law principle of anti-deprivation. The

principle encapsulates that a person cannot contract to obtain a
more beneficial position in the event of bankruptcy, than what the
law otherwise provides. A contract which states that a man’s property
shall remain his until his bankruptcy, and in that event shall go to
someone else, is not a valid contract. Both, the pari passu principle
and the anti-deprivation principle sprout from the common ground
that parties cannot contract out of an insolvency legislation. Their
distinction lies in their impacts. The pari passu principle is aimed at
ensuring that all creditors get their proportional dues by preventing
any one creditor from getting more than their deserved share.39 The
anti-deprivation principle on the other hand aims at conservation of
the insolvent estate for the benefit of the creditors.40
26. Having examined the different concepts of set-off including insolvency
set-off, we would now like to examine the contentions raised by the
parties with reference to the provisions of the Corporate Insolvency
Resolution Process under the IBC.
27. The IBC is an Act to consolidate and amend the laws relating to
reorganisation and insolvency resolution of corporate persons,
partnership firms and individuals in a time bound manner for
maximisation of value of assets of such persons, to promote
entrepreneurship, availability of credit and balance the interest
of stakeholders, etc. The IBC codifies the law of insolvency and
bankruptcy. The IBC is a complete code in itself, except where it
refers and permits application of the provisions of other enactments,
as has been consistently held by this Court in Indian Overseas
Bank v. RCM Infrastructure Ltd. and Another41, Innoventive
Industries Limited v. ICICI Bank and Another42, Embassy Property
Developments Private Limited. v. State of Karnataka and Others43,
and V. Nagarajan v. SKS Ispat and Power Limited and Others44.
39 Belmont Park Investments v. BNY Corporate Trustee Services Ltd. [2012] 1 AC 383.
40 In the present decision, we are not examining the extent of, and the manner in which the anti-depriva-
tion principle is applicable in India.
41 (2022) 8 SCC 516.
42 (2018) 1 SCC 407.
43 (2020) 13 SCC 308.
44 (2022) 2 SCC 244.
160 [2024] 1 S.C.R.
28. Section 23845 of the IBC states that the provisions of the Code would
override other laws. The provisions of this Code shall have effect,
notwithstanding anything inconsistent therewith contained in any
other law for the time being in force.
29. Section 243 deals with the repeal of certain enactments and also
incorporates the savings clause. Sub-section (1) states that Provincial
Insolvency Act, 1920 is hereby repealed. Sub-section (2) does not
apply in the present case. Provincial Insolvency Act, 1920 did not
apply to the Corporate Insolvency Resolution Process stage.
30. Given the aforesaid legal position, we do not think that the provisions
of statutory set-off in terms of Order VIII Rule 6 of CPC or insolvency
set-off as permitted by Regulation 29 of the Liquidation Regulations
can be applied to the Corporate Insolvency Resolution Process.
The aforesaid rule would be, however, subject to two exceptions
or situations. The first, if at all it can be called an exception, is
where a party is entitled to contractual set-off, on the date which is
effective before or on the date the Corporate Insolvency Resolution
Process is put into motion or commences. The reason is simple.
The Corporate Insolvency Resolution Process does not preclude
application of contractual set-off. During the moratorium period with
initiation of the Corporate Insolvency Resolution Process, recovery,
legal proceedings etc. cannot be initiated, enforced or remain in
abeyance. Besides the moratorium effect, the terms of the contract
remain binding and are not altered or modified.
31. The foundation of contractual set-off is based on the same ground as
in the case of equitable set-off, which is impeachment of title, albeit
contractual set-off is a result of mutual agreement that permits set-
off and adjustment. Therefore, if a debtor’s title to sue is impeached
before the Corporate Insolvency Resolution Process is set into
motion, so should the title of the Resolution Professional, who in
terms of Section 25 of the IBC has the duty to preserve and protect
assets of the corporate debtor, including continuing the business
operations of the corporate debtor. The Resolution Professional
takes the debtor’s property subject to all clogs and fetters affecting
it in the hands of the debtor.
45 Section 238. Provisions of this Code to override other laws.—The provisions of this Code shall
have effect, notwithstanding anything inconsistent therewith contained in any other law for the time
being in force or any instrument having effect by virtue of any such law.
[2024] 1 S.C.R. 161

32. The second exception will be in the case of ‘equitable set-off’ when
the claim and counter claim in the form of set-off are linked and
connected on account of one or more transactions that can be treated
as one. The set-off should be genuine and clearly established on
facts and in law, so as to make it inequitable and unfair that the
debtor be asked to pay money, without adjustment sought that is fully
justified and legal. The amount to be adjusted should be a quantifiable
and unquestionable monetary claim, as the Corporate Insolvency
Resolution Process is a time-bound summary procedure. It is not a
civil suit where disputed questions of law and facts are adjudicated
after recording evidence. Set-off of this nature does not require legal
proceedings. Further, set-off of money is to be given against money
alone. It will not apply to assets. Lastly, being an equitable right, it
can be denied when grant of relief will defeat equity and justice.
33. We would in fact borrow the term ‘transactional set-off’46 instead
of equitable set-off, when we describe the second exception. The
reason is that the second exception refers to an ascertained amount,
which is a requirement for legal set-off under Order VIII Rule 6 of
CPC and at the same time relies on equitable right when the statute
is silent and there is no reason to deny set-off under the common
law. It is an equitable right because the transactions are close and
connected, harbingering the claim and the counterclaim. It would be
manifestly unjust to bifurcate the connected transactions to accept
and enforce the claim of one party without adjusting the amount due
to the second party. This, in our opinion, does not contradict the
eclipse by way of moratorium, because the transactions are treated
as singular and one. When transactions are closely connected, a
claim for transactional set-off during the moratorium period on a claim
by the Resolution Professional, is by way of a defence to protect the
legitimate expectation and respect legal certainty.
34. Thus, while accepting contractual and transactional set-off on the
conditions specified, we have struck a balance with the doctrines
of pari passu and anti-deprivation, which we believe is just and
fair. Insolvency set-off in terms of Regulation 29 of the Liquidation
Regulations is statutory.
46 See Derham, supra note 25 and Gerard McCormack, Set-off under the European Insolvency Regula-
tion (and English Law), 29 IIR 100, 100-117 (2020).
162 [2024] 1 S.C.R.
35. In the context of the present case, the aforesaid legal position
takes care of the argument raised on behalf of the appellant Airtel
entities that the Resolution Professional had allowed set-off of about
Rs. 64 crores which was due and payable by the corporate debtor
Aircel entities under the operational services agreement, the SMSs
services agreement, and the interconnect usage agreements prior
to commencement of the Corporate Insolvency Resolution Process
from the dues payable by the corporate debtor (Aircel entities) to
the Airtel entities. The contractual set-off had occurred prior to the
commencement date. This aspect has been further elucidated in
paragraph 50 below.
36. The decision of the House of Lords in British Eagle International
Airlines Ltd v. Compagnie Nationale Air France47 demonstrates
the interaction between the contractual set-off mechanism and the
set-off rules as applicable to insolvency in the United Kingdom. In this
case, the company under liquidation was a member of International
Airport Transport Association which had a clearing house system
for ticket sales by member airlines. All payments were channelised
through the clearing house and at the end of the accounting period,
all debits and credits due to transactions were totalled to arrive at a
figure for a net debit or credit. In the said case, British Eagle went
into liquidation and were net debtors to the clearing house. They had
a claim against Air France. The House of Lords held that Air France
was bound to pay the liquidator the money owed to British Eagles.48
The majority judgment also observed that the clearing house medium
was possibly analogous to that of secured creditors, albeit without
creation and registration of security interests. Therefore, preference
to the clearing house agent would be contrary to public policy. 49
37. Our finding that the IBC is a complete code relying upon the opening
part of the enactment and Sections 238 and 243 takes care and
nullifies the argument raised by the appellant Airtel entities that they
are entitled to statutory set-off or insolvency set-off, in the Corporate
Insolvency Resolution Proceedings under Chapter II Part II of the
47 1975 1 WLR 758.

48 McCormack, supra note 46.
49 The contractual and consequently the legal position has undergone a change as the IATA clearing
house rules have since been amended. Therefore, this judgment should be read and understood with
caution.
[2024] 1 S.C.R. 163

IBC. Regulation 29 of the Liquidation Regulations does not apply

to Part II of the IBC. The legislation or even the legislative intent
permits neither statutory set-off, nor insolvency set-off. In support
of our conclusion, we would like to refer to the statutory provisions,
and meet the arguments to the contrary raised by the appellants.
38. This brings us to the argument raised by the Airtel entities who have
placed reliance on Section 30(2)(b)(ii) and Section 53 of the IBC.
The relevant provisions of the said Sections read as under:
“30. Submission of resolution plan. –
xx xx xx
(2) The resolution professional shall examine each
resolution plan received by him to confirm that each
resolution plan-
(b) provides for the payment of debts of operational
creditors in such manner as may be specified by the Board
which shall not be less than—
xx xx xx
(ii) the amount that would have been paid to such creditors,
if the amount to be distributed under the resolution plan
had been distributed in accordance with the order of priority
in sub-section (1) of Section 53,
xx xx xx
53. Distribution of assets.— (1) Notwithstanding anything
to the contrary contained in any law enacted by the
Parliament or any State Legislature for the time being
in force, the proceeds from the sale of the liquidation
assets shall be distributed in the following order of priority
and within such period and in such manner as may be
specified, namely—
(a) the insolvency resolution process costs and the
liquidation costs paid in full;
(b) the following debts which shall rank equally between
and among the following—
164 [2024] 1 S.C.R.
(i) workmen’s dues for the period of twenty-four

months preceding the liquidation commencement
date; and
(ii) debts owed to a secured creditor in the event
such secured creditor has relinquished security
in the manner set out in Section 52;
(c) wages and any unpaid dues owed to employees
other than workmen for the period of twelve months
preceding the liquidation commencement date;
(d) financial debts owed to unsecured creditors;
(e) the following dues shall rank equally between and
among the following:—
(i) any amount due to the Central Government and
the State Government including the amount to
be received on account of the Consolidated
Fund of India and the Consolidated Fund of
a State, if any, in respect of the whole or any
part of the period of two years preceding the
liquidation commencement date;
(ii) debts owed to a secured creditor for any amount
unpaid following the enforcement of security
interest;
(f) any remaining debts and dues;
(g) preference shareholders, if any; and
(h) equity shareholders or partners, as the case may be.
(2) Any contractual arrangements between recipients under
sub-section (1) with equal ranking, if disrupting the order
of priority under that sub-section shall be disregarded by
the liquidator.
(3) The fees payable to the liquidator shall be deducted
proportionately from the proceeds payable to each class of
recipients under sub-section (1), and the proceeds to the
relevant recipient shall be distributed after such deduction.
[2024] 1 S.C.R. 165

Explanation.—For the purpose of this section—

(i) it is hereby clarified that at each stage of the
distribution of proceeds in respect of a class of
recipients that rank equally, each of the debts will
either be paid in full, or will be paid in equal proportion
within the same class of recipients, if the proceeds
are insufficient to meet the debts in full; and
(ii) the term “workmen’s dues” shall have the same
meaning as assigned to it in Section 326 of the
Companies Act, 2013 (18 of 2013).”
39. The Airtel entities have contested the conclusion by urging that Section
30 of the IBC seeks to ensure that the assets and liabilities of the
corporate debtor, as recorded in the resolution plan, correspond to the
liquidation estate of the corporate debtor in the event of liquidation.
The provision is to ensure smooth transition between reorganisation
under the Corporate Insolvency Resolution Process and the liquidation
process. In case a contrary view is taken, anomalies will arise. In the
event the corporate debtor undergoes liquidation, Section 36(4)(e) and
Regulation 29 would apply. However, if the Resolution Professional
proceeds in terms of Section 25 and secures the assets from the
creditors, the creditors would not be entitled to claim set-off during
the course of the Corporate Insolvency Resolution Process, which
is earlier in the point of time.
40. The arguments are fallacious and should not be accepted. Sub-
section (2)(b)(ii) to Section 30 does not support the contention
of the Airtel entities. Sub-section (2) to Section 30 deals with the
resolution plan and the quantum of payment required to be made
when considering a resolution plan under Chapter II Part II of the
IBC. The provision requires that the Resolution Professional shall
examine each resolution plan received by him to confirm that each
plan provides for payment of debts of the operational creditor in
the manner as may be specified by the Board. The Board has not
specified the manner in which payment of debts to the operational
creditor shall be made. However, the stipulation that the payment of
debts to the operational creditor shall not be less than the amount
that the operational creditors are entitled to in terms of the order
of priority in sub-section (1) to Section 53 of the IBC is mandatory.
166 [2024] 1 S.C.R.
41. There are several reasons why in our opinion clause (ii) to sub-
section (2)(b) of Section 30 does not support the plea of insolvency
set-off. The section does not make Chapter III Part II, that is, Section
36(4)(e) or Regulation 29, applicable to the Corporate Insolvency
Resolution Process under Chapter II Part II of the IBC. Secondly,
clause (ii) to Section 30(2)(b) deals with the amounts to be paid to
the creditors and not the amount payable by the creditors to the
corporate debtor. Thirdly, clause (ii) to Section 30(2)(b) has appliance
when the resolution plan is being considered for approval. Fourthly,
and for the reasons elaborated earlier, and in view of the specific
legislative mandate as incorporated and reflected in Chapter II Part
II of the IBC, we should hold that the provisions of the IBC relating
to Corporate Insolvency Resolution Process do not recognise the
principle of insolvency set-off. We would not extend it by implication,
when the legislature has not accepted applicability of mutual set-
off at the initial stage, that is, the Corporate Insolvency Resolution
Process stage.
42. The judgment of this Court in Ebix Singapore Private Limited
v. Committee of Creditors of Educomp Solutions Limited and
Another.50, that one of the objects of the IBC is to provide for a
comprehensive and a time-bound framework with smooth transition
in between organisation and liquidation, has no application and
relevance to the context and issue in question. The observations
were made in the context of the time bound framework specified in
the IBC and the need to adhere to the timelines. Reorganisation or
resolution process should not get prolonged or continued indefinitely.
43. Similarly, the decision in Swiss Ribbons Private Limited and
Another v. Union of India and Others51, which refers to a claim for
set-off being considered by the Resolution Professional during the
resolution process, is an obiter dicta and not a ratio decidendi to the
issue in question. The judgment states that a set-off between the
corporate debtor and a financial creditor is a rarity. It also observes
that it is not the case that legitimate set-offs may not be considered
at all, and that they can be considered at the stage of filing proof
50 (2022) 2 SCC 401.

51 (2019) 4 SCC 17.
[2024] 1 S.C.R. 167

of claims. These observations were made to differentiate between

financial and operational creditors, and how the process of filing
an application for initiating the resolution process is distinct viz. the
financial creditors and operational creditors under the IBC. Whether
the set-off should be considered at the stage of filing of proof of
claims during the resolution process was not an issue before the
court in Swiss Ribbons (supra). These observations are not ratio
decidendi when we apply the inversion test and other tests for the
issue in question.52
44. The judgment of this Court in The Official Liquidator of High Court
of Karnataka v. Smt. V. Lakshmikutty53 had applied Section 46 of
the Provincial Insolvency Act, 1920 and had accordingly permitted
insolvency set-off on interpretation and application of Sections 529
and 530 of the Companies Act, 1956. In that context, it is observed
that the English courts, on interpretation of corresponding provisions
of the English Companies Act, had taken a similar view. In the present
matter, we are dealing with the provisions of the IBC. Secondly, the
corporate debtor is not an insolvent company undergoing liquidation
process, but is undergoing the Corporate Insolvency Resolution
Process.
45. Similarly, the reliance placed by Airtel entities on Section 60(5)54 of
the IBC, which confers jurisdiction on the Adjudicatory Authority to
entertain and dispose of any application or proceeding by or against
a corporate debtor, including claims against any of the subsidiaries
or any question of priority or question of law and facts, arising out
of or in relation to insolvency resolution or liquidation proceeds of
the corporate debtor, does not come to the aid of the Airtel entities.
These are enabling provisions which entitle the Adjudicating Authority
52 Career Institute Educational Society v. Om Shree Thakurji Educational Society, 2023 SCC OnLine SC
586.
53 (1981) 3 SCC 32.
54 Section 60 Adjudicating authority for corporate persons.—
(5) Notwithstanding anything to the contrary contained in any other law for the time being in force, the
National Company Law Tribunal shall have jurisdiction to entertain or dispose of—
(a) any application or proceeding by or against the corporate debtor or corporate person;
(b) any claim made by or against the corporate debtor or corporate person, including claims by or against
any of its subsidiaries situated in India; and
(c) any question of priorities or any question of law or facts, arising out of or in relation to the insolvency reso-
lution or liquidation proceedings of the corporate debtor or corporate person under this Code.
168 [2024] 1 S.C.R.
to go into several aspects to aid and assist the Corporate Insolvency

Resolution Process. They cannot be read as allowing a creditor/debtor
to claim set-off in the Corporate Insolvency Resolution Process.
46. Relying upon several decisions under the United Kingdom Insolvency
Act and Rules, it has been argued that insolvency set-off is self-
executing. Reliance is placed on Innoventive Industries Ltd. (supra),
wherein it is observed that the English Insolvency Act has served as
a model for the IBC. We do not agree that insolvency set-off under
the IBC is automatic and self-executing. We do not find any provision
in the IBC which states so. In the context of the IBC, insolvency
set-off is neither automatic, nor self-executing.
47. Airtel entities have also argued that the definitions of ‘claim’ and
‘debt’ in sub-sections (6) and (11) of Section 3 of the IBC buttress
the argument that set-off under the IBC is self-executing.55 The
argument is self-serving and evasive because neither clause uses
the expression ‘set-off’, nor is it implied. We would not extend on
and remodel the definitions on the basis of predisposed and self-
serving suppositions.
48. Therefore, we would reject the argument that insolvency set-off is
automatic and self-executing. Self-execution may be acceptable in
cases of contractual set-off, as held above.
49. Reference is also made to the UNCITRAL Legislative Guide on
Insolvency Law56 which states that right to set-off is essential to avoid
misuse of insolvency proceedings by a corporate debtor. The said guide
states that insolvency law of set-off of mutual obligations arising out
of pre-commencement transactions or activities of the debtor leads to
commercial predictability and availability of credit. It checks strategic
misuse of the insolvency proceedings. In the context of Chapter II
Part II of the IBC, we are not concerned with the liquidation estate or
55 Section 3 Definitions. —
(6) “claim” means—(a) a right to payment, whether or not such right is reduced to judgment, fixed, disputed,
undisputed, legal, equitable, secured or unsecured;
(b) right to remedy for breach of contract under any law for the time being in force, if such breach gives rise
to a right to payment, whether or not such right is reduced to judgment, fixed, matured, unmatured,
disputed, undisputed, secured or unsecured.
(11) “debt” means a liability or obligation in respect of a claim which is due from any person and includes a
financial debt and operational debt.
56 UNCITRAL Legislative Guide on Insolvency Law, Chapter G. p.155-156 (2005).
[2024] 1 S.C.R. 169

the liquidation process. At this stage, we are examining the question

of rehabilitation and revival of the corporate debtor. The focus and
objective is entirely different. Therefore, in our opinion, the said guide
is of no avail or instructive to us. Further, the provisions relating to
Chapter II Part II being explicit and not ambiguous, do not require
purposive interpretation. We should, however, take on record that the
UNCITRAL guide does distinguish between the set-off obligations
maturing prior to the commencement of the insolvency proceedings
and set-off obligations after the commencement of the insolvency
proceedings.57 Only the former should be permitted in insolvency
proceedings, while the latter should be disallowed or allowed to a
limited extent.
50. On the aspect of mutual dealings and also equity, it is to be noted
that adjustment of the inter-connect charges are under a separate
and distinct agreement. The telephone service providers use each
other’s facilities as the caller or the receiver may be using a different
service provider. Accordingly, adjustments of set-off are made on the
basis of contractual set-off. These are also justified on the ground of
equitable set-off. The set-off to this extent has been permitted and
allowed by the Resolution Professional. The transaction for purchase
of the right to use the spectrum is an entirely different and unconnected
transaction. The agreement to purchase the spectrum encountered
obstacles because the DoT had required bank guarantees to be
furnished. Accordingly, Airtel entities, on the request of Aircel entities
had furnished bank guarantees on their behalf. The bank guarantees
were returned and accordingly Airtel entities became liable to pay
the balance amount in terms of the letters of understanding. The
amounts have become payable post the commencement of the
Corporate Insolvency Resolution Process. For the same reason, we
will also reject the argument that by not allowing set-off, new rights
are being created and, therefore, Section 14 of the IBC will not be
operative and applicable. Moratorium under Section 14 is to grant
protection and prevent a scramble and dissipation of the assets of
the corporate debtor. The contention that the “amount” to be set-off
is not part of the corporate debtor’s assets in the present facts is
misconceived and must be rejected.
57 Ibid.
170 [2024] 1 S.C.R.
Conclusion
51. Having considered the contentions raised by the appellant Airtel
entities in detail, and in light of the provisions of the IBC relating to
the Corporate Insolvency Resolution Process, we do not find any
merit in the present appeals and the same are dismissed. There will
be no order as to costs.
Headnotes prepared by: Ankit Gyan Result of the case: Appeals dismissed.
[2024] 1 S.C.R. 171 : 2024 INSC 3
Case Details
Vishal Tiwari
v.
Union of India & Ors
(Writ Petition (C) No. 162 of 2023)
03 January 2024
[Dr Dhananjaya Y Chandrachud*, CJI,
J B Pardiwala and Manoj Misra, JJ.]
Matter pertains to the Adani-Hindenburg report alleging that the
Adani Group manipulated its share price wherein the petitioner
is seeking investigation by the Special Investigation Team or by
the CBI.
Headnotes
Constitution of India – Art. 32 - Report by an “activist short
seller”, Hindenburg Research about the financial transactions
of the Adani group alleging that the Adani group manipulated
its share prices and failed to disclose transactions with related
parties and other relevant information in violation of the
regulations framed by SEBI – Petitioners sought constitution
of expert Committee and transfer of investigation from SEBI
to Special Investigation Team or by the CBI:
Held: Power of this Court to enter the regulatory domain of SEBI
in framing delegated legislation is limited – Court must refrain from
substituting its own wisdom over the regulatory policies of SEBI
– No apparent regulatory failure attributable to SEBI – Procedure
followed in arriving at the current shape of the Regulations does not
suffer from irregularity or illegality – Further SEBI has completed
twenty-two out of the twenty-four investigations into the allegations
levelled against the Adani group – SEBI directed to complete
the pending investigations expeditiously – SEBI should take its
investigations to their logical conclusion in accordance with law –
Facts of this case do not warrant a transfer of investigation from
SEBI – Court does have the power to transfer an investigation
being carried out by the authorized agency to an SIT or CBI
in extraordinary circumstances when the competent authority
* Author
172 [2024] 1 S.C.R.
portrays a glaring, willful and deliberate inaction in carrying out

the investigation – Threshold for the transfer of investigation has
not been demonstrated to exist – Reliance placed by the petitioner
on the OCCPR report and the letter by the DRI is misconceived
– Allegations of conflict of interest against members of the
Expert Committee are unsubstantiated and are rejected – Union
Government and SEBI to consider the suggestions of the Expert
Committee in its report and take further actions to strengthen the
regulatory framework, protect investors and ensure the orderly
functioning of the securities market – SEBI and the investigative
agencies of the Union Government to probe into the loss suffered
by Indian investors due to the conduct of Hindenburg Research
and other entities in taking short positions involved any infraction
of the law and if so, suitable action be taken. [Para 67]
Constitution of India – Art. 32 – Investigation conducted by
SEBI into the allegations that the Adani group manipulated its
share prices and failed to disclose transactions with related
parties – SEBI’s regulatory domain – Scope of judicial review:
Held: Courts do not and cannot act as appellate authorities
examining the correctness, suitability, and appropriateness of a
policy, nor are courts advisors to expert regulatory agencies on
matters of policy which they are entitled to formulate – Scope of
judicial review, when examining a policy framed by a specialized
regulator, is to scrutinize whether it violates the fundamental rights
of the citizens; is contrary to the provisions of the Constitution; is
opposed to a statutory provision; or is manifestly arbitrary – Legality
of the policy, and not the wisdom or soundness of the policy, is
the subject of judicial review – When technical questions arise
particularly in the domain of economic or financial matters and
experts in the field have expressed their views and such views are
duly considered by the statutory regulator, the resultant policies
or subordinate legislative framework ought not to be interfered
with – SEBI’s wide powers, coupled with its expertise and robust
information gathering mechanism, lend a high level of credibility
to its decisions as a regulatory, adjudicatory and prosecuting
agency – Court must be mindful of the public interest that guides
the functioning of SEBI and refrain from substituting its own wisdom
in place of the actions of SEBI. [Paras 17 ]
Constitution of India – Art. 32 – Investigation conducted by
SEBI into the allegations that the Adani group manipulated
[2024] 1 S.C.R. 173
VISHAL TIWARI v. UNION OF INDIA & ORS
its share prices and failed to disclose transactions with

related parties and other information in violation of the SEBI
regulations – Regulatory failure, if attributable to SEBI:
Held: No reason to interfere with the regulations made by SEBI
in the exercise of its delegated legislative powers – SEBI has
traced the evolution of its regulatory framework, and explained
the reasons for the changes in its regulations – Procedure
followed in arriving at the current shape of the regulations is not
tainted with any illegality – There are no submissions that the
regulations are unreasonable, capricious, arbitrary, or violative of
the Constitution – Petitioners have not challenged the vires of the
Regulations but have contended that there is regulatory failure
based on SEBI’s alleged inability to investigate which is attributed
to changes in the regulations – Such a ground is unknown to this
Court’s jurisprudence – Critique of the regulations made as an
afterthought and based on a value judgment of economic policy
is impermissible – Prayer seeking directions to SEBI to revoke its
amendments to the FPI Regulations and LODR Regulations must
fail – No valid grounds have been raised for this Court to direct
SEBI to revoke its amendments to the FPI Regulations and the
LODR Regulations which were made in exercise of its delegated
legislative power – Thus, the procedure followed in arriving at the
current shape of the regulations does not suffer from irregularity
or illegality – FPI Regulations and LODR Regulations have been
tightened by the amendments in question. [Para 28, 29, 30, 67c]
Constitution of India – Arts. 32 and 142 – Transfer of the
investigation from SEBI to another agency or to SIT – Power of:
Held: Court does have the power u/Art. 32 and 142 to transfer an
investigation from the authorized agency to the CBI or constitute
an SIT – However, such powers must be exercised sparingly and
in extraordinary circumstances – Unless the authority statutorily
entrusted with the power to investigate portrays a glaring, willful
and deliberate inaction in carrying out the investigation, the court
will ordinarily not supplant the authority which has been vested
with the power to investigate – Such powers must not be exercised
by the court in the absence of cogent justification indicative of a
likely failure of justice in the absence of the exercise of the power
to transfer – Petitioner must place on record strong evidence
indicating that the investigating agency has portrayed inadequacy
in investigation or prima facie appears to be biased.[Para 32]
174 [2024] 1 S.C.R.
Constitution of India – Arts. 32 – Investigation – Comprehensive

investigation conducted by SEBI into the allegations that the
Adani group manipulated its share prices and failed to disclose
transactions with related parties:
Held: Out of the twenty-four investigations carried out by SEBI,
twenty-two are concluded – Twenty-two final investigation reports
and one interim investigation report have been approved by the
competent authority under SEBI’s procedures – As regards the
delay of only ten days in filing the report, such a delay does not
prima facie indicate deliberate inaction by SEBI, when the issue
involved a complex investigation in coordination with various
agencies, both domestic and foreign – No apparent regulatory
failure can be attributed to SEBI based on the material before this
Court – Thus, prima facie no deliberate inaction or inadequacy in
the investigation by SEBI. [Paras 35, 37, 38].
Constitution of India – Arts. 32 – Investigation conducted by
SEBI into the allegations levelled against the Adani group –
Adequacy of SEBI’s investigation – Challange to – Reliance
on the OCCRP report of a third-party organization and the
letter by DRI:
Held: Reliance on newspaper articles or reports by third-party
organizations to question a comprehensive investigation by a
specialized regulator does not inspire confidence – Such reports
by “independent” groups or investigative pieces by newspapers
may act as inputs before SEBI or the Expert Committee – However,
they cannot be relied on as conclusive proof of the inadequacy
of the investigation by SEBI nor, can such inputs be regarded as
“credible evidence” – Also the petitioner’s assertion that SEBI was
lackadaisical in its investigation is not borne out from the reference
to the letter sent by the DRI. [Paras 40, 43]
Shares and securities – Short selling – Meaning of:
Held: Short selling is a sale of securities which the seller does not
own but borrows from another entity, with the hope of repurchasing
them at a later date with a lower price, thus, attempting to profit from
an anticipated decline in the price of the securities – In its report,
Hindenburg Research admits to taking a short position in the Adani
group through US-traded bonds and non-Indian traded derivative
instruments – SEBI has submitted that short selling is a desirable
[2024] 1 S.C.R. 175
and essential feature to provide liquidity and to help price correction

in over-valued stocks and hence, short selling is recognised as
a legitimate investment activity by securities market regulators in
most countries – Short selling is regulated by a circular notified
by SEBI on 20 December 2007 – Any restrictions on short selling,
may distort efficient price discovery, provide promoters unfettered
freedom to manipulate prices, and favour manipulators rather than
rational investors – Thus, the International Organisation of Securities
Commission recommends that short selling be regulated but not
prohibited with an aim to increase transparency – Measures to
regulate short selling will be considered by the Government of
India and SEBI. [Para 58]
Constitution of India – Arts. 32 – Public interest jurisprudence
under – Scope of:
Held: It was expanded by this Court to secure access to justice
and provide ordinary citizens with the opportunity to highlight
legitimate causes before this Court – It has served as a tool to
secure justice and ensure accountability on many occasions, where
ordinary citizens have approached the Court with well-researched
petitions that highlight a clear cause of action – However, petitions
that lack adequate research and rely on unverified and unrelated
material tend to, in fact, be counterproductive – This word of
caution must be kept in mind by lawyers and members of civil
society alike. [Para 68]
Constitution of India – Arts. 32 – Allegations that the Adani
group manipulated its share prices and failed to disclose
transactions with related parties – Recommendations of the
Expert Committee to strengthen regulatory framework and
secure compliance to protect investors – Elucidated. [Para
64-66]
List Of Citations and Other References

IFB Agro Industries Ltd v. SICGIL India Ltd (2023) 4
SCC 209; Prakash Gupta v. SEBI 2021 SCC OnLine
SC 485; Himanshu Kumar v. State of Chhattisgarh 2022
SCC OnLine SC 884; K.V. Rajendran v. Superintendent
of Police CBCID South Zone, Chennai [2013] 9 SCR
199: (2013) 12 SCC 480 – referred to.
176 [2024] 1 S.C.R.
List of Acts
Securities Contracts (Regulation) Rules, 1957; SEBI (Foreign
Portfolio Investments) Regulations, 2014; SEBI (Listing Obligations
and Disclosure Requirements) Regulations, 2015; SEBI Act 1992;
Depositories Act 1996; Prevention of Money Laundering Act, 2002;
Prevention of Money Laundering Maintenance of Records Rules,
2004.
List of Keywords
Judicial review; SEBI; SEBI’s regulatory domain; Transfer of
investigation; Expert Committee; Short selling; Adani group;
Hindenburg Research; Court-monitored investigation; Special
Investigation Team; CBI; Market volatility; Organized Crime
and Corruption Reporting Project; Price manipulation; Stock
market manipulation; Conflict of interest; Enforcement actions;
Quasi-judicial proceedings; Delay; Opaque structures; Delegated
legislative powers; Administrative powers; Adjudicatory powers;
Subordinate legislation; Beneficial owner; Natural person; Related
party transaction; Promoter; Promoter group; Listed company;
Third party; Commercial law; Economic policy; Parent legislation;
Third-party organizations; Credible evidence; Public domain; Good
faith; Bias; Market Wide Circuit Breakers; Circuit Filters/Price
bands on individual shares; Additional surveillance measures;
Market Wide Position Limits; Forensic financial research; Informed
decision making; Structural Reform; Enforcement Policy; Judicial
Discipline; Settlement Policy; Timelines; Surveillance and Market
Administration Measures; Doctrine of separation; Public interest
jurisprudence.

Appearances
ORIGINAL CIVIL/CRIMINAL JURISDICTION : Writ Petition (C)

No.162 of 2023.
(Under Article 32 of The Constitution of India)
With
Writ Petition (Crl.) No.39 of 2023, Writ Petition (C) No.201 of 2023
And Writ Petition (Crl.) No.57 of 2023.
[2024] 1 S.C.R. 177
Appearances:
Vishal Tiwari, in-person, Manohar Lal Sharma, in-person, Prashant
Bhushan, Ramesh Kumar Mishra, Ms. Neha Rathi, Ms. Kajal Giri,
Varun Thakur, Deepak Goel, Mrs. Tanuj Bagga Sharma, Dr. M.K
Ravi, Ms. Alka Goyal, Dr. Praveen Hans for M/s. Varun Thakur &
Associates, Advs. for the Petitioner.
Tushar Mehta, Solicitor General, Arvind Datar, Sr. Adv., Pratap
Venugopal, Ms. Surekha Raman, Abhishek Anand, Shreyash Kumar,
Ms. Unnimaya S. for M/s. K J John and Co, Raj Bahadur Yadav,
Kanu Agrawal, Pratap Venugopal, Pratyush Srivastav, Sandeep
Kumar Mahapatra, Rajat Nair, Pratyush Shrivastava, Arvind Kumar
Sharma, Mukesh Kumar Maroria, Ramesh Babu M. R., Ms. Manisha
Singh, Ms. Nisha Sharma, Rohan Srivastava, Ms. Ekta Choudhary,
Divyank Dutt Dwivedi, Ms. Aditi Sharma, Sanjay Kapur, Devesh
Dubey, Arjun Bhatia, Advs. for the Respondents.
Applicant-in-person,

Judgment
Dr Dhananjaya Y Chandrachud, CJI
Table of Contents*
A. Factual background and submissions................................ 3
B. The scope of judicial review over SEBI’s
regulatory domain............................................................... 11
C. There is no apparent regulatory failure
attributable to SEBI............................................................. 17
D. The plea to transfer the investigation from
SEBI to another agency or to an SIT................................ 23
i. The power to transfer an investigation is
exercised in extraordinary situations....................... 23
ii. SEBI has prime facie conducted a
comprehensive investigation..................................... 25
* Ed Note: Pagination as per original Judgment.

178 [2024] 1 S.C.R.
iii. Reliance on the OCCRP report and the

letter by DRI is misconceived.................................... 28
E. Allegations of conflict of interest against
members of the Expert Committee.................................... 30
F. Other recommendations by the Expert Committee......... 32
i. Volatility and short selling.......................................... 32
ii. Investor Awareness..................................................... 36
iii. Recommendations of the Expert Committee
to strengthen regulatory framework and secure
compliance to protect investors................................ 39
G. Conclusion........................................................................... 43
1. A batch of writ petitions filed before this Court under Article 32 of the
Constitution in February 2023, raised concerns over the precipitate
decline in investor wealth and volatility in the share market due to
a fall in the share prices of the Adani Group of Companies.1 The
situation was purportedly caused by a report which was published
on 24 January 2023 by an “activist short seller”, Hindenburg
Research about the financial transactions of the Adani group. The
report inter alia alleged that the Adani group manipulated its share
prices and failed to disclose transactions with related parties and
other relevant information in violation of the regulations framed by
SEBI and provisions of securities’ legislation. Significantly, the report
expressly states that Hindenburg Research took a short position in
the Adani group through US-traded bonds and non-Indian traded
derivative instruments.
A. Factual background and submissions
2. A brief overview of the petitions follows:
a. The petitioner in WP(C) No. 162 of 2023, raises concerns about
the drastic fall in the securities market, the impact on investors,
the purported lack of redressal available and the disbursement
of loans to the Adani group allegedly without due procedure.
The petitioner inter alia seeks the constitution of a committee
1 “Adani group”
[2024] 1 S.C.R. 179
monitored by a retired judge of this Court to investigate the

Hindenburg Report;
b. The petitioner in WP (C) No. 201 of 2023 submits that the Adani
group is in violation of Rule 19A of the Securities Contracts
(Regulation) Rules, 1957 by “surreptitiously controlling more
than 75% of the shares of publicly listed Adani group companies,
thereby manipulating the price of its shares in the market.” The
petitioner inter alia seeks a court-monitored investigation by a
Special Investigation Team2 or by the CBI into the allegations
of fraud and the purported role played by top officials of public
sector banks and lender institutions;
c. The petitioner in WP (Crl.) No. 57 of 2023 seeks directions
to the competent investigative agencies to (i) investigate the
transactions of the Adani group under the supervision of a
sitting judge of this Court; and (ii) investigate the role of the
Life Insurance Corporation of India and the State Bank of India
in such transactions;
d. The petitioner in WP (Crl.) No. 39 of 2023 seeks the registration
of an FIR against a certain Mr Nathan Anderson (the founder
of Hindenburg Research) and his associates for short-selling
and directions to recover the profits yielded by short-selling, to
compensate the investors.
3. When the batch came up for hearing on 10 February 2023, this
Court noted that there was a need to review the existing regulatory
mechanisms in the financial sector to ensure that they are
strengthened with a view to protect Indian investors from market
volatility. This Court sought inputs from the Solicitor General on the
proposed constitution of an Expert Committee for the purpose. This
Court observed:
“4 We have suggested to the Solicitor General that he
may seek instructions on whether the Government of India
would facilitate the constitution of an expert committee
for an overall assessment of the situation, and if so, to
place its suggestions on the constitution and remit of
2 “SIT”
180 [2024] 1 S.C.R.
the committee on the next date. Meantime the Solicitor

General shall place on the record a brief note on factual
and legal aspects so as to further the deliberations during
the course of the next hearing.”
4. The batch of cases came up for hearing on 17 February 2023.
This Court heard detailed submissions on behalf of the parties and
reserved further orders. In its order dated 2 March 2023, this Court
took note of the loss of investor wealth in the aftermath of the report
by Hindenburg Research and recognized the dire need to protect
Indian investors from unanticipated volatility in the market. This Court
observed that SEBI is already seized of the investigation into the
Adani group and inter alia directed:
a. SEBI to continue with its investigation and examine the following
non-exhaustive issues raised in the petitions:
“a. Whether there has been a violation of Rule 19A of
the Securities Contracts (Regulation) Rules 1957;
b. Whether there has been a failure to disclose
transactions with related parties and other relevant
information which concerns related parties to SEBI,
in accordance with law; and
c. Whether there was any manipulation of stock prices
in contravention of existing laws;”
b. SEBI to conclude its investigation within two months and file a
status report before this Court;
c. The constitution of an Expert Committee chaired by Justice
Abhay Manohar Sapre, former judge of this Court. Besides its
Chairperson, the Committee was to compose of the following
members:
a. Mr OP Bhatt;
b. Justice JP Devadhar;
c. Mr KV Kamath;
d. Mr Nandan Nilekani;
e. Mr Somasekhar Sundaresan
[2024] 1 S.C.R. 181
d. The remit of the Expert Committee was:

“a. To provide an overall assessment of the situation
including the relevant causal factors which have led
to the volatility in the securities market in the recent
past;
b. To suggest measures to strengthen investor
awareness;
c. To investigate whether there has been regulatory
failure in dealing with the alleged contravention of
laws pertaining to the securities market in relation to
the Adani Group or other companies; and
d. To suggest measures to (i) strengthen the statutory
and/or regulatory framework; and (ii) secure
compliance with the existing framework for the
protection of investors.”
The Expert Committee was directed to furnish its report to this Court
within two months.
5. This Court clarified that the Expert Committee and SEBI would work
in collaboration with each other. The appointment of the Committee
would, in other words, not affect the investigation by SEBI which would
proceed simultaneously. The constitution of the Expert Committee
was not to divest SEBI of its powers or responsibilities in continuing
with its investigation. The Court observed:
“12. …SEBI shall apprise the expert committee (constituted
in paragraph 14 of this order) of the action that it has
taken in furtherance of the directions of this Court
as well as the steps that it has taken in furtherance
of its ongoing investigation. The constitution of the
expert committee does not divest SEBI of its powers
or responsibilities in continuing with its investigation
into the recent volatility in the securities market.”
6. On 6 May 2023, in compliance with the above interim order, the
Expert Committee submitted its report to this Court. In its order
dated 17 May 2023, this Court directed that copies of the report
shall be made available to the parties and their counsel to enable
182 [2024] 1 S.C.R.
them to assist the Court in the course of further deliberations. This

Court also granted SEBI an extension of time till 14 August 2023 to
submit its status report about its investigation.
7. SEBI filed an interlocutory application on 14 August 2023 intimating
this Court about the status of the twenty-four investigations which were
undertaken by them. Further, SEBI submitted a status report dated
25 August 2023 providing details about the twenty-four investigations.
Both SEBI and the counsel for the petitioners have also filed their
responses to the Expert Committee’s report.
8. In the above background, this matter came up for hearing before this
Court on 24 November 2023. We heard Mr Prashant Bhushan, learned
counsel and other counsel appearing on behalf of the petitioners and Mr
Tushar Mehta, learned Solicitor General appearing on behalf of SEBI.
9. Mr Prashant Bhushan, appearing on behalf of the petitioner broadly
pressed his case for two directions: firstly, a direction to constitute an
SIT to oversee the SEBI investigation into the Adani group and that
all such investigations be court-monitored; and second, a direction
to SEBI to revoke certain amendments made to the SEBI (Foreign
Portfolio Investments) Regulations, 20143 and the SEBI (Listing
Obligations and Disclosure Requirements) Regulations, 2015.4 Mr
Bhushan made the following submissions:
a. The Hindenburg Report and certain newspaper reports allege
that some Foreign Portfolio Investments5 in Adani group stocks
in the Indian stock market are owned by shell companies based
outside India, which have close connections with the Adani
group. Such investments in Adani stocks allow the Adani group
to maintain financial health and artificially boost the value of
stocks in the market, in violation of Indian law;
b. The investments by FPIs violate Rule 19A of the Securities
Contracts (Regulations) Rules, 1957 which requires a minimum
25% public shareholding in all public-listed companies;
3 “FPI Regulations”
4 “LODR Regulations”
5 “FPIs”
[2024] 1 S.C.R. 183
c. The investigative findings of the Organized Crime and Corruption

Reporting Project6, published by two newspapers, indicate price
manipulation by the Adani group through two Mauritius-based
funds. However, SEBI has not acted on such reports;
d. The Directorate of Revenue Intelligence7 had addressed a
letter dated 31 January 2014 to the then SEBI Chairperson
alerting them about possible stock market manipulation being
committed by the Adani group by over-valuation of the import
of power equipment. However, SEBI did not take adequate
action based on this letter;
e. SEBI must be directed to revoke amendments to the FPI
Regulations which have done away with restrictions on opaque
structures. As a result of these amendments, SEBI, the
Enforcement Directorate8 and the CBDT have not been able
to give any clear findings with regard to price manipulation and
insider trading. SEBI has tied its own hands;
f. SEBI must be directed to revoke the amendment made to its
LODR Regulations which have altered the definition of “related
party”;
g. SEBI’s inability to establish a prima facie case of regulatory non-
compliance and legal violations by the Adani group promoters
despite starting an investigation in November 2020, appears
to be prima facie self-inflicted. The unprecedented rise in the
price of the Adani scrips occurred between January 2021 and
December 2022, over a period when the Adani group was
already under SEBI investigation;
h. A few members of the Expert Committee may have a conflict of
interest and there is a likelihood of bias, which was not brought
to the notice of the Court by the concerned members; and
i. SEBI has willfully delayed the submission of its status report on
the investigation into the Adani group within the time granted
by this Court.
6 “OCCRP”
7 “DRI”
8 “ED”
184 [2024] 1 S.C.R.
10. On the other hand, the learned Solicitor General, appearing on behalf
of SEBI made the following submissions:
a. Twenty-two out of twenty-four investigations being conducted
by SEBI are complete. In these investigations, enforcement
actions/ quasi-judicial proceedings would be initiated, wherever
applicable;
b. The delay by SEBI in filing the report is only ten days which is
unintentional and not willful, given that twenty-four investigations
were to be carried out;
c. SEBI has been taking various steps on the areas identified by
the Expert Committee and will also take into consideration the
suggestions of the Expert Committee to improve its practices
and procedures;
d. The events pertaining to the present batch of petitions relate
to only one set of entities in the market without any significant
impact at the systemic level. While the shares of the Adani group
saw a significant decline on account of the selling pressure, the
“wider Indian market has shown full resilience”;
e. The petitioner’s reliance on the letter by the DRI is misconceived.
After having received DRI’s letter, SEBI sought information from
DRI on the subject and received a response. Further, while
SEBI’s examination was in process, the Additional Director,
DRI (Adjudication) found the allegations of over-valuation to be
incorrect. The CESTAT and this Court also dismissed appeals
against the order;
f. The OCCRP report relied on by the petitioner lacks documentary
support and certain important facts with regard to the source
of the report have been concealed; and
g. The FPI Regulations, initially, had allowed “opaque structures”
under certain conditions, inter alia, that they undertake to
disclose the details of beneficial owners on being sought. The
subsequent amendment required upfront mandatory disclosure
of beneficial owners by FPIs. This made the disclosure clause
redundant which led to its omission in 2019. The amendments
[2024] 1 S.C.R. 185
have tightened the regulatory framework by making disclosure

requirements mandatory and removing the requirement of
disclosure only when sought.
B. The scope of judicial review over SEBI’s regulatory domain
11. The petitioners in the present case are inter alia seeking directions
with regard to (i) investigations being carried out by SEBI; and (ii)
regulations/policies adopted by SEBI. In other words, directions in
relation to both the regulatory and delegated legislative powers of
SEBI are being sought by the petitioners. At the outset, therefore,
this Court’s power to enter the domain of a specialized regulator,
such as SEBI must be delineated.
12. SEBI was established as India’s principal capital markets regulator
with the aim to protect the interest of investors in securities and
promote the development and regulation of the securities market in
India. SEBI is empowered to regulate the securities market in India
by the SEBI Act 1992, the SCRA and the Depositories Act 1996.
SEBI’s powers to regulate the securities market are wide and include
delegated legislative, administrative, and adjudicatory powers to
enforce SEBI’s regulations. SEBI exercises its delegated legislative
power by inter alia framing regulations and appropriately amending
them to keep up with the dynamic nature of the securities’ market.
SEBI has issued a number of regulations on various areas of security
regulation which form the backbone of the framework governing the
securities market in India.
13. Section 11 of the SEBI Act lays down the functions of SEBI and
expressly states that it “shall be the duty of the Board to protect the
interests of investors in securities and to promote the development
of, and to regulate the securities market, by such measures as it
thinks fit”. Further, Section 30 of the SEBI Act empowers SEBI to
make regulations consistent with the Act. Significantly, while framing
these regulations, SEBI consults its advisory committees consisting
of domain experts, including market experts, leading market players,
legal experts, technology experts, retired Judges of this Court or the
High Courts, academicians, representatives of industry associations
and investor associations. During the consultative process, SEBI
also invites and duly considers comments from the public on their
proposed regulations. SEBI follows similar consultative processes
while reviewing and amending its regulations.
186 [2024] 1 S.C.R.
14. This Court in IFB Agro Industries Ltd v. SICGIL India Ltd, 9
examined the role of independent regulatory bodies such as SEBI in
public administration and upheld the primacy of SEBI as the forum
to adjudicate violations of its regulations. Further, the Court detailed
the delegated legislative, administrative, and adjudicatory powers of
SEBI arising from the SEBI Act. The court held:
“30. Public administration is dynamic and ever-evolving.
It is now established that governance of certain sectors
through independent regulatory bodies will be far more
effective than being under the direct control and supervision
of Ministries or Departments of the Government. Regulatory
control by an independent body composed of domain
experts enables a consistent, transparent, independent,
proportionate, and accountable administration and
development of the sector. All this is achieved by way
of legislative enactments which establish independent
regulatory bodies with specified powers and functions. They
exercise powers and functions, which have a combination
of legislative, executive, and judicial features.
31. Another feature of these regulators is that they are
impressed with a statutory duty to safeguard the interest
of the consumers and the real stakeholders of the sector.
…
33. The statutory provisions contained in Chapters IV,
VI-A, read with Section 30, delineate the legislative,
administrative, and adjudicatory functions of the Board. In
its normative or legislative functions, SEBI can formulate
regulations encompassing various aspects having a
bearing on the securities market. It should be noted that
the SEBI Act, Rules, Regulations and Circulars made or
issued under the legislation, are constantly evolving with
a concerted aim to enforce order in the securities market
and promote its healthy growth while protecting investor
wealth. Insofar as its administrative/executive power
goes, it has the power to regulate the business of stock
9 (2023) 4 SCC 209

[2024] 1 S.C.R. 187
exchanges and securities market. The Board provides

for the registration and regulation of stock brokers, share
transfer agents, depositories, venture capital funds,
collective investment schemes, etc. It also has the power
to prohibit various transactions which interfere with the
health of the securities market.
34. In the exercise of its adjudicatory powers under Section
15-I, SEBI has the power to appoint officers for holding
an inquiry, give a reasonable opportunity to the person
concerned and determine if there is any transgression of
the Rules prescribed. The Board has the power to impose
penalties for violations and also restitute the parties.
The adjudicatory power also includes the power to settle
administrative and civil proceedings under Section 15-JB
of the SEBI Act.
35. The regulatory jurisdiction of the Board also includes
ex-ante powers to predict a possible violation and take
preventive measures. The exercise of ex-ante jurisdiction
necessitates the calling of information as provided in
Sections 11(2)(i), 11(2)(ia) and 11(2)(ib) of the SEBI Act.
Where the Board has a reasonable ground to believe that
a transaction in the securities market is going to take place
in a manner detrimental to the interests of the stakeholders
or that any intermediary has violated the provisions of the
Act, it may investigate into the matter under Section 11(C)
of the SEBI Act. In other words, being the real-time security
market regulator, the Board is entitled to keep a watch,
predict and even act before a violation occurs.
…
(Emphasis supplied)
15. In a consistent line of precedent, this Court has held that when
technical questions arise particularly in the financial or economic
realm; experts with domain knowledge in the field have expressed their
views; and such views are duly considered by the expert regulator in
designing policies and implementing them in the exercise of its power
to frame subordinate legislation, the court ought not to substitute its
own view by supplanting the role of the expert. Courts do not act as
188 [2024] 1 S.C.R.
appellate authorities over policies framed by the statutory regulator

and may interfere only when it is found that the actions are arbitrary
or violative of constitutional or statutory mandates. The court cannot
examine the correctness, suitability, or appropriateness of the policy,
particularly when it is framed by a specialized regulatory agency in
collaboration with experts. The court cannot interfere merely because
in its opinion a better alternative is available.
16. In Prakash Gupta v. SEBI,10 this Court speaking through one of us
(DY Chandrachud, J), observed that the Court must be mindful of
the public interest that guides the functioning of SEBI and should
refrain from substituting its own wisdom over the actions of SEBI.
The Court held:
“101. Therefore, the SEBI Act and the rules, regulations
and circulars made or issued under the legislation, are
constantly evolving with a concerted aim to enforce order
in the securities market and promote its healthy growth
while protecting investor wealth
[…]
102. In a consistent line of precedent, this Court has
been mindful of the public interest that guides the
functioning of SEBI and has refrained from substituting
its own wisdom over the actions of SEBI. Its wide
regulatory and adjudicatory powers, coupled with
its expertise and information gathering mechanisms,
imprints its decisions with a degree of credibility. The
powers of the SAT and the Court would necessarily have
to align with SEBI’s larger existential purpose.”
17. From the above exposition of law, the following principles emerge:
a. Courts do not and cannot act as appellate authorities examining
the correctness, suitability, and appropriateness of a policy, nor
are courts advisors to expert regulatory agencies on matters
of policy which they are entitled to formulate;
b. The scope of judicial review, when examining a policy framed
by a specialized regulator, is to scrutinize whether it (i) violates
10 2021 SCC OnLine SC 485.

[2024] 1 S.C.R. 189
the fundamental rights of the citizens; (ii) is contrary to the

provisions of the Constitution; (iii) is opposed to a statutory
provision; or (iv) is manifestly arbitrary. The legality of the policy,
and not the wisdom or soundness of the policy, is the subject
of judicial review;
c. When technical questions arise – particularly in the domain of
economic or financial matters – and experts in the field have
expressed their views and such views are duly considered by
the statutory regulator, the resultant policies or subordinate
legislative framework ought not to be interfered with;
d. SEBI’s wide powers, coupled with its expertise and robust
information-gathering mechanism, lend a high level of credibility
to its decisions as a regulatory, adjudicatory and prosecuting
agency; and
e. This Court must be mindful of the public interest that guides
the functioning of SEBI and refrain from substituting its own
wisdom in place of the actions of SEBI.
We have made a conscious effort to keep the above principles in
mind while adjudicating the petitions, which contain several prayers
that require the Court to enter SEBI’s domain.
C. There is no apparent regulatory failure attributable to SEBI
18. The petitioners have submitted, based on the Hindenburg Report
and other newspaper reports, that the FPIs investing in Adani group
stocks in the Indian stock market are shell companies outside India
owed by the brother of the Chairperson of the Adani group. These
shell companies have, it is urged, an unclear ownership pattern and
seem to only trade in Adani stocks which allegedly allows the Adani
group to maintain an appearance of financial health and solvency.
The petitioners allege that this would artificially boost the value
of Adani stocks in the market and expose the Indian market and
investors to huge losses.
19. Additionally, the petitioners contend that after accounting for these
shell companies which allegedly belong to a member of the Adani
family, the promotor shareholding would surpass 75%. This, it is
alleged, would be in contravention of Rule 19A of the Securities
Contracts (Regulation) Rules 1957 which mandates a minimum
of 25% public shareholding. The alleged contravention would
190 [2024] 1 S.C.R.
according to the petitioners entail the delisting of the Adani group as

a consequence. According to the petitioners, the disclosure of the
ownership of the FPIs investing in the Adani stocks lies at the heart
of the alleged violation of Rule 19A. In its order dated 10 March
2023, this Court noted that SEBI was already seized of investigations
into the Adani group since 2020. This Court further directed SEBI
to investigate the alleged violation of Rule 19A of the Securities
Contracts (Regulation) Rules 1957.
20. The FPI Regulations, 2014 had mandated the disclosure of the
ultimate beneficial ownership by natural persons of the FPI under the
provisions concerning “opaque structures” in ownership of FPIs. The
declaration of the “ultimate beneficial owner” under SEBI Regulations
was required to conform to the disclosure of “beneficial owner”
under the Prevention of Money Laundering Act, 200211 and thereby
under Rule 9 of the Prevention of Money Laundering Maintenance
of Records Rules, 2004. These requirements were amended by
SEBI in 2018 and 2019 by removing the requirement of disclosing
ownership of the FPIs by a natural person. The petitioner submits
that this amounts to a regulatory failure on the part of SEBI.
21. The petitioner further argues that the LODR Regulations, 2015 defined
a “related party transaction” in Regulation 2(1)(zb) as a transaction
involving a transfer of resources between a listed entity and a “related
party”, regardless of whether a price is charged. The term “related
party”, in Regulation 2(1)(zc) had the same meaning that is ascribed
to “related party” under Section 2(76) of the Companies Act, 2013.
Based on a report of the Committee on Corporate Governance dated
5 October 2017 the definition was amended on 1 April 2019 to provide
that any person or entity belonging to the “promoter” or “promoter
group” of a listed entity that held 20% or more of the shareholding
in the listed entity shall be deemed to be a related party.
22. On 21 November 2021, substantial amendments were made to the
definition of “related party” with deferred prospective effect from 1
April 2022 and 1 April 2023. In these amendments, the definition of
“related party” was amended to include persons holding 20% or more
in the listed company whether directly or indirectly or on a beneficial
interest basis under Section 89 of the Companies Act, 2013 with
11 PMLA
[2024] 1 S.C.R. 191
effect from 1 April 2022. However, with effect from 1 April 2023, the
deemed inclusion would bring within the scope of the term “related
party” persons who hold 10% or more of the listed company. The
Expert Committee report has opined that these amendments were
necessitated to address the mischief or contrivance of effecting a
transaction involving a transfer of resources between a listed company
and a third party which is not a related party, only to technically escape
the rigours of compliance applicable to a related party transaction,
to thereafter transfer the resources from the unrelated party to a
related party. The Committee further opined that deferred prospective
application of regulations is not bad practice in commercial law, as
it allows the market to adjust to the proposed changes and avoid
uncertainty.
23. However, the petitioner argues that these amendments to the LODR
Regulations have facilitated the mischief or contravention with
regard to related party transactions by the Adani group. This, as the
petitioner argues, is because the series of amendments have made
it difficult to establish contravention of law by first opening a loophole
and then plugging the loophole with deferred effect. The petitioner
has also argued that while initially the director, their relative, or a
relative of a key managerial person was considered a related party,
the amendments have changed this position to hold that a person/
entity be deemed ‘related party’ only if the shareholding of that
person/entity is at least 20%. These amendments have allegedly
made it difficult to investigate the acquisition against the Adani group
for flouting minimum public shareholding regulations by engaging in
related party transactions through FPIs. It has also made it difficult to
assign the specific contravention of a regulation to the Adani group.
24. In essence, the petitioners have argued that the amendments to
the two regulations amount to regulatory failure on the part of SEBI
and have accordingly prayed that SEBI be directed to revoke the
amendments to the FPI Regulations and LODR Regulations or
make suitable changes. It may be pointed out that these arguments
and prayers were not present in the initial petitions. They have only
propped after the report of the Expert Committee dated 6 May 2023.
The Report stated that in view of the amendments to the regulations,
it cannot return a finding of regulatory failure by SEBI. Thereafter, the
petitioners have made arguments to belie the finding of the Expert
Committee Report.
192 [2024] 1 S.C.R.
25. SEBI in its affidavit dated 10 July 2023 has submitted that the
entire rouse around regulatory failure caused by amendments to
FPI Regulations and LODR Regulations was initiated because of
SEBI’s submissions before the Expert Committee in the context
of challenges faced in obtaining information regarding holders of
economic interest. SEBI had used the term “opaque” to describe the
FPIs which it submits was mistaken by the Expert Committee to imply
the rules on “opaque structures” under the FPI Regulations, 2014.
26. SEBI claims no disability in its investigation into the Adani group on
account of the amendments to the FPI Regulations. On merits, SEBI
has argued that the FPI Regulations, 2014 in fact did not prohibit
opaque structures. They were permitted upon meeting certain
conditions including the condition that they provide details of their
beneficial ownership as and when called upon to do so. The 2018
amendment required mandatory disclosures by all FPIs with a few
exceptions. It marked a shift towards tightening the regulations with
mandatory disclosure of beneficial owner details. This new mandate
rendered the previous provision on disclosure upon demand otiose.
Mandatory upfront disclosure meant that the undertaking to disclose
beneficial ownership by FPIs was a vestige. This led to provisions on
“opaque structures” being omitted in 2019 upon the recommendation
of the Working Group headed by a former Deputy Governor of RBI.
27. In essence, SEBI argues that the difficulty it faces in obtaining
information regarding holders of economic interest in FPIs does
not change regardless of the amendments in the FPI Regulations.
SEBI contends that a challenge arises due to differing regulations in
jurisdictions where entities with economic interest in an FPI operate.
The ambiguity lies in beneficial ownership identification, which is based
on control or ownership in some jurisdictions, potentially overlooking
entities with economic interest but no apparent control. Consequently,
investment managers or trustees, utilizing arrangements like voting
shares, may be recognized as beneficial owners, leading to a potential
failure in identifying the actual investing entities with economic interest,
especially when holdings are distributed across multiple FPIs.
28. We find merit in SEBI’s arguments and do not find any reason to
interfere with the regulations made by SEBI in the exercise of its
delegated legislative powers. SEBI has traced the evolution of its
regulatory framework, as noticed above, and explained the reasons
[2024] 1 S.C.R. 193
for the changes in its regulations. The procedure followed in arriving

at the current shape of the regulations is not tainted with any illegality.
Neither has it been argued that the regulations are unreasonable,
capricious, arbitrary, or violative of the Constitution. The petitioners
have not challenged the vires of the Regulations but have contended
that there is regulatory failure based on SEBI’s alleged inability to
investigate which is attributed to changes in the regulations. Such a
ground is unknown to this Court’s jurisprudence. In effect, this Court
is being asked to replace the powers given to SEBI by Parliament
as a delegate of the legislature with the petitioners’ better judgment.
The critique of the regulations made as an afterthought and based on
a value judgment of economic policy is impermissible. Additionally,
we find no merit in the argument that the FPI Regulations, 2014
have been diluted to facilitate mischief. The amendments far from
diluting, have tightened the regulatory framework by making the
disclosure requirements mandatory and removing the requirement
of it being disclosed only when sought. The disclosure requirement
therefore is now at par with PMLA.
29. We do not see any valid grounds raised for this Court to interfere
by directing SEBI to revoke its amendments to regulations which
were made in the exercise of its legislative power. A regulation may
be subject to judicial review based on it being ultra vires the parent
legislation or the Constitution. None of these grounds have been
pressed before the Court. Therefore, we find that the prayer seeking
directions to SEBI to revoke its amendments to the FPI Regulations
and LODR Regulations must fail.
30. SEBI has completed twenty-two out of the twenty-four investigations
into the Adani group. It submits that the remaining two are pending
due to inputs being awaited from foreign regulators. We also record
the assurance given by the Solicitor General on behalf of SEBI that
the investigations would be concluded expeditiously. SEBI cannot
keep the investigation open-ended and indeterminate in time. Hence,
SEBI shall complete the pending investigations preferably within
three months.
D. The plea to transfer the investigation from SEBI to another
agency or to an SIT
i. The power to transfer an investigation is exercised in
extraordinary situations
194 [2024] 1 S.C.R.
31. The petitioners seek the transfer of the investigation from SEBI to the
CBI or an SIT. The question that falls for decision is whether a case
has been established by the petitioners for the court to issue such a
direction.
32. This Court does have the power under Article 32 and Article 142
of the Constitution to transfer an investigation from the authorized
agency to the CBI or constitute an SIT. However, such powers must
be exercised sparingly and in extraordinary circumstances. Unless
the authority statutorily entrusted with the power to investigate
portrays a glaring, willful and deliberate inaction in carrying out the
investigation the court will ordinarily not supplant the authority which
has been vested with the power to investigate. Such powers must
not be exercised by the court in the absence of cogent justification
indicative of a likely failure of justice in the absence of the exercise
of the power to transfer. The petitioner must place on record strong
evidence indicating that the investigating agency has portrayed
inadequacy in the investigation or prima facie appears to be biased.
33. Recently, in Himanshu Kumar v. State of Chhattisgarh12, this
Court, speaking through one of us (JB Pardiwala, J) relying on a
judgement of a three judge Bench of this Court in K.V. Rajendran
v. Superintendent of Police CBCID South Zone, Chennai 13
reiterated the principle that the power to transfer an investigation to
investigating agencies such as the CBI must be invoked only in rare
and exceptional cases. Further, no person can insist that the offence
be investigated by a specific agency since the plea can only be that
the offence be investigated properly. The Court held as follows:
“49. Elaborating on this principle, this Court further
observed:
“17. … the Court could exercise its constitutional powers
for transferring an investigation from the State investigating
agency to any other independent investigating agency like
CBI only in rare and exceptional cases. Such as where high
officials of State authorities are involved, or the accusation
itself is against the top officials of the investigating agency
thereby allowing them to influence the investigation, and
12 2022 SCC OnLine SC 884

13 (2013) 12 SCC 480
[2024] 1 S.C.R. 195
further that it is so necessary to do justice and to instil

confidence in the investigation or where the investigation
is prima facie found to be tainted/biased.”
50. The Court reiterated that an investigation may be
transferred to the CBI only in “rare and exceptional cases”.
One factor that courts may consider is that such transfer
is “imperative” to retain “public confidence in the impartial
working of the State agencies.” This observation must be
read with the observations made by the Constitution Bench
in the case of Committee for Protection of Democratic
Rights, West Bengal (supra), that mere allegations against
the police do not constitute a sufficient basis to transfer
the investigation.
…
52. It has been held by this Court in CBI v. Rajesh Gandhi,
1997 Cri LJ 63, that no one can insist that an offence be
investigated by a particular agency. We fully agree with
the view in the aforesaid decision. An aggrieved person
can only claim that the offence he alleges be investigated
properly, but he has no right to claim that it be investigated
by any particular agency of his choice.
53. The principle of law that emerges from the precedents
of this Court is that the power to transfer an investigation
must be used “sparingly” and only “in exceptional
circumstances”. In assessing the plea urged by the
petitioner that the investigation must be transferred to the
CBI, we are guided by the parameters laid down by this
Court for the exercise of that extraordinary power.”
(emphasis supplied)
34. Given the above position of law, the question that arises before the
Court is whether, in the facts of the present case, the transfer of
investigation from SEBI to another agency is warranted.
ii. SEBI has prime facie conducted a comprehensive
investigation
35. As noted above, out of the twenty-four investigations carried out
by SEBI, twenty-two are concluded. Twenty-two final investigation
196 [2024] 1 S.C.R.
reports and one interim investigation report have been approved by

the competent authority under SEBI’s procedures. With respect to the
interim investigation reports SEBI has submitted that it has sought
information from external agencies/entities and upon receipt of such
information will determine the future course of action.
36. Further, in its status report, SEBI has provided the current status
of each of the investigations conducted by it and the reasons for
interim findings in two of the investigations. SEBI has also provided
details such as the number of emails issued, summons for personal
appearance, pages of documents examined, statements recorded
on oath, etc. for each investigation. An overview of twenty-four
investigations conducted by SEBI is as follows:
Sr. Issues No. of

No. Investigations
1 Minimum Public Shareholding- alleged violation of Rule 19A 1
of Securities Contracts (Regulation) Rules, 1957
2 Alleged manipulation of stock prices in contravention of 2
existing laws
3 Alleged related Party Transactions (RPT)-Failure to disclose 13
transactions with Related Parties and other relevant
information
4 Other Issues:
(A) Possible violation of SEBI (Foreign Portfolio Investors) 1
Regulations, 2014 and 2019
(B) Possible violation of SEBI (Substantial Acquisition of 1
Shares and Takeovers) Regulations, 2011
(C) Trading-Pre-post Hindenburg Report 1
(D) Possible violation of SEBI (Prohibition of Insider Trading) 5
Regulations, 2015
Total 24
SEBI’s status report and the details of the twenty-four investigations

does not indicate inaction by SEBI. In fact, to the contrary, the course
of conduct by SEBI inspires confidence that SEBI is conducting a
comprehensive investigation.
37. The petitioners have also raised questions about the delay by SEBI
in submitting the status report before this Court. As noted earlier, by
an order dated 2 March 2023, this Court directed SEBI to conclude
its investigation within two months and file a status report before this
[2024] 1 S.C.R. 197
Court. This Court by its order dated 17 May 2023, granted SEBI an
extension of time till 14 August 2023 to submit its status report about
its investigation. Eventually, SEBI filed an interlocutory application
intimating this Court about the status of the twenty-four investigations
undertaken by SEBI on 14 August 2023. SEBI submitted a status
report dated 25 August 2023 providing comprehensive details
about all the investigations carried out by SEBI. Therefore, there is
a delay of only ten days in filing the report. Such a delay does not
prima facie indicate deliberate inaction by SEBI, particularly, as the
issue involved a complex investigation in coordination with various
agencies, both domestic and foreign.
38. Further, as noted in part C of this judgment, no apparent regulatory
failure can be attributed to SEBI based on the material before this
Court. Therefore, there is prima facie no deliberate inaction or
inadequacy in the investigation by SEBI.
iii. Reliance on the OCCRP report and the letter by DRI is
misconceived
39. To assail the adequacy of SEBI’s investigation thus far, the petitioner
has sought to rely on a report published by OCCRP and various
newspapers referring to the report. The petitioner’s case appears to
rest solely on inferences from the report by the OCCRP, a third-party
organization involved in “investigative reporting”. The petitioners have
made no effort to verify the authenticity of the claims.
40. The reliance on newspaper articles or reports by third-party
organizations to question a comprehensive investigation by a
specialized regulator does not inspire confidence. Such reports by
“independent” groups or investigative pieces by newspapers may
act as inputs before SEBI or the Expert Committee. However, they
cannot be relied on as conclusive proof of the inadequacy of the
investigation by SEBI. Nor, as the petitioners state, can such inputs be
regarded as “credible evidence”. The veracity of the inputs and their
sources must be demonstrated to be unimpeachable. The petitioners
cannot assert that an unsubstantiated report in the newspapers
should have credence over an investigation by a statutory regulator
whose investigation has not been cast into doubt on the basis of
cogent material or evidence.
198 [2024] 1 S.C.R.
41. In addition to the OCCRP report, the petitioners have also relied on
a letter dated 31 January 2014 sent by the DRI to the then SEBI
Chairperson. The letter purportedly alerted SEBI about inter alia
potential stock market manipulation by the Adani group through
over-valuation of the import of power equipment from a UAE-based
subsidiary. According to the petitioner, SEBI did not disclose the
receipt of the letter and did not take adequate action based on it.
42. SEBI has submitted that after receiving the above letter, it sought
information from the DRI on the issue and received the requisite
inputs. Further, while SEBI examined the preliminary alerts by the
DRI, the Additional Director General (Adjudication), DRI concluded
their examination and held that the allegations were not established.
The order of the Additional Director General was assailed by the
Commissioner of Customs before the Customs, Excise and Service
Tax Tribunal.14 The CESTAT passed an order on 8 November
2022 dismissing the appeal and concluding that the allegation of
overvaluation was not proved. The order of the CESTAT was upheld
by this Court on 27 March 2023. Further, SEBI has also submitted
that its investigation based on the DRI alerts was concluded and
the related findings were also placed before the Expert Committee.
43. None of the above facts have been disputed by the counsel for the
petitioners. The petitioner is re-agitating an issue that has already
been settled by concurrent findings of the DRI’s Additional Director
General, the CESTAT and this Court. Therefore, the petitioner’s
assertion that SEBI was lackadaisical in its investigation is not borne
out from the reference to the letter sent by the DRI in 2014.
44. Additionally, it must be noted that in the present case, this Court
has already exercised its extraordinary powers by setting up an
Expert Committee to assess the situation in the market, suggest
regulatory measures, and investigate whether there has been a
regulatory failure. To expect the Court to monitor the investigation
indefinitely, even after the committee has submitted its report and
SEBI has completed its investigation in twenty-two out of twenty-four
enquiries is not warranted.
14 “CESTAT”
[2024] 1 S.C.R. 199
E. Allegations of conflict of interest against members of the Expert

Committee
45. The petitioners have raised allegations against some of the members
of the Expert Committee alleging that there was a conflict of interest
which was not revealed to the Court.
46. On 2 March 2023, this Court constituted the Expert Committee
comprising of domain experts and headed by a former judge of this
Court. The allegations against certain members of the committee
were raised by the petitioner for the first time only on 18 September
2023 almost six months after the constitution of the committee and
several months after the Committee had submitted its report in
May 2023. All the purported facts and documents relied on by the
petitioner in this regard were available in the public domain well
before the allegations were raised by the petitioner for the first time
in September 2023. The belated allegations by the petitioner prima
facie indicate that they have not been made in good faith.
47. In any event, the allegation against Mr Somasekhar Sundaresan
is that he had represented the Adani group before various fora
including the SEBI Board, as a lawyer. To buttress the submission,
the petitioner has merely averred to one order of the SEBI Board
dated 25 May 2007 which indicates that Mr Sundaresan has
appeared for Adani Exports Ltd on an unconnected issue. On a
specific query by the Court during the hearing, counsel appearing
on behalf of the petitioner did not present any additional evidence.
The acceptance of a professional brief by a lawyer in 2007 cannot
be construed to reflect “bias” or even a “likelihood of bias” in 2023.
There is an absence of proximity both in terms of time (the alleged
appearance was sixteen years ago) and subject matter. There was
also no justifiable reason for the petitioners to wait until the expert
committee submitted its report.
48. Similarly, the allegations against Mr OP Bhatt and Mr Kamath have
not been adequately substantiated by the petitioner. With regard to
Mr OP Bhatt, the petitioner has alleged that he is presently working
as the Chairman of a leading renewable energy company, which
is working in partnership with the Adani group on certain projects.
Additionally, the petitioner has also raised vague accusations against
Mr OP Bhatt and Mr Kamath in relation to unconnected misconduct
by Mr Vijay Mallya and the ICICI Bank, respectively.
200 [2024] 1 S.C.R.
49. The petitioner has not established the link between these
unsubstantiated allegations and the appointment of Mr Bhatt and Mr
Kamath to the committee. Here too, the petitioner has only annexed
newspaper reports published after the appointment of the committee
by this Court, without any attempts to verify their authenticity or
supplement them with independent research.
50. Therefore, the allegations of conflict of interest against members of
the Expert Committee are unsubstantiated and do not warrant this
Court’s serious consideration.
F. Other recommendations by the Expert Committee
51. The Expert Committee met on 17 March 2023 and noted that it
would require specific factual briefings from SEBI on all four aspects
within the remit of the Committee. It further sought inputs from
market participants with regard to (i) suggestions and measures
to strengthen investor awareness; (ii) strengthen the statutory and
regulatory framework; and (iii) secure compliance with the existing
framework. We have discussed the committee’s analysis on the
issue of whether there was a regulatory failure above. The other
observations and recommendations of the Expert Committee report
are discussed below.
i. Volatility and short selling
52. The Court in its order dated 10 March 2023 expressed concern over
the impact of volatility in the securities market on Indian investors.
It therefore empowered the Expert Committee with the remit to
enquire into and assess the volatility in the market. The enquiry was
to give a sense of direction to increase investor awareness, address
deficiencies in the regulatory framework and enable the Committee
to make any other suggestions to avoid unanticipated volatility which
would adversely impact the interests of investors.
53. Market forces act on the assessment of available information and
its anticipated impact. This behaviour creates volatility in the market.
However, such volatility is an inherent feature of the market and
becomes a matter of concern when it has wide ramifications. The
stocks of the Adani group witnessed volatility in the aftermath of the
publication of the Hindenburg Report. This volatility was examined by
the Expert Committee, which after examining the facts presented by
SEBI and engaging with market participants, opined that the impact
of the Adani group-related events on the overall market was low.
[2024] 1 S.C.R. 201
54. The report of the Committee indicates that the Indian securities’ market
showed resilience and the impact of the fluctuations in the Adani
stocks was not deleterious to the economic ecosystem as a whole.
The volatility in Adani stocks in the aftermath of the Hindenburg Report
was stabilised due to market forces and mitigatory measures. While
shares of the group fluctuated, it did not pose any systemic market-
level risk. According to the Expert Committee the trend observed in
volatility in the Indian market in comparison with the global volatility
index has been consistent since the COVID-19 pandemic and was
maintained even during the period when volatility was observed
in the Adani stocks. Therefore, according to the Committee, while
events related to Adani stocks had an impact at an individual scale,
it did not result in volatility in the market.
55. After drawing the above conclusion, the Expert Committee has
additionally made the following recommendation upon considering
the submissions of SEBI and other market participants:
“47. ⁠SEBI has submitted that only recently, it has made
a regulatory intervention in terms of supervising the
construction of stock indices. SEBI must consider
directing index writers to construct indices to compute
volatility of stocks that are constituents of indices
so that volatility in these stocks can be compared
with volatility in the indices. The availability of such
data on a real time basis would enable the market
to be more informed in making its investment and
divestment decisions. SEBI must ensure that there are
secular norms and periodic reviews for construction
and design changes in indices.”
In its note filed in compliance with this Court’s order
dated 10 February 2023, SEBI had submitted that it
has implemented measures to deal with issues which
may impact sudden and unusual price movements,
excessive volatility, etc. by measures like Market
Wide Circuit Breakers, Circuit Filters/Price bands on
individual shares, additional surveillance measures15,
and Market Wide Position Limits. SEBI has inter
15 ASM
202 [2024] 1 S.C.R.
alia reiterated these submissions before the Expert

Committee and has further, in its affidavit dated 10 July
2023 placed on record the existing ASM and graded
surveillance measure16 framework. We are inclined to
direct SEBI to further consider the recommendations
and take appropriate measures.
56. The chain of events which triggered the Adani group-related events
and eventually the petitions filed before this Court were attributable
to the report by short-seller Hindenburg Research. The Expert
Committee also points to the publication of the report to explain
the volatility observed. The petitioner on the other hand has argued
that the real cause of the loss of investor money was the alleged
unchecked violations of law and artificial boosting of share prices
which would always entail the risk of volatility upon being discovered
in one way or the other. These allegations have been investigated by
SEBI including some investigations which were directed by this Court.
SEBI as the statutory regulator has stated that it would complete the
process in accordance with law.
57. However, this Court had sought inputs as to the role of short sellers,
like Hindenburg, and the rules governing their actions as well
as measures which may be taken to regulate them. Hindenburg
Research describes itself as a research firm that specialises in
“forensic financial research”. The firm purports to seek out situations
where companies may have accounting irregularities, bad actors in
management, undisclosed related party transactions, illegal/unethical
business or financial reporting practices and undisclosed regulatory,
product or financial issues.
58. Short selling is a sale of securities which the seller does not own
but borrows from another entity, with the hope of repurchasing them
at a later date with a lower price, thus, attempting to profit from
an anticipated decline in the price of the securities. In its report,
Hindenburg Research admits to taking a short position in the Adani
group through US-traded bonds and non-Indian traded derivative
instruments. SEBI has submitted that short selling is a desirable
and essential feature to provide liquidity and to help price correction
in over-valued stocks and hence, short selling is recognised as
16 GSM
[2024] 1 S.C.R. 203
a legitimate investment activity by securities market regulators in

most countries. Short selling is regulated by a circular notified by
SEBI on 20 December 2007. SEBI submits that any restrictions on
short selling, may distort efficient price discovery, provide promoters
unfettered freedom to manipulate prices, and favour manipulators
rather than rational investors. Therefore, the International Organisation
of Securities Commission recommends that short selling be regulated
but not prohibited with an aim to increase transparency. We record
the statement made by the Solicitor General before this Court
that measures to regulate short selling will be considered by the
Government of India and SEBI. SEBI and the investigative agencies
of the Union Government shall also enquire into whether there was
any infraction of law by the entities, which engaged in short-selling on
this occasion. The loss which has been sustained by Indian investors
as a result of the volatility caused by the short positions taken by
Hindenburg Research and any other entities acting in concert with
Hindenburg Research should be probed.
ii. Investor Awareness
59. Informed decisions made by an aware investor population are a pre-
requisite to an efficient market. The data from 2019 to 2022 provided
by SEBI shows that there is an increase in the number of investors
in the Indian economy in the ‘future and options segment’ of the
stock market.17 This requires specialized knowledge. The creation
of a framework for this knowledge to percolate to investors lies in
the policy domain. However, this Court sought an assessment of the
existing framework to aid a determination of whether the regulatory
framework suffers from infirmities which would lead to an adverse
impact on the Indian investors. The Court also sought inputs on
measures which may be taken to increase investor awareness thereby
creating a conducive environment for a more efficient market. The
Expert Committee solicited views and perspectives from SEBI and
various market participants.
60. Before the Expert Committee, SEBI submitted that there has been
no market default owing to price movements due to the measures
17 SEBI, Analysis of Profit and Los of Individual Traders dealing in Equity F&O Segment, 25 January
2023, available at <https://www.sebi.gov.in/reports-and-statistics/research/jan-2023/study-analysis-of-profit-
and-loss-of-individual-traders-dealing-in-equity-fando-segment_67525.html#>
204 [2024] 1 S.C.R.
taken by SEBI. These measures include an index-based market-

wide “circuit breaker” system, limit of 20% in movement of prices in
individual shares, price bands at 10% of the previous day’s closing
price for the future and options segment, stock specific surveillance
mechanisms like ASM and GSM, and cautionary messages displayed
to brokers placing orders for stocks under ASM or GSM.
61. The Expert Committee has concluded that having systems like ASM
and GSM is not sufficient and that there must be a real prospect of
investors being aware of heightened surveillance by measures, such
as clients being alerted when stocks are under ASM or GSM at the
point of entry of orders. The Expert Committee also highlighted the
possibility of there being a surfeit of information in which investors find
themselves drowned. Measures to communicate relevant information
in a comprehensive manner to the investors are therefore imperative
for informed decision making.
62. The Committee also explored investor awareness with respect to
unclaimed securities, dividends and bank deposits of deceased next
of kin which may be lost due to the legal framework. The Committee
invited the Investor Education and Protection Fund Authority18 to
present its workings and manner of administration. Based on its
findings, the Committee recommended that the Government of India
establish a centralised authority to handle and process unclaimed
private assets. It suggested creating the Central Authority for
Unclaimed Property which must aim to reunite assets of deceased
persons with their next of kin. The Committee also made some
suggestions in the context of IEPFA which state:
“a. The integrated portal announced in the Finance
Minister Budget Speech should be expedited and
process re-engineering delegation to the issuer
companies based upon type and threshold of the
claims must be considered;
b. The same may be reviewed on incremental basis
from time to time considering the benefits on reducing
the timeline for disposal of claims vis-à-vis the risks
of fraud.
18 IEPFA
[2024] 1 S.C.R. 205
c. Pilot projects such as taking up names from the death

registry in a given area to map it with the database
of the IEPFA and proactively attempting to reach out
to the next of kin should be considered;
d. Registered market intermediaries who are answerable
to the regulatory regime of financial sector regulators
could be identified and recognized as agents for
service delivery to enable release of unclaimed
dividend and securities;
e. An officer strength of a dozen personnel is evidently
disproportionate. The IEPFA would need a full time
Chief Executive Officer who would have specific
key performance indicia that would be fixed by the
governance oversight of the Authority.”
The Committee made further recommendation to induce financial
literacy and make it a fundamental part of pedagogy right from
school curricula.
63. SEBI has submitted that while it is open to considering some of
the above suggestions, it is not empowered to implement others as
they lie outside its prescribed sphere of competence and expertise.
In particular, SEBI has submitted that the recommendations on
creation of a financial redressal agency, central unclaimed property
authority, and framework to set up a multi-agency committee would
require multiple regulators and the Government may need to look
into these recommendations. We find it appropriate to direct both the
Government of India and SEBI to consider the recommendations of
the Expert Committee with respect to investor awareness and create
an appropriate legal framework to implement the recommendations.
iii. Recommendations of the Expert Committee to strengthen
regulatory framework and secure compliance to protect
investors
64. The Expert Committee was also directed to suggest measures to
(i) strengthen the statutory and/or regulatory framework; and (ii)
secure compliance with the existing framework for the protection of
investors. Pursuant to its remit, the Committee in its report dated 6
May 2023 has made the following suggestions:
206 [2024] 1 S.C.R.
a. Structural Reform: SEBI must perform its complex functions

in a structured form by ensuring greater transparency in law-
making, and greater societal involvement in contributing to the
law. This will lead to greater compliance with the laws;
b. Effective Enforcement Policy: SEBI must optimize its resources
and lay down policies for effective enforcement of its law
by stipulating the criteria by which it may use its powers to
initiate measures. This must be consistent with the legislative
policy of SEBI and an attempt must be made to apply the law
prospectively;
c. Judicial Discipline: Adjudicating Officers and Whole Time
Members must show consistency and not take differing views
in similar circumstances. Judicial discipline must be followed
in applying ratios of previous decisions as well as following the
decisions made at the appellate stage;
d. Settlement Policy: SEBI must have a robust settlement policy and
formulate objective criteria to regulate it. It must not be hesitant
to enter settlements whereby financial injury commensurate with
the alleged violation may be inflicted on the party;
e. Timelines: SEBI must lay down and adhere to strict timelines
for initiation of investigations, completion of investigations,
initiation of proceedings, disposal of settlement, and disposal
of proceedings;
f. Surveillance and Market Administration Measures: The element
of human discretion must be done away with as far as possible.
It must be saved for extraordinary circumstances that would
not have been factored in already. With regard to disclosures,
all provision of data should be in machine-readable format and
inter-operable across electronic platforms;
g. The suggestions made on structural reforms by committees in
the past should be followed. These include (i) the creation of
a Financial Redress Agency that handles investor grievances
across sectors; (ii) easing and centralizing the process for
recovering unclaimed private property, which is currently spread
across agencies, either through the aegis of the Financial Stability
and Development Council or even by appropriate legislation;
(iii) creation of a framework for a multi-agency committee to
investigate complex enforcement matters. The same must have
[2024] 1 S.C.R. 207
a temporary shelf life which ends upon initiation of prosecution.

It may only be used in cases involving serious cross-sectoral
repercussions which would need multi-disciplinary skill sets to
act in coordination; and (iv) following the doctrine of separation
within SEBI in its quasi-judicial, and executive arm.
65. SEBI has addressed these recommendations in its affidavit dated 10
July 2023. SEBI has inter alia submitted that its existing framework
already accounts for the recommendations of the Expert Committee on
effective enforcement policy, judicial discipline, settlement policy, and
surveillance & market administration measures. SEBI has opposed
the recommendations with respect to laying down timelines on the
ground that the time taken to form a prima facie opinion and conduct
an investigation is contingent on many variable factors which render
the process and time taken subjective. SEBI submits that they cannot
be uniformly bound to a time limit. Further, as noted above, SEBI
has submitted that creation of financial redressal agency, central
unclaimed property authority, and framework to set up a multi-agency
committee would require multiple regulators and the Government
may need to look into these recommendations. SEBI argues that it
is not competent to enforce the same and requires the Government
of India to consider them.
66. The Expert Committee has made the above suggestions after applying
its mind to the wealth of information collected from SEBI, market
participants, invitees and from their own expertise. These suggestions
merit favourable consideration with a positive intent. We direct the
Government of India and SEBI to consider these suggestions and
to take the benefit of the efforts put in by the Expert Committee. We
may add that the approach in considering these suggestions must not
be defensive but constructive. The Committee has favourably noted
some of the measures that SEBI has taken in reaction to the events
and learnings from the market. The same attitude of advantaging from
the perspectives should be taken by the Government of India and
SEBI. The Union Government and SEBI would be at liberty to interact
with the Committee so as to take this forward. Since a member of
the Bar who was a member of the Committee has been appointed
to the Bench since the submission of the report, the Chairperson
of the Committee will be at liberty to nominate a member with legal
expertise and domain knowledge for the purpose of interacting with
the Union Government and SEBI.
208 [2024] 1 S.C.R.
G. Conclusion
67. In a nutshell, the conclusions reached in this judgement are
summarized below:
a. The power of this Court to enter the regulatory domain of SEBI
in framing delegated legislation is limited. The court must refrain
from substituting its own wisdom over the regulatory policies
of SEBI. The scope of judicial review when examining a policy
framed by a specialized regulator is to scrutinise whether it
violates fundamental rights, any provision of the Constitution,
any statutory provision or is manifestly arbitrary;
b. No valid grounds have been raised for this Court to direct SEBI
to revoke its amendments to the FPI Regulations and the LODR
Regulations which were made in exercise of its delegated
legislative power. The procedure followed in arriving at the
current shape of the regulations does not suffer from irregularity
or illegality. The FPI Regulations and LODR Regulations have
been tightened by the amendments in question;
c. SEBI has completed twenty-two out of the twenty-four
investigations into the allegations levelled against the Adani
group. Noting the assurance given by the Solicitor General on
behalf of SEBI we direct SEBI to complete the two pending
investigations expeditiously preferably within three months;
d. This Court has not interfered with the outcome of the
investigations by SEBI. SEBI should take its investigations to
their logical conclusion in accordance with law;
e. The facts of this case do not warrant a transfer of investigation
from SEBI. In an appropriate case, this Court does have the
power to transfer an investigation being carried out by the
authorized agency to an SIT or CBI. Such a power is exercised
in extraordinary circumstances when the competent authority
portrays a glaring, willful and deliberate inaction in carrying out
the investigation. The threshold for the transfer of investigation
has not been demonstrated to exist;
f. The reliance placed by the petitioner on the OCCPR report
to suggest that SEBI was lackadaisical in conducting the
[2024] 1 S.C.R. 209
investigation is rejected. A report by a third-party organization

without any attempt to verify the authenticity of its allegations
cannot be regarded as conclusive proof. Further, the petitioner’s
reliance on the letter by the DRI is misconceived as the issue has
already been settled by concurrent findings of DRI’s Additional
Director General, the CESTAT and this Court;
g. The allegations of conflict of interest against members of the
Expert Committee are unsubstantiated and are rejected;
h. The Union Government and SEBI shall constructively consider
the suggestions of the Expert Committee in its report detailed
in Part F of the judgment. These may be treated as a non-
exhaustive list of recommendations and the Government of
India and SEBI will peruse the report of the Expert Committee
and take any further actions as are necessary to strengthen the
regulatory framework, protect investors and ensure the orderly
functioning of the securities market; and
i. SEBI and the investigative agencies of the Union Government
shall probe into whether the loss suffered by Indian investors
due to the conduct of Hindenburg Research and any other
entities in taking short positions involved any infraction of the
law and if so, suitable action shall be taken.
68. Before concluding, we must observe that public interest jurisprudence
under Article 32 of the Constitution was expanded by this Court
to secure access to justice and provide ordinary citizens with the
opportunity to highlight legitimate causes before this Court. It has
served as a tool to secure justice and ensure accountability on
many occasions, where ordinary citizens have approached the Court
with well-researched petitions that highlight a clear cause of action.
However, petitions that lack adequate research and rely on unverified
and unrelated material tend to, in fact, be counterproductive. This
word of caution must be kept in mind by lawyers and members of
civil society alike.
69. We are grateful to all the members and the Chairperson of the
Expert Committee for their time, efforts, and dedication in preparing
their erudite, comprehensive, and detailed report in a time-bound
manner. Subject to the consent and availability of the members and
210 [2024] 1 S.C.R.
Chairperson of the Expert Committee, SEBI and the Government

of India may draw upon their expertise and knowledge while taking
necessary measures pursuant to the recommendations of the
Committee.
70. The Petitions shall accordingly stand disposed of in the above terms.
71. Pending applications, if any, stand disposed of.
Headnotes prepared by: Nidhi Jain Result of the case: Petitions

disposed of.
[2024] 1 S.C.R. 211 : 2024 INSC 4
Case Details
The State of Uttar Pradesh & Ors.

v.
Association of Retired Supreme Court and High Court
Judges at Allahabad & Ors.
(Civil Appeal Nos 23-24 of 2024)
03 January 2024
[Dr Dhananjaya Y Chandrachud*, CJI, J B Pardiwala
and Manoj Misra, JJ.]
Whether the High Court had the power to direct the State
Government to notify Rules proposed by the Chief Justice pertaining
to post-retiral benefits for former Judges of the High Court; whether
the power of criminal contempt could be invoked by the High Court
against officials of the State Government on the ground that the
application for recall was ‘contemptuous’; and as regards the
broad guidelines to guide courts when they direct the presence
of government officials before the court.
Headnotes
Constitution of India – Arts 226, 229 – Summoning of
government officials – Invocation of criminal contempt –
Writ petition by the first respondent-Association seeking
an increase in the allowance granted to former judges of
the High Court for domestic help and other expenses –
Issuance of direction by the High Court directing the State
Government to inter alia notify rules proposed by the Chief
Justice of the High Court pertaining to ‘Domestic Help to
Former Chief Justices and Former Judges of the Allahabad
High Court’ by the next date of hearing – Also directed the
certain officials to be present before the court on the next
date if the order was not complied with – Application filed
by the State seeking recall of the aforesaid Order – High
Court held that the recall application was ‘contemptuous’
and initiated criminal contempt proceedings against various
officials of the Government – Also the officials present in
the court, including the Secretary (Finance) and Special
Secretary (Finance) taken into custody and bailable warrants
* Author
212 [2024] 1 S.C.R.
issued against Chief Secretary and Additional Chief Secretary

(Finance) – Correctness:
Held: High Court did not have the power to direct the State
Government to notify Rules proposed by the Chief Justice
pertaining to post-retiral benefits for former Judges of the High
Court – Power of criminal contempt could not be invoked by
the High Court against officials of the Government of Uttar
Pradesh on the ground that the application for recall of the First
Impugned Order was ‘contemptuous’ – Conduct of the High
Court in frequently summoning government officials to exert
pressure on the government, under the threat of contempt,
is impermissible – Issuance of bailable warrants by the High
Court against officials, who was not even summoned in the
first place, indicates the attempt by the High Court to unduly
pressurise the government – Thus, both the Impugned Orders
set aside – Standard Operating Procedure (SOP) on personal
appearance of government officials in court proceedings framed
by this Court. [Paras 46, 47]
Constitution of India – Art. 229(2) – High Court directing the
State Government to notify the Rules proposed by the Chief
Justice pertaining to post-retiral benefits for former Judges
of the High Court – Correctness:
Held: High Court did not have the power to direct the State
Government to notify Rules proposed by the Chief Justice pertaining
to post-retiral benefits for former Judges of the High Court – Chief
Justice did not have the competence to frame the said rules u/Art.
229 – High Court, acting u/Art. 226, cannot usurp the functions
of the executive and compel the executive to exercise its rule-
making power in the manner directed by it – Compelling the State
Government to mandatorily notify the Rules by the next date of
hearing, in the First Impugned Order, virtually amounted to the High
Court issuing a writ of mandamus to notify the Rules proposed
by the Chief Justice – Such directions by the High Court are
impermissible and contrary to the separation of powers envisaged
by the Constitution – High Court, acting on the judicial side, could
not compel the State Government to notify Rules proposed by the
Chief Justice in the purported exercise of his administrative powers
– Thus, the High Court acted beyond its jurisdiction u/Art. 226 by
frequently summoning officers to expedite the consideration of the
Rules and issuing directions to notify the Rules by a fixed date,
under the threat of criminal contempt. [Paras 25, 26, 28-30, 46a]
[2024] 1 S.C.R. 213
THE STATE OF UTTAR PRADESH & ORS. v. ASSOCIATION OF RETIRED

SUPREME COURT AND HIGH COURT JUDGES AT ALLAHABAD & ORS
Contempt of Courts Act, 1971 – Criminal Contempt – Initiation

of – Officials of the Government of Uttar Pradesh availing legal
remedies and raising a legal challenge to an order – Criminal
contempt invoked by the High Court against the officials on
the ground that the application for recall was ‘contemptuous’
– Correctness:
Held: Power of criminal contempt could not be invoked by the
High Court against officials of the Government of Uttar Pradesh
on the ground that the application for recall of the first impugned
order was ‘contemptuous’ – High Court acted in haste by invoking
criminal contempt and taking the government officials into custody
and the same was not warranted – Actions of the officials did not
meet the standard of both ‘criminal contempt’ and ‘civil contempt’
– In the second Impugned Order, the High Court held that the
actions of the officials of the State Government constituted
criminal contempt as there was no “valid reason” to not comply
with the earlier Order wherein the High Court directed the State
Government to inter alia notify rules proposed by the Chief Justice
of the High Court pertaining to ‘Domestic Help to Former Chief
Justices and Former Judges of the High Court’ by the next date
of hearing – Even if the High Court’s assessment is assumed to
be correct, non-compliance with the first impugned order could
at most, constitute civil contempt – High Court failed to give any
reasoning for how the purported non-compliance with the first
impugned order was of the nature to meet the standard of criminal
contempt – However, even the standard for civil contempt was not
met – While initiating proceedings of contempt of court, the court
must act with great circumspection – It is only when there is a
clear case of contemptuous conduct that the alleged contemnor
must be punished – Power of the High Courts to initiate contempt
proceedings cannot be used to obstruct parties or their counsel
from availing legal remedies. [Paras 33-36, 46 b]
Summons – Summoning of Government Officials before
Courts – Broad guidelines for the courts:
Held: Appearance of government officials before courts must not
be reduced to a routine measure in cases where the government
is a party and can only be resorted to in limited circumstances –
Conduct of the High Court in frequently summoning government
officials to exert pressure on the government, under the threat
of contempt, is impermissible – Summoning officials repeatedly,
instead of relying on the law officers representing the government
214 [2024] 1 S.C.R.
or the submissions of the government on affidavit, runs contrary

to the scheme envisaged by the Constitution – Courts must be
cognizant of the role of law officers before summoning the physical
presence of government officials – Law officers act as the primary
point of contact between the courts and the government – Instead
of adjudicating on the legal position taken by the State Government
on affidavit or hearing the Additional Advocate General present
in the court, the High Court repeatedly summoned government
officials – Government was also directed to notify the Rules – Such
situations can be avoided where submissions on affidavit can be
sought and the law officers of the Government are present in court,
with instructions – Courts must refrain from summoning officials as
the first resort – Thus, Standard Operating Procedure(SOP) framed
specifically addressing the appearance of Government Officials
before the courts. [Para 38, 39, 41, 42, 44, 45, 46c]
Practice and procedure – Personal Appearance of Government
Officials in Court Proceedings – Framing of Standard Operating
Procedure (SOP):
Held: SOP on personal appearance of government officials in court
proceedings emphasizes the critical need for courts to exercise
consistency and restraint – It aims to serve as a guiding framework,
steering courts away from the arbitrary and frequent summoning
of government officials and promoting maturity in their functioning
– SOP framed to be followed by all courts across the country – All
High Courts to consider framing rules to regulate the appearance
of Government officials in court, after taking into account the SOP
formulated. [Paras 45, 46d]
Constitution of India – Arts 76 and 165 – Law officers-Attorney
General for India and Advocate General for the State – Role of:
Held: U/Art. 76, the Attorney General is appointed by the President
and serves in an advisory capacity, providing legal counsel to the
Union Government – Similarly, u/Art. 165, the Advocate General
is appointed by the Governor of each state – Several other law
officers also represent the Union and the states including the
Solicitor General, Additional Solicitor General, and Additional
Advocates General for the States – They inter alia obtain instructions
from the various departments of the government and represent
the government before the courts – Courts must be cognizant of
the role of law officers before summoning the physical presence
of government officials – Law officers act as the primary point of
contact between the courts and the government – They not only
[2024] 1 S.C.R. 215

represent the government as an institution but also represent the

various departments and officials that comprise the government –
Exercising restraint, avoiding unwarranted remarks against public
officials, and recognizing the functions of law officers contribute to
a fair and balanced judicial system – Courts across the country
must foster an environment of respect and professionalism, duly
considering the constitutional or professional mandate of law
officers, who represent the government and its officials before the
courts. [Paras 40, 41, 44].
Contempt of Courts Act, 1971 – s. 2 – Civil contempt and
criminal Contempt – Distinction:
Held: ‘Wilful disobedience’ of a judgment, decree, direction, order,
writ, or process of a court or wilful breach of an undertaking given
to a court amounts to ‘civil contempt’ – Criminal contempt involves
‘scandalising’ or ‘lowering’ the authority of any court; prejudicing or
interfering with judicial proceedings; or interfering with or obstructing
the administration of justice. [Para 32]

P Ramakrishnan Raju vs. Union of India Writ Petition
(Civil) No. 521/2002; Justice V.S. Dave, President, the
Association of Retired Judges of Supreme Court and
High Courts vs. Kusumjit Sidhu and Others Contempt
Petition (Civil) Nos. 425-426 of 2015; Leila David v.
State of Maharashtra [2009] 15 SCR 317:(2009) 10 SCC
337; Mohd. Iqbal Khandaly v. Abdul Majid Rather [1994]
3 SCR 396:(1994) 4 SCC 34; State of Uttar Pradesh v.
Manoj Kumar Sharma (2021) 7 SCC 806 – referred to.
List of Acts
Constitution of India; Contempt of Courts Act, 1971
Keywords
Separation of powers; Criminal contempt jurisdiction; Summoning
government officials to court; recall application; Allowance granted
to former judges of the High Court for domestic help; Post retiral
benefits to former judges of the High Courts; Writ of mandamus;
Policymaking; Summoning; Civil Contempt; Criminal Contempt;
Law officers; Judicial review; Unwarranted remarks; Standard
Operating Procedure.
216 [2024] 1 S.C.R.

Appearances
CIVIL APPELLATE JURISDICTION : Civil Appeal Nos.23-24 of 2024.

From the Judgment and Order dated 04.04.2023 and 19.04.2023 in
WC No.38595 of 2011 of the High Court of Judicature at Allahabad.
Appearances:
Tushar Mehta, Solicitor General, K.M. Nataraj, A.S.G., Sharan Dev
Singh Thakur, A.A.G., Ms. Ruchira Goel, Siddharth Thakur, Adit J.
Shah, Mustafa Sajjad, Ms. Keerti Jaya, Prem Prakash, Ms. Deepali
Nanda, Nishit Agrawal, Ms. Kanishka Mittal, Ms. Vanya Agrawal,
Vatsal Joshi, Shlok Chandra, Akshit Pradhan, Raghav Sharma,
Arvind Kumar Sharma, Raj Bahadur Yadav, Mrs. Sunita Sharma,
Gaurav Agrawal, Ms. Preetika Dwivedi, Abhisek Mohanty, Advs. for
the appearing parties.

Judgment
Dr Dhananjaya Y Chandrachud, CJI
Table of Contents
I. Factual Background.............................................................. 4
II. The High Court did not have the power to direct the
notification of the Rules proposed by the Chief
Justice................................................................................... 15
III. Criminal Contempt cannot be initiated against a
party for availing legal remedies and raising a
legal challenge to an order................................................. 19
IV. Summoning of Government Officials before Courts....... 22
1. Leave granted.
2. The present appeals arise from two orders of the Division Bench of
the High Court of Judicature at Allahabad1 dated 4 April 2023 and
19 April 2023.2 The Impugned Orders have given rise to significant
1 “High Court”
2 “Impugned Orders”
* Ed Note: Pagination as per original Judgment.
[2024] 1 S.C.R. 217

questions about the separation of powers, the exercise of criminal

contempt jurisdiction, and the practice of frequently summoning
government officials to court.
3. By its order dated 4 April 2023, 3 the High Court directed the
Government of Uttar Pradesh to inter alia notify rules proposed by
the Chief Justice of the High Court pertaining to ‘Domestic Help to
Former Chief Justices and Former Judges of the Allahabad High
Court’ by the next date of hearing. The High Court further directed
certain officials of the Government of Uttar Pradesh to be present
before the court on the next date if the order was not complied with.
4. The State of Uttar Pradesh moved an application before the High
Court to seek a recall of the Order dated 4 April 2023 highlighting
legal obstacles in complying with the directions of the High Court.
By its order dated 19 April 2023,4 the High Court held that the recall
application was ‘contemptuous’ and initiated criminal contempt
proceedings against various officials of the Government of Uttar
Pradesh. The officials present in the court, including the Secretary
(Finance) and Special Secretary (Finance) were taken into custody
and bailable warrants were issued against the Chief Secretary and
the Additional Chief Secretary (Finance).
I. Factual Background
5. The Impugned Orders arise from a writ petition instituted in 2011
before the High Court by the first respondent, the Association of
Retired Supreme Court and High Court Judges at Allahabad. The
petition inter alia sought an increase in the allowance granted to
former judges of the High Court for domestic help and other expenses.
6. While the petition was pending before the High Court, a three-judge
bench of this Court in P Ramakrishnan Raju vs. Union of India,5
decided a batch of cases pertaining inter alia to the post-retiral benefits
payable to former judges of the High Courts. In its judgement dated
31 March 2014, this Court appreciated the scheme formulated by
the State of Andhra Pradesh and recommended that other States
also formulate similar schemes for post-retiral benefits to former
3 “First Impugned Order”

4 “Second Impugned Order”
5 Writ Petition (Civil) No. 521/2002
218 [2024] 1 S.C.R.
judges of the High Courts, preferably within six months from the
Judgement. The Court held:
“34. While appreciating the steps taken by the Government
of Andhra Pradesh and other States who have already
formulated such scheme, by this order, we hope and
trust that the States who have not so far framed such
scheme will formulate the same, depending on the local
conditions, for the benefit of the retired Chief Justices and
retired Judges of the respective High Courts as early as
possible preferably within a period of six months from the
date of receipt of copy of this order.”
(emphasis supplied)
7. Subsequently, contempt petitions were instituted before this Court
for non-compliance with the Court’s decision in P Ramakrishnan
Raju (supra). This Court directed all states to file affidavits detailing
the steps taken to comply with the directions. By an Order dated
27 October 2015, reported as Justice V.S. Dave, President, the
Association of Retired Judges of Supreme Court and High Courts
vs. Kusumjit Sidhu and Others6, this Court closed the contempt
proceedings against the State of Uttar Pradesh, noting that it had
already framed a scheme in accordance with the Court’s directions.
The Court further held that a slight variation from the yardstick in the
Andhra Pradesh scheme is permissible keeping in mind the local
conditions and directed that states that are paying less than the
yardstick, shall consider upward revision at the ‘appropriate stage
and time’. The court held:
“State of Meghalaya, Manipur, Maharashtra, Goa,
Mizoram, Punjab, Tamil Nadu, Karnataka, Andhra
Pradesh, Sikkim, Arunachal Pradesh, Telangana,
Uttar Pradesh, Madhya Pradesh, Tripura, Government
of NCT of Delhi, Haryana, Uttarakhand, Rajasthan,
Chhattisgarh, Kerala, Gujarat and Assam
The counter-affidavits/responses filed on behalf of each
of the aforesaid States indicate that a scheme has been
framed in accordance with the directions of the Court.
6 Contempt Petition (Civil) Nos. 425-426 of 2015.

[2024] 1 S.C.R. 219

While some of the States are paying more than what the
State of Andhra Pradesh (Adopted as the yardstick by
the Court) is paying by way of post-retirement allowances
some others are affording lesser amount(s). A little
variation from the yardstick can be understood in terms
of the flexibility contemplated in paragraphs 33 and 34
of the judgment which enable the States to frame their
respective schemes keeping in mind the local conditions.
As all the aforesaid States have framed their schemes,
we direct that the contempt proceedings insofar as these
states are concerned are closed.
We also direct that such of the states where the allowances
paid are lesser than the State of Andhra Pradesh, shall
consider the necessity of an upward revision of such
allowances at the appropriate stage and time.”
(emphasis supplied)
8. The Government of Uttar Pradesh issued a Government Order dated
3 July 2018 and revised the post-retiral benefits for former judges
of the High Court. The domestic help allowance payable to retired
Chief Justices and Judges of the High Court was increased to Rs.
20,000/- (per month) for former Chief Justices and Rs.15,000/- (per
month) for former judges. Under this revised scheme, after the death
of a former Chief Justice or judge, the surviving spouse would be
entitled to receive Rs. 10,000/- and Rs 7,500/- per month, respectively
for life. In 2022, the Government of Andhra Pradesh increased the
allowance to Rs. 50,000 for former Chief Justices and Rs. 45,000 for
former judges of the High Court. The first respondent preferred an
application to amend the prayers in the writ petition and sought parity
with the new scheme framed by the Andhra Pradesh government.
9. From the submissions of the parties and documents on the record,
it appears that sometime between 2019 and 2023, the Chief Justice
of the High Court proposed certain ‘Rules for providing Domestic
Help to Former Chief Justices and Former Judges of Allahabad High
Court’.7 The preamble to the Rules indicates that they were framed
by the Chief Justice in the exercise of his purported powers under
7 “Rules”
220 [2024] 1 S.C.R.
Article 229 of the Constitution. The operative portion of the Rules,

which lie at the heart of the present case, follows:
“In exercise of the powers conferred by Article 229 of
the Constitution of India, the Chief Justice of the High
Court of Judicature at Allahabad is pleased to frame the
following rules for providing the domestic help to former
Chief Justices and former Judges of the High Court.
…
“6. Selection of Domestic Help: The former Chief Justice
or former Judge may at her, or his discretion select a
person to be engaged as a Domestic Help.
7. Contractual appointment: The engagement of a
Domestic Help under Rule 6 shall be on a contractual basis
and will be available until the former Chief Justice or former
Judge is entitled to the benefit of the facility under Rule 5
and until the Domestic Help performs duties satisfactorily
subject to the certification of the former ChiefJustice or
former Judge.
8. Reimbursement: Upon engagement, the monthly
remuneration payable to the Domestic Help shall be
reimbursed by the High Court to the former Chief Justice or
former Judge after completion of the month in each month.
9. Wages: The wages to be reimbursed by the High
Court to the former Chief Justice or former Judge for the
engagement of the Domestic Help shall be equivalent to
the salary payable to a Class-IV employee of the High
Court in the grade of a peon or equivalent at the minimum
of the scale of pay inclusive of dearness allowance.
…”
(emphasis supplied)
10. In the above factual background, the High Court heard the writ
petition, summoned officials of the Government of Uttar Pradesh
and passed various orders, including the two Impugned Orders. The
orders of the High Court passed before the Impugned Orders are
pertinent to understand the course of events before the High Court
while adjudicating the subject writ petition.
[2024] 1 S.C.R. 221

11. On 5 January 2023, the High Court allowed the first respondent’s
amendment application. The High Court directed the Principal
Secretary, Law and Justice, Government of Uttar Pradesh to appear
in-person along with the records to “expedite the matter”. The High
Court held:
“On specific query, the learned Standing Counsel submits
that the scheme pursuant to the direction of the Supreme
Court is already there and the amount is being duly paid
by the State Government. However, the quantum of
amount towards the benefits being granted to the retired
Judges has not been revised since then. It is submitted
that the matter for revision, if any, is to be considered at
the highest level.
Be that as it may, in order to expedite the matter, before
any further order is passed, it would be appropriate that
the Principal Secretary, Law and Justice, Government of
Uttar Pradesh, shall appear along with the records and
apprise the Court of the stand of the State Government
in the matter.
Amendment application is allowed. Learned counsel for
the petitioner to file an amended copy of the writ petition.”
(emphasis supplied)
12. When the writ petition was heard on 12 January 2023, the Principal
Secretary, Law and Justice, Government of Uttar Pradesh was present
before the High Court. Further, it was submitted before the High
Court that the Rules proposed by the Chief Justice were pending
consideration, certain queries were made to the High Court and the
matter would be placed before the Cabinet for approval. The High
Court listed the case for 19 January 2023 and noted that “on the said
date, it is expected that the queries/clarification would be addressed
by the concerned committee.” (of the High Court).
13. On 19 January 2023, the counsel on behalf of the High Court
submitted that while the queries about the Rules were resolved
by the High Court, the State Government was raising queries in a
piecemeal manner to keep the matter pending for a long period.
The Additional Advocate General submitted that the Rules involve
an amendment to the existing scheme and would be examined by
the State Government expeditiously.
222 [2024] 1 S.C.R.
14. On the next date, 23 March 2023, the High Court expressed its
displeasure about the delay by the State Government in notifying
the Rules and revising the post-retiral benefits granted to former
judges of the High Court. The High Court stated that it is “constrained
to summon the Finance Secretary, Government of UP and all the
associated Officers dealing with the file along with the Principal
Secretary (Law), Government of UP to appear along with the records
on the next date fixed.”
15. On 4 April 2023, the High Court passed the First Impugned Order.
As directed, the Special Secretary, Finance and Principal Secretary,
Law, Government of Uttar Pradesh were present. The High Court
noted the submission by the Principal Secretary, Law that the matter
was placed before the Finance Department on six occasions, but
approval was not accorded. On the other hand, the Secretary,
Finance submitted that the Rules are beyond the competence of
the Chief Justice and do not fall within the ambit of Article 229 of
the Constitution. The High Court observed that the objection with
regard to the competence of the Chief Justice was being raised for
the first time before the High Court. The High Court observed that:
“5. On perusal of the record with the assistance of the
learned Additional Advocate General, we do not find any
such objection which is being pressed before this Court.
In other words, the attitude of the officers of the Finance
Department is not only contemptuous, but at the same
time their stand/submission with regard to the competence
of the Hon’ble Chief Justice/ Article 229 is not reflected
from the record”
16. The High Court further recorded the submissions of the counsel for
the High Court that the Finance Department was attempting to stall
all the recommendations of the High Court in the recent past and that
the objections being raised by the Finance Department should have
been raised with the Law Department. The High Court observed:
“6. […] The audacity of the officers to raise the issue
of competence of the Hon’ble Chief Justice, is not only
unbecoming of a civil servant, but at the same time
contemptuous. These objections are not available on
record, nor have it been brought to the notice of the Law
Department for legal advice. The Government Order
granting benefits to the retired Judges is already in place,
[2024] 1 S.C.R. 223

the proposal of the High Court merely seeks to incorporate

the same by amending, and/or, in supercession of the
earlier Government Order. Article 229 is unnecessarily
being ·pressed with the sole purpose of creating hindrance
when there is none.
17. The High Court observed that the Rules were pursuant to the
assurances given by the State of Uttar Pradesh in P Ramakrishnan
Raju (supra) and Justice V.S. Dave (supra). Further, the High Court
recorded that the Secretary, Finance conceded that the Rules could
be notified by way of a Government Order amending or superseding
the Government Order dated 3 July 2018. The High Court relied on
this purported ‘no objection’ and directed as follows:
“22. Secretary, Finance, fairly states that the Finance
Department would have no objection in the event the
Government Order to that effect is issued incorporating the
proposals submitted by the High Court in the form of Rules.
He further submits that the Finance Department does not
have objections with regard to the financial implications
in according approval to the proposed Rules/Guidelines.
…
25. Having regard to the categorical stand of the Principal
Secretary Law and Secretary Finance Department, the
following directions are issued:
1. The Rules/Guidelines as proposed by the High
Court shall be notified by amending/incorporating/
superceeding the Government Order dated 3 July
2018, forthwith;
2. The Finance Department would accord approval
within a week thereafter;
3. The notification of the Government Order and the
approval, thereof, shall be placed on record on the
date fixed;
4. In the event the order is not complied, Additional
Chief Secretary, Finance and the officers present
today shall appear on the date fixed.”
(emphasis supplied)
224 [2024] 1 S.C.R.
18. The State of Uttar Pradesh filed a recall application before the High
Court on 19 April 2023 seeking a recall of the First Impugned Order
on the grounds that:
a. The High Court did not have the power to pass the above
directions;
b. The rules do not fall within the ambit of Article 229 of the
Constitution;
c. The direction for the Rules to be notified and the Finance
Department to accord approval thereafter cannot be complied
with as the concurrence/advice of the Finance Department must
be taken before notifying the rules; and
d. Only the Parliament and the Union government are competent
to frame legislation/rules pertaining to post-retiral benefits for
former judges of the High Courts.
19. On 19 April 2023, the High Court passed the Second Impugned
Order. The High Court noted that the Additional Chief Secretary
(Finance) was not present, while the Secretary (Finance) and the
Special Secretary (Finance), who also appeared on the previous
date, were present. The High Court noted that on the date of the First
Impugned Order, the officials of the Finance Department categorically
stated that they have “no objection” if the Government Order issued
in 2018 is modified or amended. The recall application, according
to the High Court, constituted “ex-facie criminal contempt”, as it did
not indicate any valid reasons for non-compliance with the First
Impugned Order. The High Court held:
“30. [..] From perusal of the entire affidavit, it is not clear
as to which part of the order the officers intend to recall,
rather, the prayer made therein is to recall the entire order,
but no reason has been assigned as to how the order is
obnoxious on the whole. In other words, the affidavit that
has been filed today is false, misleading and averments,
therein, constitute ex-facie criminal contempt.
31. On specific query, it is informed by the· officers present
in the Court, on perusal of the record, that pursuant to
the order dated 4 April 2023, the Chief Secretary had
[2024] 1 S.C.R. 225

convened a meeting of the officers on 13 April 2023. The

Advocate General had opined to comply the order. Further,
the office of the Law Department on 6 April 2023, had
forwarded the proposed Government Order/amendment to
confer benefits upon the retired Judges for approval of the
Finance Department. The proposal is not to frame Rules
under Article 229 of the Constitution. These facts have
been suppressed. As per the stand of the officers, it is only
after approval by the Finance Department, submitted by
the Law Department, the matter would be placed before
the Cabinet. In this backdrop, affidavit is not only false but
also misleading as the affidavit does not disclose as to why
the proposal submitted by the Law Department was not
approved or the reason for not approving it, rather, frivolous
issues have been raised with regard to the procedure to
be adopted while notifying the Government Order or the
issue of Article 229 of the Constitution. Affidavit does not
clarify as to why the Government Order as proposed by
the Law Department was not approved by the Finance
Department till date. The approach of the officers of
the Finance Department is writ large, that the proposal
submitted by the High Court, would not be complied and
in their overzealous approach and adamant attitude are
opposing compliance of the writ court order without any
valid basis.
32. In the circumstances, having regard to the averments
made in the affidavit and the conduct of the officers
suppressing material facts and misleading the Court, prima
facie, have committed criminal contempt of the Court.”
(emphasis supplied)
20. The High Court directed that the officials present in the court, the
Secretary (Finance) and the Special Secretary (Finance) be taken into
custody and produced before the Court on the next day for framing
of charges. Further, the Court issued bailable warrants against the
Chief Secretary and the Additional Chief Secretary (Finance) to
ensure their presence before the Court on the next day.
226 [2024] 1 S.C.R.
21. The above Orders dated 4 April 2023 and 19 April 2023 have been
challenged by the State of Uttar Pradesh by the present appeal. By
an interim order dated 20 April 2023, this Court stayed the operation
of the Impugned Orders and the officials of the Government of Uttar
Pradesh, who were taken into custody were directed to be released.
This Court directed:
“4 Till the next date of listing, there shall be a stay” of the
operation of the orders of the Division Bench of the High
Court of Judicature at Allahabad dated 4 April 2023 and
19 April 2023.
5 The officers of the Government of Uttar Pradesh, who
have been taken into custody, shall be released forthwith
6 The Registrar (Judicial) of this Court shall communicate
the order of this Court both telephonically and on the email
to the Registrar General of the High Court of Judicature
at Allahabad for immediate compliance.”
22. We have heard Mr Tushar Mehta, Solicitor General with Mr K.M.
Natraj, Additional Solicitor General appearing on behalf of the Union
of India, Mr Nishit Agrawal, counsel appearing on behalf of the
Association of Retired Supreme Court and High Court Judges at
Allahabad and Ms Preetika Dwivedi, counsel appearing on behalf of
the High Court of Judicature at Allahabad on the administrative side.
23. Having heard the rival submissions advanced by the parties and
examined the record, the following broad points of law arise for our
consideration:
(i) Whether the High Court had the power to direct the State
pertaining to post-retiral benefits for former Judges of the High
Court;
(ii) Whether the power of criminal contempt could be invoked by
the High Court against officials of the Government of Uttar
Pradesh on the ground that the application for recall was
‘contemptuous’; and
(iii) The broad guidelines that must guide courts when they direct
the presence of government officials before the court.
[2024] 1 S.C.R. 227

II. The High Court did not have the power to direct the notification
of the Rules proposed by the Chief Justice
24. The preamble to the Rules proposed by the Chief Justice expressly
states that the Rules have been made pursuant to Article 229 of
the Constitution. Article 229 pertains to ‘officers and servants’ of the
High Courts. Article 229(2) provides that the conditions of service of
officers and servants of the High Court shall be as may be prescribed
by rules made by the Chief Justice of the High Court or any other
Judge or officer authorized by the Chief Justice for the purpose. The
proviso to the Article mandates that the rules made under Article
229(2) require the approval of the Governor of the State, in so far as
they relate to salaries, allowances, leave or pensions. The provision
reads as follows:
229. Officers and servants and the expenses of High
Courts. — (1) Appointments of officers and servants of
a High Court shall be made by the Chief Justice of the
Court or such other Judge or officer of the Court as he
may direct:
Provided that the Governor of the State may by rule require
that in such cases as may be specified in the rule no person
not already attached to the Court shall be appointed to
any office connected with the Court save after consultation
with the State Public Service Commission.
(2) Subject to the provisions of any law made by the
Legislature of the State, the conditions of service of officers
and servants of a High Court shall be such as may be
prescribed by rules made by the Chief Justice of the Court
or by some other Judge or officer of the Court authorised
by the Chief Justice to make rules for the purpose:
Provided that the rules made under this clause shall, so far
as they relate to salaries, allowances, leave or pensions,
require the approval of the Governor of the State.
(3) The administrative expenses of a High Court, including
all salaries, allowances and pensions payable to or in
respect of the officers and servants of the Court, shall be
228 [2024] 1 S.C.R.
charged upon the Consolidated Fund of the State, and

any fees or other moneys taken by the Court shall form
part of that Fund
(Emphasis Supplied)
25. Article 229(2) pertains only to the service conditions of ‘officers and
servants’ of the High Courts and does not include Judges of the High
Court (both sitting and retired judges). The Chief Justice does not
have the power, under Article 229, to make rules pertaining to the
post-retiral benefits payable to former Chief Justices and judges of
the High Court. Therefore, the Rules proposed by the Chief Justice,
in the present case, do not fall within the competence of the Chief
Justice under Article 229. The reliance placed on the provision in
the preamble to the Rules is misplaced.
26. It is a settled principle of law that merely because reference is made
to a wrong provision of law while exercising power, that by itself
does not vitiate the exercise of power so long as the power of the
authority can be traced to another source of law. However, in the
Rules, the Impugned Orders or in its submissions before this Court,
the High Court has not brought to the fore any other source of law
which empowers the Chief Justice to frame binding rules for post-
retiral benefits of former judges of the High Court. In the Impugned
Orders, the High Court merely adverts to the judgements of this Court
in P Ramakrishnan Raju (supra) and Justice V.S. Dave (supra) to
justify the imposition of the Rules on the state government.
27. In our considered opinion, the reliance on the judgements of this
Court to justify the promulgation of Rules by the Chief Justice is based
on an erroneous and over-expansive interpretation of the directions
of this Court. As stated above, this Court in P Ramakrishnan Raju
(supra) appreciated the scheme in Andhra Pradesh and observed
that the Court “hopes and trusts that the States who have not so far
framed such scheme will formulate the same, depending on the local
conditions”. Further, in Justice V.S. Dave (supra), the Court closed
the contempt proceedings against the State of Uttar Pradesh noting
that the state had already framed a scheme for post-retiral benefits.
The Court held that slight variations from the scheme adopted in
Andhra Pradesh were permissible and flexibility was contemplated
in P Ramakrishnan Raju (supra) for states to frame their respective
[2024] 1 S.C.R. 229

schemes. Further, the court directed that “states where the allowances
paid are lesser than the State of Andhra Pradesh, shall consider the
necessity of an upward revision of such allowances at the appropriate
stage and time.”
28. There is no iota of doubt that in the above judgements, this Court
directed the state governments to frame schemes for post-retiral
benefits. The above judgements of this Court did not grant the Chief
Justices of High Courts, acting on the administrative side, the power
to frame rules about post-retiral benefits for former judges that must
mandatorily be notified by the State Governments. Further, the Court
recognized the need for flexibility and granted state governments
the leeway to duly account for local conditions.
29. Further, the High Court’s conduct on the judicial side in the Impugned
Orders was also erroneous. The High Court, acting under Article 226
of the Constitution, cannot usurp the functions of the executive and
compel the executive to exercise its rule-making power in the manner
directed by it. Compelling the State Government to mandatorily notify
the Rules by the next date of hearing, in the First Impugned Order,
virtually amounted to the High Court issuing a writ of mandamus to
notify the Rules proposed by the Chief Justice. Such directions by
the High Court are impermissible and contrary to the separation of
powers envisaged by the Constitution. The High Court cannot direct
the State Government to enact rules on a particular subject, by a
writ of mandamus or otherwise.
30. The High Court, acting on the judicial side, could not compel the
State Government to notify Rules proposed by the Chief Justice in
the purported exercise of his administrative powers. Policymaking
by the government envisages various steps and the consideration of
various factors, including local conditions, financial considerations,
and approval from various departments. The High Court cannot use
its judicial powers to browbeat the State Government to notify the
Rules proposed by the Chief Justice. As the Rules were promulgated
by the Chief Justice without competence, at best, they amounted
to inputs to the State Government. The State Government was free
to constructively consider the desirability of the Rules within its
own decision-making apparatus. Therefore, the High Court acted
beyond its jurisdiction under Article 226 by frequently summoning
officers to expedite the consideration of the Rules and issuing
230 [2024] 1 S.C.R.
directions to notify the Rules by a fixed date, under the threat of

criminal contempt.
III. Criminal Contempt cannot be initiated against a party for availing
legal remedies and raising a legal challenge to an order
31. The Contempt of Courts Act, 1971 defines ‘civil contempt’ and ‘criminal
contempt’ in the following terms:
2. Definitions. — In this Act, unless the context otherwise
requires, —
[...]
(b) “civil contempt” means wilful disobedience to any
judgment, decree, direction, order, writ or other process of
a court or wilful breach of an undertaking given to a court;
(c) “criminal contempt” means the publication (whether
by words, spoken or written, or by signs, or by visible
representations, or otherwise) of any matter or the doing
of any other act whatsoever which—
(i) scandalises or tends to scandalise, or lowers or tends
to lower the authority of, any court; or
(ii) prejudices, or interferes or tends to interfere with, the
due course of any judicial proceeding; or
(iii) interferes or tends to interfere with, or obstructs or
tends to obstruct, the administration of justice in any
other manner;
32. The Act makes a clear distinction between two types of contempt.
‘Wilful disobedience’ of a judgement, decree, direction, order, writ,
or process of a court or wilful breach of an undertaking given to a
court amounts to ‘civil contempt’. On the other hand, the threshold
for ‘criminal contempt’ is higher and more stringent. It involves
‘scandalising’ or ‘lowering’ the authority of any court; prejudicing or
interfering with judicial proceedings; or interfering with or obstructing
the administration of justice.
33. In the second Impugned Order, the High Court held that the actions of
the officials of the Government of Uttar Pradesh constituted criminal
contempt as there was no “valid reason” to not comply with the
earlier Order. Even if the High Court’s assessment is assumed to be
[2024] 1 S.C.R. 231

correct, non-compliance with the First Impugned Order could at most,

constitute civil contempt. The High Court failed to give any reasoning
for how the purported non-compliance with the First Impugned Order
was of the nature to meet the standard of criminal contempt. The
High Court acted in haste by invoking criminal contempt against the
officials of the Government of Uttar Pradesh and directing for them
to be taken into custody.
34. In our considered opinion, however, even the standard for civil
contempt was not met in the facts of the present case. In a consistent
line of precedent, this Court has held that while initiating proceedings
of contempt of court, the court must act with great circumspection.
It is only when there is a clear case of contemptuous conduct that
the alleged contemnor must be punished. The power of the High
Courts to initiate contempt proceedings cannot be used to obstruct
parties or their counsel from availing legal remedies.
35. In the present case, the State of Uttar Pradesh was availing its
legitimate remedy of filing a recall application. From a perusal of
the record, it appears that the application was filed in a bona fide
manner. Not only had the Finance Department raised its concerns
regarding the competence of the Chief Justice before the High Court
but its previous conduct, including file notings of the department
and letters to the Central Government, indicate that this objection
had been raised by them in the past. The legal position taken by
the Government in the recall application was evidently based on
their desire to avail their legal remedy and not to willfully disobey
the First Impugned Order.
36. The objections raised by the Government of Uttar Pradesh with
regard to legal obstacles in complying with the First Impugned Order
were never adjudicated by the High Court. Instead, the High Court
regarded the objection as an attempt to obstruct justice, without
even a cursory attempt to provide reasons. Applying the standards
delineated above, it is clear that the actions of the government
of Uttar Pradesh did not constitute even ‘civil contempt’ let alone
‘criminal contempt’. The circumstances most definitely did not warrant
the High Court acting in haste, by directing that the officials present
before the court be taken into custody. This summary procedure,
although, permitted under Section 14 of the Contempt of Courts Act
cannot be invoked as a matter of routine and is reserved for only
extraordinary circumstances.
232 [2024] 1 S.C.R.
37. Such summary procedure, as has been held by this Court, in Leila
David v. State of Maharashtra,8 can only be invoked in exceptional
cases, such as instances where:
“36. ….after being given an opportunity to explain their
conduct, not only have the contemnors shown no remorse
for their unseemly behavior, but they have gone even
further by filing a fresh writ petition in which apart from
repeating the scandalous remarks made earlier, certain
new dimensions in the use of unseemly and intemperate
language have been resorted to further denigrate and
scandalize and overawe the Court. This is one of such
cases where no leniency can be shown as the contemnors
have taken the liberal attitude shown to them by the Court
as license for indulging in indecorous behavior and making
scandalous allegations not only against the judiciary but
those holding the highest positions in the country.”
No such situation prevailed in the present case. Therefore, the
invocation of criminal contempt and taking the government officials
into custody was not warranted.
IV. Summoning of Government Officials before Courts
38. Before concluding, we must note the conduct of the High Court in
frequently summoning officials of the Government of Uttar Pradesh.
The appearance of government officials before courts must not be
reduced to a routine measure in cases where the government is a
party and can only be resorted to in limited circumstances. The use
of the power to summon the presence of government officials must
not be used as a tool to pressurize the government, particularly,
under the threat of contempt.
39. The Court must also refrain from relying on mere undertakings
by government officials in court, without consent on affidavit or
instructions to law officers such as the Attorney General, Solicitor
General, or the Advocate Generals of the states. Courts must be
cognizant of the role of law officers before summoning the physical
presence of government officials.
8 (2009) 10 SCC 337

[2024] 1 S.C.R. 233

40. Under Article 76 of the Constitution, the Attorney General is appointed

by the President and serves in an advisory capacity, providing legal
counsel to the Union Government. The responsibilities of the Attorney
General include advising on legal matters, performing assigned
legal duties, and representing the government in various courts.
Similarly, under Article 165 of the Constitution, the Advocate General
is appointed by the Governor of each state. The Advocate General
provides legal advice to the state government, performs legal duties
as assigned, and discharges functions conferred by the Constitution.
Several other law officers also represent the Union and the states
including the Solicitor General, Additional Solicitor General, and
Additional Advocates General for the states. They inter alia obtain
instructions from the various departments of the government and
represent the government before the courts.
41. Law officers act as the primary point of contact between the courts
and the government. They not only represent the government as an
institution but also represent the various departments and officials
that comprise the government. This Court in Mohd. Iqbal Khandaly
v. Abdul Majid Rather,9 had occasion to observe that there was no
justification to direct the Additional Advocate General, not to appear
for the appellant in a contempt petition and to direct that he should
merely assist the court.
42. In the present case, instead of adjudicating on the legal position
taken by the Government of Uttar Pradesh on affidavit or hearing
the Additional Advocate General present in the court, the High Court
repeatedly summoned government officials. The government was
also directed to notify the Rules based on a “no objection” from the
officials of the Finance Department purportedly made before the
High Court, which is now contested by the state. Such situations can
be avoided in cases where submissions on affidavit can be sought
and the law officers of the Government are present in court, with
instructions. The issuance of bailable warrants by the High Court
against officials, including the Chief Secretary, who was not even
summoned in the first place, further indicates the attempt by the
High Court to unduly pressurise the government.
9 (1994) 4 SCC 34.

234 [2024] 1 S.C.R.
43. This Court in State of Uttar Pradesh v. Manoj Kumar Sharma,10

frowned upon the frequent summoning of government officials “at
the drop of a hat”. This Court held:
“17. A practice has developed in certain High Courts
to call officers at the drop of a hat and to exert direct
or indirect pressure. The line of separation of powers
between Judiciary and Executive is sought to be crossed
by summoning the officers and in a way pressurizing them
to pass an order as per the whims and fancies of the Court.
18. The public officers of the Executive are also performing
their duties as the third limbs of the governance. The
actions or decisions by the officers are not to benefit them,
but as a custodian of public funds and in the interest of
administration, some decisions are bound to be taken. It
is always open to the High Court to set aside the decision
which does not meet the test of judicial review, but
summoning officers frequently is not appreciable at all. The
same is liable to be condemned in the strongest words.
…
21. Thus, we feel, it is time to reiterate that public officers
should not be called to court unnecessarily. The dignity and
majesty of the court is not enhanced when an officer is
called to court. Respect to the court has to be commanded
and not demanded and the same is not enhanced by calling
the public officers. The presence of public officer comes
at the cost of other official engagement demanding their
attention. Sometimes, the officers even have to travel long
distance. Therefore, summoning of the officer is against
the public interest as many important tasks entrusted to
him get delayed, creating extra burden on the officer or
delaying the decisions awaiting his opinion. The court
proceedings also take time, as there is no mechanism
of fixed time hearing in courts as of now. The courts
have the power of pen which is more effective than the
presence of an officer in court. If any particular issue
10 (2021) 7 SCC 806.

[2024] 1 S.C.R. 235

arises for consideration before the court and the advocate

representing the State is not able to answer, it is advised
to write such doubt in the order and give time to the State
or its officers to respond.”
(emphasis supplied)
44. Courts must refrain from summoning officials as the first resort.
While the actions and decisions of public officials are subject to
judicial review, summoning officials frequently without just cause is
not permissible. Exercising restraint, avoiding unwarranted remarks
against public officials, and recognizing the functions of law officers
contribute to a fair and balanced judicial system. Courts across the
country must foster an environment of respect and professionalism,
duly considering the constitutional or professional mandate of law
officers, who represent the government and its officials before the
courts. Constantly summoning officials of the government instead of
relying on the law officers representing the government, runs contrary
to the scheme envisaged by the Constitution.
45. Enriched by the valuable insights shared in discussions with my
esteemed colleagues Justice J.B. Pardiwala and Justice Manoj Misra,
we have framed a Standard Operating Procedure (SOP) specifically
addressing the appearance of Government Officials before the
courts. At its core, this SOP emphasizes the critical need for courts
to exercise consistency and restraint. It aims to serve as a guiding
framework, steering courts away from the arbitrary and frequent
summoning of government officials and promoting maturity in their
functioning. The SOP is set out below:
Standard Operating Procedure (SOP) on Personal Appearance

of Government Officials in Court Proceedings
This Standard Operating Procedure is applicable to all court
proceedings involving the government in cases before the Supreme
Court, High Courts and all other courts acting under their respective
appellate and/or original jurisdiction or proceedings related to
contempt of court.
1. Personal presence pending adjudication of a dispute
1.1 Based on the nature of the evidence taken on record,
proceedings may broadly be classified into three categories:
236 [2024] 1 S.C.R.
a. Evidence-based Adjudication: These proceedings

involve evidence such as documents or oral
statements. In these proceedings, a government
official may be required to be physically present for
testimony or to present relevant documents. Rules
of procedure, such as the Code of Civil Procedure,
1908, or Criminal Procedure Code 1973, govern
these proceedings.
b. Summary Proceedings: These proceedings, often
called summary proceedings, rely on affidavits,
documents, or reports. They are typically governed
by the Rules of the Court set by the High Court and
principles of Natural Justice.
c. Non-adversarial Proceedings: While hearing non-
adversarial proceedings, the court may require the
presence of government officials to understand a
complex policy or technical matter that the law officers
of the government may not be able to address.
1.2 Other than in cases falling under para 1.1(a) above, if the issues
can be addressed through affidavits and other documents,
physical presence may not be necessary and should not be
directed as a routine measure.
1.3 The presence of a government official may be directed, inter
alia, in cases where the court is prima facie satisfied that specific
information is not being provided or is intentionally withheld, or
if the correct position is being suppressed or misrepresented.
1.4 The court should not direct the presence of an official solely
because the official’s stance in the affidavit differs from the
court’s view. In such cases, if the matter can be resolved based
on existing records, it should be decided on merits accordingly.
2. Procedure prior to directing personal presence
2.1 In exceptional cases wherein the in-person appearance of
a government official is called for by the court, the court
should allow as a first option, the officer to appear
before it through video conferencing.
[2024] 1 S.C.R. 237

2.2 The Invitation Link for VC appearance and viewing, as

the case may be, must be sent by the Registry of the
court to the given mobile no(s)/e-mail id(s) by SMS/email/
WhatsApp of the concerned official at least one day before
the scheduled hearing
2.3 When the personal presence of an official is directed,
reasons should be recorded as to why such presence is
required.
2.4 Due notice for in-person appearance, giving sufficient time
for such appearance, must be served in advance to the
official. This would enable the official to come prepared and
render due assistance to the court for proper adjudication
of the matter for which they have been summoned.
3. Procedure during the personal presence of government
officials: In instances where the court directs the personal
presence of an official or a party, the following procedures are
recommended:
3.1 Scheduled Time Slot: The court should, to the extent
possible, designate a specific time slot for addressing
matters where the personal presence of an official or a
party is mandated.
3.2 The conduct of officials: Government officials participating
in the proceedings need not stand throughout the hearing.
Standing should be required only when the official is
responding to or making statements in court.
3.3 During the course of proceedings, oral remarks with the
potential to humiliate the official should be avoided.
3.4 The court must refrain from making comments on the
physical appearance, educational background, or social
standing of the official appearing before it.
3.5 Courts must cultivate an environment of respect and
professionalism. Comments on the dress of the official
appearing before the court should be avoided unless
there is a violation of the specified dress code applicable
to their office.
238 [2024] 1 S.C.R.
4. Time Period for compliance with judicial orders by the

Government
4.1 Ensuring compliance with judicial orders involving intricate
policy matters necessitates navigating various levels of
decision-making by the Government. The court must
consider these complexities before establishing specific
timelines for compliance with its orders. The court should
acknowledge and accommodate a reasonable timeframe,
as per the specifics of the case.
4.2 If an order has already been passed, and the government
seeks a revision of the specified timeframe, the court may
entertain such requests and permit a revised, reasonable
timeframe for the compliance of judicial orders, allowing
for a hearing to consider modifications.
5. Personal presence for enforcement/contempt of court
proceedings
5.1 The court should exercise caution and restraint when
initiating contempt proceedings, ensuring a judicious and
fair process.
5.2 Preliminary Determination of Contempt: In a proceeding
instituted for contempt by wilful disobedience of its order,
the court should ordinarily issue a notice to the alleged
contemnor, seeking an explanation for their actions, instead
of immediately directing personal presence.
5.3 Notice and Subsequent Actions: Following the issuance
of the notice, the court should carefully consider the
response from the alleged contemnor. Based on their
response or absence thereof, it should decide on the
appropriate course of action. Depending on the severity of
the allegation, the court may direct the personal presence
of the contemnor.
5.4 Procedure when personal presence is directed: In
cases requiring the physical presence of a government
official, it should provide advance notice for an in-person
appearance, allowing ample time for preparation. However,
the court should allow the officer as a first option, to appear
before it through video conferencing.
[2024] 1 S.C.R. 239

5.5 Addressing Non-Compliance: The court should

evaluate instances of non-compliance, taking into account
procedural delays or technical reasons. If the original order
lacks a specified compliance timeframe, it should consider
granting an appropriate extension to facilitate compliance.
5.6 When the order specifies a compliance deadline and
difficulties arise, the court should permit the contemnor
to submit an application for an extension or stay before
the issuing court or the relevant appellate/higher court.
46. In a nutshell, the conclusions reached in this Judgement are as follows:
a. The High Court did not have the power to direct the State
pertaining to post-retiral benefits for former Judges of the
High Court. The Chief Justice did not have the competence to
frame the rules under Article 229 of the Constitution. Further,
the High Court, acting on the judicial side, does not have the
power to direct the Government to frame rules proposed by it
on the administrative side.
b. The power of criminal contempt could not be invoked by the High
Court against officials of the Government of Uttar Pradesh on
the ground that the application for recall of the First Impugned
Order was ‘contemptuous’. The actions of the officials do not
meet the standard of both ‘criminal contempt’ and ‘civil contempt’.
c. The conduct of the High Court in frequently summoning
government officials to exert pressure on the government, under
the threat of contempt, is impermissible. Summoning officials
repeatedly, instead of relying on the law officers representing the
government or the submissions of the government on affidavit,
runs contrary to the scheme envisaged by the Constitution.
d. The SOP on Personal Appearance of Government Officials
in Court Proceedings framed by this Court in Para 45 of this
Judgement must be followed by all courts across the country.
All High Courts shall consider framing rules to regulate the
appearance of Government officials in court, after taking into
account the SOP which has been formulated above.
240 [2024] 1 S.C.R.
47. Both the Impugned Orders dated 4 April 2023 and 19 April 2023
are set aside and the appeals are disposed of. The High Court is
at liberty to hear the writ petition, in view of the observations made
in this judgement.
48. The Registry is directed to communicate the judgment to the Registrar
General of every High Court.
49. Pending applications, if any, stand disposed of.
Headnotes prepared by: Nidhi Jain Result of the case: Appeals

disposed of.
[2024] 1 S.C.R. 241 : 2024 INSC 16
Case Details
Satish P. Bhatt
v.
The State of Maharashtra & Anr
(Criminal Appeal No.42 of 2024)
03 January 2024
The High Court took a firm stance against the appellant’s continued
failure to fulfil his financial obligations, culminating in the cancellation
of his bail and the order of suspension of sentence. Whether the
High Court was justified.
Headnotes
Judicial Directives – Disregard for – The High Court cancelled
the order of suspension of sentence and bail granted to the
appellant and intervenor (petitioner before the High Court) as
they violated the undertaking given before the High Court and
further violated the condition in an order granting extension
of time to comply – Propriety:
Held: Before the High Court the appellant and the intervenor filed
an undertaking based on a settlement on 03.07.2018 according to
which it was agreed that a total sum of Rs.4,63,50,000/- (Out of
the said amount Rs.73,50,000/- was already paid and remaining
amount of Rs.3,90,00,000/- was to be paid in instalments) would
be paid to the complainant-respondent no.2 – Based on the said
undertaking an interim protection was granted by suspending the
sentence of imprisonment and they were directed to be released
on bail on furnishing a personal bond – However, there was a
failure to fulfil financial obligations – Appellant and intervenor
made submissions before the Supreme Court regarding, who is
to pay how much amount – The Court not inclined to go into the
said question – The fact remains that the total amount agreed
to be paid has not been paid and as per the order of the High
Court, the revisionists (appellant and intervenor) being in default in
payment of the agreed amount, the interim protection granted by
way of bail and suspension of sentence, would stand withdrawn
without reference to the Court – No infirmity in the impugned
order of the High Court – The appeal is accordingly dismissed
* Author
242 [2024] 1 S.C.R.
with costs quantified at Rs. 5 lakhs to be paid to the respondent

No. 2 (Complainant). [Paras 7, 8, 17, 19]
List of Keywords
Disregard for judicial directives; undermining judicial efficacy.

Appearances
CRIMINAL APPELLATE JURISDICTION : Criminal Appeal No.42 of

2024.
of Judicature at Bombay in CRLAP No.244 of 2019.
Appearances:
Atul Babasaheb Dakh, Diganta Gogoi, Bitu Kumar Singh, Advs. for
the Appellant.
Aaditya Aniruddha Pande, Siddharth Dharmadhikari, Bharat Bagla,
Sourav Singh, Aditya Krishna, Siddharth Sangal, Ms. Richa Mishra,
Chirag Sharma, Ms. Nilanjani Tandon, Ms. Harshita Agrawal, Manoj
K. Mishra, Ghanshyam Upadhyay, A. Baskar, J.K. Mishra, Umesh
Dubey, Vishal, Ms. Madhulika, Advs. for the Respondents.

Judgment
Vikram Nath, J.
1. The facts of this case bring to light a situation marked by a persistent
disregard for judicial directives and a lackadaisical approach to legal
and financial obligations. The behaviour of the Petitioner stands
as a testament to how an individual’s nonchalant attitude towards
financial responsibilities and court orders can undermine the essence
of judicial efficacy.
2. The High Court took a firm stance against the appellant’s continued
failure to fulfil his financial obligations, culminating in the cancellation
of his bail and suspension of sentence. This decision, reflecting the
frustration of the legal system with repeated non-compliance, sets
the stage for our deliberation.
3. Leave granted.
[2024] 1 S.C.R. 243
SATISH P. BHATT v. THE STATE OF MAHARASHTRA & ANR
4. The present appeal assails the correctness of the judgment and

order dated 23.07.2019 passed by the High Court of Judicature at
Bombay cancelling the order of suspension of sentence and bail
granted to the appellant as also the intervenor (petitioner before
the High Court) vide order dated 03.07.2018 as they violated the
undertaking given before the High Court on 03.07.2018 and recorded
in the order of even date and further violated the condition contained
in paragraph 3 of the order dated 20.03.2019 granting extension
of time to comply.
5. The appellant-Satish P.Bhatt and the intervenor Vishwanath
Ramakrishna Nayak were Chairman-cum-Managing Director and
Vice-Chairman of a company by the name of M/s.Astral Glass
Private Limited (in short the AGPL). The company AGPL as also
the appellant and the intervenor were convicted for offence under
Section 138 of the Negotiable Instruments Act, 18811 vide judgment
and order of the Trial Court dated 26.08.2011 in three separate cases
and were awarded sentence of ten months with total liability of Rs.5
crores cumulatively in all the three cases. The operative portion of
the conviction and sentence as recorded by the Trial Court in one
of the cases is reproduced hereunder:
“I) Accused No.2 Mr.Satish Padamanath Bhat,
aged 54 years and accused no.3 Mr.Vishwanath
Ramakrsishna Nayak, aged 50 years both r/o.Borivali
(E), Mumbai-400 066 are hereby convicted vide
provisions under Section 255(2) of Cr.P.C. for offence
under Section 138 of Negotiable Instruments Act and
they are sentenced to suffer Simple Imprisonment for
10 (ten) months each.
II) Both accused shall also to pay in total Rs.1,10,00,000/-
(Rupees one crore and ten lakhs only) as compensation
to Complainant vide provisions under Section 357(3)
of Cr.P.C. within 3 months. In default to suffer further
Simple imprisonment for 6 (six) months each.
III) Cash security of Rs.3000/- of accused no.2 shall
stand continued till appeal period is over and P.R.
bond of accused no.3 stands cancelled….”
1 NI Act
244 [2024] 1 S.C.R.
6. Three appeals jointly filed by the appellant, the intervenor as also

AGPL were dismissed by the Sessions Court vide common judgment
and order dated 30.01.2014. The Sessions Court granted a month’s
time to surrender in order to undergo the sentence.
7. Aggrieved by the same, they preferred three revisions before the
High Court as originally there were three complaints. Before the High
Court the appellant and the intervenor filed an undertaking based on
a settlement on 03.07.2018 according to which it was agreed that
a total sum of Rs.4,63,50,000/- would be paid to the complainant-
respondent no.2. Out of the said amount Rs.73,50,000/- had already
been paid before the appeal Court. As such, the remaining amount
of Rs.3,90,00,000/- was to be paid in installments. The payment
schedule was also laid down in paragraphs 6 and 7 whereas
paragraph 5 mentioned amount of settlement. Paragraph 8 of the
settlement mentioned that the said amount would be paid equally
by the appellant and the intervenor. However, in default of payment
by either of them as per their agreed share in the settlement they
would be held liable and would be prosecuted as per law.
8. Based on the undertaking, the learned Single Judge of the High
Court passed an order on the same day i.e. 03.07.2018 and granted
interim protection by suspending the sentence of imprisonment and
they were directed to be released on bail on furnishing a personal
bond in the sum of Rs.25,000/- with one or more sureties in the like
amount. The Court further directed that no further extension shall be
granted for payment of the settled amount and fixed 8th October,
2018 for reporting compliance.
9. As per the undertaking, Rs.2 crores was to be paid on or before
30th September, 2018, in addition to Rs.25 lakhs which was paid on
the date of passing of the order. Remaining amount of Rs. 1 crore
65 lakhs was to be paid on or before 15th March, 2019. Thereafter
the matter was taken up by the High Court on 20th March, 2019 by
which time they had paid only Rs.82 lakhs. Further time was sought
to pay the balance amount till 20th April, 2019. The counsel for the
complainant pointed out that the amount due was Rs.1,69,10,000/-.
The High Court on 20.03.2019 extended the time for payment of
Rs.1,69,10,000/- till 20th April, 2019 and further provided that if
the said amount was not paid then the order granting bail and also
suspending the sentence shall stand cancelled forthwith without
further reference to Court.
[2024] 1 S.C.R. 245
10. Thereafter it appears that the present appellant Satish P.Bhatt filed
a criminal application in the pending revision on 16th April, 2019
stating that he had paid his share of Rs.1,95,00,000/- being 50% of
Rs.3,90,00,000/- as mentioned in the order dated 3rd July, 2018 and,
therefore, he may be absolved of the charges and acquitted. On the
said application, notice was issued to the complainant on 19th June,
2019 fixing 10th July, 2019. On that date, it was adjourned to 16th
July, 2019. Thereafter on 16th July it was adjourned to 23rd July,
2019. On 23rd July, 2019, the High Court passed the impugned order
cancelling the suspension of sentence and bail granted vide order
dated 3rd July, 2018 for non-compliance of the undertaking and in
view of the order dated 20th March, 2019 wherein while extending
the time it was observed that in case of default, the bail order and the
suspension of sentence order would stand automatically withdrawn
without reference to the Court.
11. Learned counsel for the appellant has sought to argue that out of
Rs.3,90,00,000/- his half share would amount to Rs.1,95,00,000/-
which has duly been paid and, therefore, the order of the High Court
cancelling his bail and suspension of sentence was not warranted
and deserves to be set aside.
12. On the other hand, learned counsel for the complainant has submitted
that as of date there is still an outstanding amount of Rs.83,10,000/-
and has, therefore, claimed that the complainant would be entitled
to receive Rs.83,10,000/- along with compound interest @ 12% p.a.
from 15th March, 2019 till actual payment is made along with costs
against the appellant as also the intervenor.
13. The intervenor has also filed his response and according to him the
partnership between the appellant and the intervenor was in the ratio
of 60:40 and that they had actually agreed to pay the settled amount
of Rs.4,63,50,000/- in that proportion as per their shares in the firm.
It is also his case that the amount of Rs.73,50,000 had been paid by
him alone prior to 03.07.2018 during the time when the appeal was
pending before the Sessions Court and, therefore, he was entitled
to adjustment of the said amount. Further his case is that out of the
settled amount to be paid to the complainant i.e. Rs.4,63,50,000/-
his share being 40%, the amount liable to be paid by him would be
Rs.1,85,00,000/-. As he had paid Rs.73,50,000 earlier he was liable
to pay a further amount of Rs.1,11,90,000/-. According to him, he
246 [2024] 1 S.C.R.
has paid the said amount of Rs.1,11,90,000/- after the order dated
03.07.2018. The outstanding amount of Rs.83,10,000/- falls in the
share of the appellant whose total liability being 60% of the settled
amount would come to Rs.2,78,10,000/- and he having paid only
Rs.1,95,00,000/- there is a shortfall of Rs.83,10,000/- which the
appellant should pay.
14. It is further submitted that the intervenor is being unnecessarily
suffering because of remaining amount not being paid by the
appellant. It is also the case of the intervenor that as per the e-mails
exchanged between them which have been duly placed on record
prior to the undertaking dated 03.07.2018, it was decided and agreed
between them that the amount would be paid as per their respective
shares i.e. in the ratio of 60:40. The said exchange of e-mails and
the draft settlement was also shared with the lawyer and the same
was duly accepted. The intervenor was not dealing with the lawyer
directly and it was the appellant who was dealing with the lawyer.
The appellant has mischievously and fraudulently altered the words
“as per the respective shares” by substituting it with “equally”. The
intervenor was hurriedly made to sign the undertaking on the date
it was being filed i.e. 03.07.2018 and he trusted the appellant and
the lawyer who was appearing for both of them. It is further stated
that the intervenor has also filed before the High Court by way of a
modification application to deal with this aspect of the matter, which
application is still pending.
15. We have perused the undertaking dated 03.07.2018 as also the order
dated 03.07.2018 and also the subsequent orders passed by the High
Court. It is apparent from the same that the complainant was entitled
to receive a total amount of Rs.4,63,50,000/-. The undertaking as
also the order dated 03.07.2018 clearly mention that both of them
will pay the amount equally as agreed by and between them and it
further contains a stipulation that in default of the payment by either
of them as per their agreed share in the settlement, they shall be
held liable and prosecuted as per law.
16. The settlement between the two directors i.e. the appellant and the
intervenor is inter se these two only and the complainant is not bound
by the same. Complainant’s agreement or consent was only to the
extent of accepting Rs.4,63,50,000/- only. He was not a signatory to
the agreement which was signed by the two parties. Admittedly, both
[2024] 1 S.C.R. 247
the appellant and the intervenor were Chairman and Vice-Chairman

of the company AGPL and, therefore, were convicted by the Trial
Court and their conviction was affirmed by the Appellate Court.
17. We are not inclined to go into this question as to who is to pay how
much amount. The fact remains that the total amount agreed to
be paid has not been paid and as per the order of the High Court
dated 20.03.2019 the revisionists being in default in payment of the
agreed amount, the interim protection granted by way of bail and
suspension of sentence, would stand withdrawn without reference
to the Court. We find no infirmity in the impugned order.
18. There is a protection provided by this Court vide order dated
26.08.2019 regarding stay of arrest, as a result of which the appellant
and the intervenor have still not undergone the sentence. On the
other hand, the complainant has still not reaped not only the fruits
of the order dated 03.07.2018 but also of the order of the Trial Court
dated 26.08.2011. He agreed to receive a much lesser amount than
he was entitled to under the order of the Trial Court. He has been
litigating since 2007 almost 16 years by now.
19. We, accordingly, do not find any illegality in the order passed by the
High Court. The appeal is accordingly dismissed with costs quantified
at Rs. 5 lakhs to be paid to the respondent No. 2 (Complainant) within
four weeks from today. It is clarified that this amount of costs will not
be adjusted against the compensation awarded to the respondent
No.2 but will be in addition to it.
20. It is further directed that the appellant and the intervenor to surrender
within a period of four weeks from today to undergo the sentence. If
they do not surrender, the High Court to take appropriate coercive
measures to get the sentence executed. The revisions before the
High Court are still pending. The High Court will proceed to decide
the revisions as also pending applications if any and ensure that the
undertaking is fully complied with and the complainant is suitably
compensated for the further harassment caused.
21. Pending application(s), if any, stand disposed of.
Headnotes prepared by: Ankit Gyan Result of the case: Appeal

dismissed.
[2024] 1 S.C.R. 248 : 2024 INSC 19
Case Details
Darshan Singh
v.
State of Punjab
(Criminal Appeal No. 163 of 2010)
04 January 2024
[B. R. Gavai, Pamidighantam Sri Narasimha and
Aravind Kumar*, JJ.]
Whether the prosecution had proved beyond reasonable doubt,
the entire chain of circumstances, not leaving any link missing for
the appellant to escape from the clutches of law.
Headnotes
Penal Code, 1860 – s. 302 rw s. 34 – Murder – Prosecution
case that the appellant along with the lady with whom he
had illicit relations, administered poison to the appellant’s
wife, with the motive to eliminate her and caused her death
– Conviction u/s.302/34 and sentenced to life imprisonment
– High Court upheld the order of conviction and sentence
against the appellant while acquitted the lady – Correctness:
Held: There was no eye-witness to the incident – Prosecution case
rested on circumstantial evidence – Presence of the appellant and
the lady in the appellant’s house in the intervening night not firmly
and cogently established – Several omissions and improvements
in the cross examination of the prosecution witnesses – There
was a strong hypothesis that the deceased had committed suicide,
which explanation was led by the appellant in his statement u/s.313
CrPC and is sufficient to create doubt – Furthermore, evidence of
prosecution witnesses not sufficient to prove presence of the lady at
the appellant’s house, as a natural corollary, such evidence cannot
be relied on to conclude that the appellant was present in the house
– Also the manner in which the High Court sought to distinguish
the case of the appellant from the lady is perverse – When the
conviction is to be based on circumstantial evidence solely, then
there should not be any snap in the chain of circumstances – Failure
* Author
[2024] 1 S.C.R. 249
DARSHAN SINGH v. STATE OF PUNJAB
to prove a single circumstance cogently can cause a snap in the

chain of circumstances and make the accused entitled to benefit
of doubt – In view thereof, the concurrent findings of conviction
set aside – Code of Criminal Procedure, 1973 – Evidence. [Paras
25, 30, 33, 36-38]
Code of Criminal Procedure, 1973 – s. 161 – Examination of
witnesses by the police – Failure of the prosecution witnesses
to mention in their statements u/s 161 about the involvement
of an accused – However, their subsequent statement before
court during trial regarding involvement of that particular
accused – Reliance upon:
Held: It cannot be relied upon – Prosecution cannot seek to prove
a fact during trial through a witness which such witness had not
stated to police during investigation – Evidence of that witness
regarding the said improved fact is of no significance. [Para 26]
Evidence – Circumstantial evidence – Evidentiary value:
Held: Circumstances from which an inference of guilt is sought
to be drawn must be cogently and firmly established – Those
circumstances should be of a definite tendency unerringly pointing
towards the guilt of the accused – Circumstances taken cumulatively
should form a chain so complete that there is no escape from
the conclusion, that within all human probability, the crime was
committed by the accused and they should be incapable of
explanation on any hypothesis other than that of the guilt of the
accused and inconsistent with his innocence. [Para 9]
Evidence – Rustic/illiterate witness – Evidentiary value:
Held: Appreciation of evidence led by such a witness has to be
treated differently from other kinds of witnesses – It cannot be
subjected to a hyper-technical inquiry – Evidence of a rustic/
illiterate witness must not be disregarded if there were to be
certain minor contradictions or inconsistencies in the deposition
– Witness. [Para 27]

Sharad Birdhichand Sarda v. State of Maharashtra
[1985] 1 SCR 88: (1984) 4 SCC 116; Rohtash Vs. State
of Haryana [2012] 6 SCR 62: (2012) 6 SCC 589; Sunil
250 [2024] 1 S.C.R.
Kumar Shambhu Dayal Gupta Vs. State of Maharashtra

2011 (72) ACC 699 (SC); Rudrappa Ramappa Jainpur
Vs. State of Karnataka (2004) 7 SCC 422; Vimal Suresh
Kamble Vs. Chaluverapinake, (2003) 3 SCC 175;
Pramila vs State of Uttar Pradesh 2021 SCC OnLine
SC 711; Periasami Vs. State of Tamil Nadu [1996] 6
Suppl. SCR 757: (1996) 6 SCC 457; Bhimsingh Vs.
State of Uttarakhand (2015) 4 SCC 281 – relied on.
Jaipal V. State of Haryana [2002] 2 Suppl. SCR 714:
(2003) 1 SCC 169; Trimukh Maroti Kirkan v. State of
Maharashtra [2006] 7 Suppl. SCR 156: (2006) 10 SCC
681; State of U.P. Vs. Chhoteylal [2011] 1 SCR 406:
AIR 2011 SC 697; Dimple Gupta (minor) Vs. Rajiv
Gupta [2007] 11 SCR 213: AIR 2008 SC 239; Sidhartha
Vashisht Vs. State of NCT of Delhi [2010] 4 SCR 103:
AIR 2010 SC 2352 – referred to.
List of Acts
Penal Code, 1860; Code of Criminal Procedure, 1973
Keywords
Murder; Acquittal; Imprisonment for life; Homicide; Suicide; Motive;
Benefit of doubt; Circumstantial evidence; Onus of proof; Improved
fact; Minor contradictions or inconsistencies; Omissions and
improvements; Seen together; Rustic/illiterate witness; Reliable
witness; Chance witness; Chemical examiner’s report; Plea of alibi.

Appearances

of 2010.
of Punjab & Haryana at Chandigarh in CRLA No.593-DB of 2000.
Appearances:
Abhimanyu Tewari, Ms. Eliza Bar, Siddhant Saroha, Tushar Bathija,
Praveer Singh, Parth Jain, Manav Bhalla, Advs. for the Appellant.
Prateek Chadha, DAG, Sreekar Aechuri, Pragya Ganjoo, Ms. Muskan
Singla, Ms. Rooh-e-hina Dua, Advs. for the Respondent.
[2024] 1 S.C.R. 251

Judgment
Aravind Kumar, J.
1. This appeal by special leave arises out of judgment and order dated
23.07.2009 passed in Criminal Appeal No.593-DB of 2000 by the
High Court of Punjab & Haryana. The High Court has upheld the
order of conviction and sentence, as against Darshan Singh (the
appellant) and has allowed the appeal of Rani Kaur (Accused No.
2), thereby acquitting her of all charges. The State of Punjab has
not challenged the acquittal of Rani Kaur by filing any special leave
petition. It is in this background that Darshan Singh had sought
special leave to appeal before us and leave came to be granted by
order dated 22.01.2010.
Case of the Prosecution:
2. The facts can be summed up in brief as follows:
The deceased, Amrik Kaur was married to Darshan Singh,
the appellant, some time in 1988. The marriage was arranged
through Melo Kaur (PW-3), the cousin sister of the deceased. The
prosecution alleges that their marital relationship was strained
owing largely to the fact that Darshan Singh had developed an illicit
partnership with Rani Kaur (A2). Several relatives had prevailed
on the appellant to put an end to his relationship with Rani Kaur,
but to no avail. The illicit relationship between Darshan Singh and
Rani Kaur is said to have lasted for at least three years before the
fateful day. It is the case of the prosecution that on the intervening
night of 18.05.1999 and 19.05.1999, Darshan Singh and Rani
Kaur, with the motive of eliminating the deceased, administered
poison and intentionally caused the death of Amrik Kaur.
3. On these allegations, Darshan Singh and Rani Kaur were prosecuted
for charges under Section 302 r/w Section 34 IPC. The Trial Court
convicted both the accused persons for the offence under Section 302
r/w Section 34 and sentenced them to undergo imprisonment for life.
252 [2024] 1 S.C.R.
Findings of the Trial Court and High Court:

4. The Trial Court has concluded that it was a case of homicide and
not suicide. It has found that the appellant had a strong motive
to commit the murder of his wife. It further held that the appellant
and Rani Kaur were present in the house on the intervening
night of 18.05.1999 and 19.05.1999 and therefore, the burden
lay on them to explain as to ‘how the body of Amrik Kaur who
was alive on the night of 18.05.1999 turned into a corpse’ the
next morning. The Court has completely disbelieved the theory
of suicide sought to be advanced on behalf of appellant. It was
noted that merely because there were no injuries on the body of
the deceased, that by itself would not obviate the possibility of
forceful administration of the poisonous substance. On the basis
of the above circumstances taken together, the Trial Court held
that the prosecution has proved its case beyond reasonable doubt
against the appellant and Rani Kaur.
5. In appeal, the High Court has agreed with the findings of the Trial
Court in so far as the appellant is concerned and has acquitted
Rani Kaur by extending her the benefit of doubt. It has found that
there is no other evidence except the testimony of PW3 and PW4,
to prove the presence of Rani Kaur on the intervening night of
18.05.1999 and 19.05.1999 at the appellant’s house.
ARGUMENTS OF MR. ABHIMANYU TEWARI, COUNSEL
APPEARING FOR APPELLANT:
6. PW3, Melo Kaur, is not a reliable witness. The presence of the
appellant, Darshan Singh, at the house on the intervening night
of 18.05.1999 and 19.05.1999 is sought to be established based
on her testimony. She has made several improvements in her
version, and her testimony suffers from several contradictions, and
therefore, it is not safe to rely on such a witnesses’ uncorroborated
testimony. It would be prejudicial to the appellant to rely on only
a part of her testimony and exclude the rest. If her testimony is
ignored in toto, there is no other evidence to establish the key
circumstance of appellant’s presence at the spot of crime.
6.1 That aluminium phosphide is rather impossible to administer
in a deceitful manner owing to its pungent smell and odour.
[2024] 1 S.C.R. 253
No injury marks have been found on the deceased, which

further establishes that there could not have been any forceful
administration of the poison. Therefore, it is submitted that it
is nothing but a case of suicide, the driving force for which,
was the confrontation with Melo Kaur. It is the appellants’ case
that Amrik Kaur was having an illicit affair with Melo Kaur’s
husband, Gurmel Singh PW4, and embarrassed with her sister
finding out, she self-administered the poisonous substance and
committed suicide. Counsel has submitted judgments to support
the proposition that aluminium phosphide has a pungent smell
similar to garlic.
6.2 Reliance has been placed on Jaipal V. State of Haryana –
(2003) 1 SCC 169 wherein the Apex Court discussed the nature
of aluminium phosphide. The relevant paragraphs have been
extracted below for reference:
“16. According to Modi, symptoms and signs of
poisoning by aluminium phosphide are similar to
poisoning by zinc phosphide (p. 197, ibid.). The chief
symptoms after the administration of zinc phosphide
are a vacant look, frequent vomiting with retching,
tremors and drowsiness followed by respiratory distress
at death. Zinc phosphide acts as a slow poison and is
decomposed by hydrochloric acid in the stomach with
the liberation of phosphine which acts as a respiratory
poison. Being a very fine powder zinc phosphide
adheres firmly to the crypts in the mucous membrane
of the stomach, and a very small quantity only in the
stomach even after vomiting is sufficient to cause death
by slow absorption.
17. Phosphine released from zinc phosphide (rat poison)
and from aluminium phosphide, is mainly used as a
fumigant to control insects and rodents in foodgrains
and fields. Liberated from the metal phosphides by the
action of water or acids, gaseous phosphine exerts
more potent pesticidal action, for it penetrates to all
areas otherwise inaccessible for pesticide application.
Pathological findings from phosphine inhalation are
254 [2024] 1 S.C.R.
pulmonary hyperaemia and oedema. It causes both

fatty degeneration and necrosis of liver (p. 174, ibid.).
18. Our attention was invited, as was done in the High
Court and the trial court, to a paper entitled “Toxicology
— Acute Aluminium Phosphide Poisoning in Northern
India” written by Dr Mitra Basu and Prof. S.B. Siwach,
Head, Department of Medicine, Postgraduate Institute
of Medical Sciences, Rohtak and published in Current
Medical Journal, Vol. I, No. 5, July 1995. The authenticity
of this article has not been doubted by the High Court nor
questioned either in the High Court or in this Court. The
learned authors have noticed the aluminium phosphide
having emerged as a major health problem in northern
India when these cases first started coming in 1984
and hardly any literature being available earlier on this
malady. In Postgraduate Institute of Medical Sciences,
Rohtak about 2000 cases were reported which were
all suicidal.
19. We may briefly sum up the opinion of the learned
authors from their published paper. Phosphine gas
(active ingredient of ALP) causes sudden cardiovascular
collapse; most patients die of shock, cardiac arrhythmia,
acidosis and adult respiratory distress syndrome
(ARDS). Aluminium phosphide is available in the form
of chalky-white tablets. When these tablets are taken
out of the sealed container, they come in contact with
atmospheric moisture and the chemical reaction takes
place liberating Phosphine gas (PH3) which is the active
ingredient of ALP. This gas is highly toxic and effectively
kills all insects and thus preserves the stored grains.
When these tablets are swallowed, the chemical reaction
is accelerated by the presence of hydrochloric acid in the
stomach and within minutes phosphine gas dissipates
and spreads into the whole body. The gas is highly toxic
and damages almost every organ but maximal damage
is caused to heart and lungs. Sudden cardiovascular
collapse is the hallmark of acute poisoning. Patients
[2024] 1 S.C.R. 255
come with fast, thready or impalpable arterial pulses,

unrecordable or low blood pressure and icy-cold skin.
Somehow these patients remain conscious till the end
and continue to pass urine despite unrecordable blood
pressure. Vomiting is a prominent feature associated
with epigastric burning sensation. The patients will be
smelling foul (garlic-like) from their breath and vomitus.
Many of them will die within a few hours. Those who
survive for some time will show elevated jugular venous
pressure, may develop tender hepatomegaly and still
later adult respiratory distress syndrome (ARDS),
renal shutdown and in a very few cases, toxic hepatic
jaundice. The active ingredient of ALP is phosphine
gas which causes extensive tissue damage. A spot
clinical diagnosis is possible in majority of cases of ALP
poisoning. However, ALP on account of its very pungent
smell (which can drive out all inmates from the house
if left open) cannot be taken accidentally.”
6.3 It was also argued that the courts below have failed to give
sufficient weight to the evidence led on behalf of the defence,
in particular, the testimony of DW3 and DW4.
6.4 Lastly, it was argued that Rani Kaur (A2) having been
extended benefit of doubt, it was rather anomalous to
exclude such benefit to A1- the appellant, when the case of
the prosecution was that both of them were present at the
scene of crime.
Arguments of Mr. Prateek Chaddha, learned counsel on behalf
of State of Punjab:
7. Melo Kaur was an illiterate person who cannot be expected to
be aware of the intricacies of law and cross examination and
therefore, it was rather natural for minor inconsistencies to creep
into the testimony of such a witness. The Trial Court has rightly
appreciated her testimony by excluding the uncorroborated parts
from the corroborated parts of her testimony. In that sense, the
Trial Court has separated the chaff from the grain, as is expected
to be done when it has to appreciate the evidence of a partly
256 [2024] 1 S.C.R.
reliable and partly unreliable witness. Moreover, the accused

himself has never denied his presence at the scene of crime.
In his statement recorded under Section 313 of Cr.P.C., he has
admitted his presence. This, coupled with the testimony of PW3,
4 and 5, is sufficient to prove the presence of the accused at the
spot of crime.
7.1 The case rests on circumstantial evidence, the prosecution
has proved the circumstances from which an inference of
guilt is sought to be drawn, cogently and convincingly. The
circumstances relied on include -– (1) Motive; (2) Presence
of the appellant at the scene of crime; (3) Cause of Death: By
Poisoning (4) Opportunity to administer poison; (5) Conduct
(6) False explanation in 313 Statement.
7.2 He has further relied on the principle laid down in Trimukh
Maroti Kirkan v. State of Maharashtra1 to contend that
the degree of evidence needed to prove the case resting
on circumstantial evidence in the given facts cannot be as
high as is normally the case. In view of Section 106 of the
Evidence Act, the appellant was under a burden to explain the
circumstances leading to the death of the deceased. Merely
remaining quiet or offering a false explanation would provide
an additional link in the chain of circumstances to make it
complete. Remaining quiet, or offering a false explanation
would therefore provide an additional link in the chain of
circumstances to make it complete. He has also sought to
distinguish the cases relied on behalf of the appellant.
ANALYSIS AND FINDINGS:
8. We have heard the learned Counsel for the appellant and respondent
and perused the materials on record.
9. There is no eye-witness to the incident. The case of the prosecution
rests on circumstantial evidence. The normal approach in a case
based on circumstantial evidence is that the circumstances from
which an inference of guilt is sought to be drawn must be cogently
1 (2006) 10 SCC 681

[2024] 1 S.C.R. 257
and firmly established; that those circumstances should be of

a definite tendency unerringly pointing towards the guilt of the
accused; that the circumstances taken cumulatively should form
a chain so complete that there is no escape from the conclusion,
that within all human probability, the crime was committed by
the accused and they should be incapable of explanation on
any hypothesis other than that of the guilt of the accused and
inconsistent with his innocence. [See Sharad Birdhichand Sarda
v. State of Maharashtra2]
10. Let us, therefore, examine whether the prosecution had proved
beyond reasonable doubt, the entire chain of circumstances,
not leaving any link missing for the appellant to escape from the
clutches of law. The circumstances which are said to have been
proved on behalf of the prosecution is as follows:
1. Motive
2. Presence at the spot
3. False explanation in 313 statement
4. Death by Poisoning – Doctor’s opinion on cause of death
5. Conduct of the Appellant
6. Opportunity to administer poison.
11. According to the case of the prosecution, the illicit relationship
that existed between Darshan Singh and Rani Kaur served as the
key motive for them to jointly eliminate the deceased. The fact
that they were in an illicit relationship has been sufficiently proved
from the testimony of PW 2, PW 3 and PW 4. This circumstance,
therefore, has been cogently established.
12. The most important circumstance, among all, must be the circumstance
of the appellant and Rani Kaur having been present in the appellant’s
house on the intervening night of 18.05.99 and 19.05.99 and they
having been seen leaving the house in the early hours of the day.
For, the proof of presence has the effect of triggering into operation,
2 (1984) 4 SCC 116

258 [2024] 1 S.C.R.
Section 106 of the Evidence Act and the principle laid down in the
case of Trimukh Maroti Kirkan v. State of Maharashtra. Even the
circumstance that the appellant had the ‘opportunity’ to administer
poison was strongly linked to aspect of proving the presence of the
appellant and Rani Kaur in the appellants house.
13. In Trimukh’s case, it has been held:
i. “If an offence takes place inside the privacy of a house
and in such circumstances where the assailants have
all the opportunity to plan and commit the offence at
the time and in circumstances of their choice, it will be
extremely difficult for the prosecution to lead evidence
to establish the guilt of the accused if the strict principle
of circumstantial evidence, as noticed above, is insisted
upon by the Courts……………………Where an offence
like murder is committed in secrecy inside a house, the
initial burden to establish the case would undoubtedly
be upon the prosecution, but the nature and amount of
evidence to be led by it to establish the charge cannot
be of the same degree as is required in other cases
of circumstantial evidence. The burden would be of
a comparatively lighter character. In view of Section
106 of the Evidence Act there will be a corresponding
burden on the inmates of the house to give a cogent
explanation as to how the crime was committed. The
inmates of the house cannot get away by simply
keeping quiet and offering no explanation on the
supposed premise that the burden to establish its
case lies entirely upon the prosecution and there is
no duty at all on an accused to offer any explanation”
14. In Trimukh (supra), this Court has pointed out that there are
two important consequences that play out when an offence is
said to have taken place in the privacy of a house, where the
accused is said to have been present. Firstly, the standard of
proof expected to prove such a case based on circumstantial
evidence is lesser than other cases of circumstantial evidence.
Secondly, the appellant would be under a duty to explain as to
the circumstances that led to the death of the deceased. In that
[2024] 1 S.C.R. 259
sense, there is a limited shifting of the onus of proof. If he remains

quiet or offers a false explanation, then such a response would
become an additional link in the chain of circumstances.
15. Both the Courts below have in fact applied the principle referred to
in Trimukh’s case. Their presence having been held to be proved,
the Court relied on Section 106 of the Evidence Act and shifted
the onus of proof on the accused to explain the circumstances
which led to the unnatural death of the deceased.
16. Whereas the Trial Court found both the accused guilty, the High
Court has confirmed the order of conviction only against the
appellant and extended benefit of doubt to Rani Kaur. The appellant
having failed to give a proper and believable explanation was, in
fact, used as an additional link in the chain of circumstances. The
proof of presence in that sense triggered the two consequences
as laid down in Trimukh’s case (supra)
17. In this case, the presence was sought to be proved by the
prosecution on the basis of the testimony of PW-3, PW-4, PW-5
and the statements of the accused at the 313 stage. The Courts
below had also relied on the testimony of PW 3 and PW 4 to
conclude that the appellant was present in the house. Therefore,
it becomes necessary to carefully evaluate this circumstance,
given the consequences that flow from proof of this circumstance.
18. PW-3 has deposed that her husband, Gurmel Singh (PW-4), on
his return home from work around 8 pm on 18.05.99, had informed
her that he saw the appellant along with Rani Kaur present in the
appellant’s house. He further informed her that it would not be
appropriate to visit their house at that time since he anticipated
the possibility of a flare up among the family members. He told
her that they could talk to the appellant in the morning. PW-3
stated that she visited the house of the appellant in the morning
at around 4:45 am, only to find her sister lying dead. She states
that she saw the appellant and Rani Kaur present in the house.
She further states that both of them pushed her aside and left
in a jeep, belonging to the appellant. She then states that she
called her husband (PW-4) to the spot.
260 [2024] 1 S.C.R.
19. In the cross examination of PW-3 on behalf of the appellant, several

omissions have been brought on record by drawing her attention
to her previous statement given to the police under Section 161
CrPC. For instance, it has come out in the evidence that PW-3
had omitted to state in her Section 161 statement that: (a) her
husband had informed her that he saw the appellant and Rani
Kaur in the appellant’s house when he was returning back home
from work around 8 pm; (b) she had seen the appellant and Rani
Kaur in the early hours on 19.05.99 in the appellant’s house and
they pushed her aside before escaping in a jeep. (c) her husband
had advised her not to visit the deceased in the night. It had been
specifically suggested to her that she was falsely deposing and
that the appellant was being falsely implicated on account of him
having strained relations with PW-4, the husband of PW3.
20. In the cross examination of PW-3 on behalf of Rani Kaur, it was
elicited that PW-3 had personally witnessed the appellant and Rani
Kaur putting poison in the mouth of the deceased. This, according
to PW-3, was seen by her through the chinks of the door.
21. PW-4 has stated that he met the appellant and Rani Kaur on his
way home, while he was returning from work around 7.00 PM
on 18.05.99. He stated that both of them went to the appellant’s
house. He informed his wife that it would not be appropriate to visit
their house at this time since there was a possibility of a quarrel
arising between Amrik Kaur and her husband, the appellant, since
he had brought Rani Kaur home. Instead, he asked her to go and
visit her sister on the next morning. In the morning, around 5.30
am, his wife left to visit her sister at the appellant’s house after
serving tea to him and his children. On having received a message
from his wife, he set about to reach the appellant’s house and
found Amrik Kaur lying dead and his wife, weeping and wailing.
22. Similarly, in the cross examination of PW-4, it has been brought
on record that PW-4 had omitted to state the following aspects
in his statement recorded under Section 161 Cr.P.C. before the
police – (a) that PW-4 had seen the appellant and Rani Kaur
entering the house of the appellant in a jeep; (b) PW-4 had told
PW-3 not to visit the appellant’s house since they were intoxicated
[2024] 1 S.C.R. 261
and there was a strong possibility of some dispute arising. (c)

PW-4’s statement that PW-3 had left for the appellant’s house
at 5.00 am in the morning on 19.05.99 after serving him tea.
It has been specifically suggested to this witness that he had
strained relations with the appellant, and owing to this fact, he
has falsely implicated the appellant. It was further suggested that
on account of the quarrel that occurred in the night on 18.05.99,
the deceased had committed suicide by taking poison.
23. PW 5 is an independent witness having no relationship with any
of the persons involved, either as an accused or as witnesses,
in this incident. He stated that on the morning of 19.05.99, at
about 6.00 am, he had gone to answer the call of nature. At that
time, he states that he saw the appellant and Rani Kaur were
going in a jeep to Hiro Kalan and that jeep was covered with
black cloth. He then returned to the bus stop and found a lot of
persons having gathered and there, he heard the news that the
appellant had murdered his wife.
24. PW-5’s deposition that he had heard from persons at the bus stop
that the appellant had murdered his wife, was an omission since
he had not stated as such in his statement before the police. It
has been elicited from him that the jeep came from behind and
then passed by his side. It has been further elicited that the black
cloth which was used to cover the jeep was opened on both sides.
25. In the face of the above evidence on record, can it be said that
the presence of the appellant and Rani Kaur in the appellant’s
house in the intervening night of 18.05.99 and 19.05.99, has been
firmly and cogently established? According to us, the answer must
be in the negative. There are several omissions that have been
brought out in the cross examination of PW-3 and PW-4, which
seriously dent the credibility of their testimony.
26. If the PWs had failed to mention in their statements u/s 161 CrPC
about the involvement of an accused, their subsequent statement
before court during trial regarding involvement of that particular
accused cannot be relied upon. Prosecution cannot seek to prove
a fact during trial through a witness which such witness had not
stated to police during investigation. The evidence of that witness
262 [2024] 1 S.C.R.
regarding the said improved fact is of no significance. [See :

(i) Rohtash Vs. State of Haryana, (2012) 6 SCC 589 (ii) Sunil
Kumar Shambhu Dayal Gupta Vs. State of Maharashtra, 2011
(72) ACC 699 (SC). (iii) Rudrappa Ramappa Jainpur Vs. State
of Karnataka, (2004) 7 SCC 422 (iv) Vimal Suresh Kamble Vs.
Chaluverapinake, (2003) 3 SCC 175]
27. Of course, PW-3 claims to be an illiterate witness and therefore,
her testimony must be interpreted in that light. We are cognizant
that the appreciation of evidence led by such a witness has to
be treated differently from other kinds of witnesses. It cannot be
subjected to a hyper-technical inquiry and much emphasis ought
not to be given to imprecise details that may have been brought
out in the evidence. This Court has held that the evidence of a
rustic/illiterate witness must not be disregarded if there were to be
certain minor contradictions or inconsistencies in the deposition.3
28. However, the testimony of PW-3 suffers not merely from technical
imperfections, there are glaring omissions and improvements that
have been brought out in the cross-examination, which cannot
be attributed to the illiteracy of the individual deposition. If there
were minor contradictions and inconsistencies, that could have
been ignored since the recollection of exact details as to location
and time can be attributed to the lack of literacy. However, such
is not the case here. PW-3 had only heard from her husband that
the appellant and Rani Kaur were seen together in the appellant’s
house on 18.05.99. To that extent, it is merely hearsay. Moreover,
PW-4 has omitted to state this fact to PW3 in his statement before
the police. He has also omitted to state that he advised his wife
(PW-3) against going to the appellant’s house in the night since
there may arise a quarrel between all of them. If these facts are
ignored from consideration, we only wonder as to why PW-3
would visit the house of the appellant in the wee hours of the
morning on 19.05.99. It seems quite unnatural for PW-3 to visit
the house of the appellant at 430 am in the morning without any
reason. If PW-3 was aware that the appellant and Rani Kaur
3 State of U.P. Vs. Chhoteylal, AIR 2011 SC 697 ;

Dimple Gupta (minor) Vs. Rajiv Gupta, AIR 2008 SC 239
[2024] 1 S.C.R. 263
were in an illicit relationship for a sufficiently long duration, there

was no reason to suspect all of a sudden that the two of them
would get together, administer poison and murder the deceased
on 19.05.1999, which fact, prompted her to visit the house of
the appellant at such odd hours in the morning. Both the Courts
have failed to take notice of the several significant omissions and
improvements in the evidence of PW 3 and PW 4.
29. Further, PW-5 is a chance witness. He was in his village, answering
the call of nature at 6 am, at which point he claimed to have seen
the accused persons going in a jeep. It was elicited in his cross
examination that he had a side-on view since he stated the jeep
came from behind and he got a side-on glimpse. The side-on view
would have been only for a couple of seconds at best, since they
were travelling in a jeep. Therefore, it is not safe to rely on this
testimony solely to prove that the appellant was escaping along
with Rani Kaur after having murdered his wife.
30. The appellant had set up a defence that the deceased had
committed suicide. The Trial Court has disbelieved it on the
premise that the appellant and Rani Kaur were present in the
house, and if the deceased were to have committed suicide, it
was but natural for the appellant to take her to the hospital and
inform concerned persons/authorities. However, we have come
to the finding above that the circumstance of appellant and Rani
Kaur being present in the house has not been convincingly
proved beyond doubt. Therefore, the reasoning given by the Trial
Court loses its legs to stand on. In any case, we believe that the
appellant has raised a doubt in our minds as regards his defence
that the deceased had committed suicide. There appears to be
no dispute as to the fact that the death was caused by poisoning.
The doctor’s testimony on the basis of the chemical examiner’s
report that the cause of death was linked to aluminium phosphide
poisoning remains unchallenged. In fact, in his 313 statement,
even the appellant states that the deceased consumed poison
(aluminum phosphide) and committed suicide. In Jaipal’s case,
this Court has considered the characteristic features of death
caused by poisoning through aluminum phosphide. Review of
scholarly literature and research papers suggests that the nature
264 [2024] 1 S.C.R.
of this substance (aluminum phosphide) is such that it is not

conducive for deceitful administration since it carries a pungent
garlic-like odour, which cannot go unmissed. It was suspected
that the substance was mixed in tea and served to the deceased
since 200ml brownish liquid was found in her stomach as per
the PMR. We find it doubtful that the deceased would have
been made to consume tea deceitfully given the nature of the
substance. Forceful administration of this substance also seems
doubtful since there are no injury marks suggestive of a scuffle.
In light of the evidence on record, even assuming for a moment
that the appellant and Rani Kaur were present, it still cannot be
said with certainty that it was a case of homicide and not suicide.
The main principle to be satisfied in a case of conviction based
on circumstantial evidence is that the proved circumstances must
be complete and incapable of explanation of any other hypothesis
than that of the guilt of the accused but should be inconsistent with
his innocence- in other words, the circumstances should exclude
every possible hypothesis except the one to be proved. In this
case, it cannot be said that the proved circumstances, even if
presence was proved, taken with other circumstances would lead
to an unfailing conclusion that the appellant and Rani Kaur were
guilty of murdering his wife. There was alive a strong hypothesis
that the deceased had committed suicide, which explanation was
led by the appellant in his statement under Section 313 CrPC,
and it is sufficient to create a doubt in our minds.
31. This Court has held that the standard of proof to be met by an
accused in support of the defence taken by him under Section
313 of Code of Criminal Procedure is not beyond all reasonable
doubt, as such, a burden lies on the prosecution to prove the
charge. The accused has merely to create a doubt and it is for
the prosecution then to establish beyond reasonable doubt that
no benefit can flow from the same to the accused. [See: Pramila
vs State of Uttar Pradesh 2021 SCC OnLine SC 711]
32. Learned Counsel for the respondent-State has argued that no
specific plea of alibi was taken in the statement of the appellant
recorded under Section 313 CrPC. In fact, it is submitted that
there is an implicit admission as to his presence in the house. It
[2024] 1 S.C.R. 265
is too well settled that the statement of an accused under Section

313 CrPC is no ‘evidence’ because, firstly, it is not on oath and,
secondly, the other party i.e. the prosecution does not get an
opportunity to cross examine the accused. [ Sidhartha Vashisht
Vs. State of NCT of Delhi, AIR 2010 SC 2352]
33. It is trite law that the statement recorded u/s. 313 CrPC cannot
form the sole basis of conviction. Therefore, the presence of
the appellant cannot be found solely based on his statement,
notwithstanding the lack of independent evidence led by the
prosecution. Further, this Court has previously considered the
consequences when a particular defence plea was not taken by
accused u/s 313 CrPC and held that mere omission to take a
specific plea by accused when examined u/s 313 CrPC, is not
enough to denude him of his right if the same can be made out
otherwise. See: Periasami Vs. State of Tamil Nadu, (1996) 6
SCC 457
34. The case of the prosecution has, from the very start, been
that the appellant was seen jointly along with Rani Kaur in the
appellant’s house on 18.05.99 and they were seen leaving the
house together on 19.05.99. They were both tried together on
charges of having administered poison and killing the deceased
on the intervening night of 18.05.99 & 19.05.99. Though the
Trial Court has convicted both of them under Section 302, the
High Court has extended the benefit of doubt to Rani Kaur and
acquitted her of all criminal charges. According to the High Court,
‘apart from the evidence of Melo Kaur PW3 and Gurmel Singh
PW4, there is no other evidence to show that she was present
in the house on the fateful night’. However, even though it was
the very same evidence that was sought to be used to prove the
presence of the appellant in the house, the benefit of doubt has
not been similarly extended to him. The High Court reasoned that
the appellant, being the husband, it was only natural for him to
be present in the house.
35. It is important to notice that the respondent-State has not
challenged the acquittal of Rani Kaur before this Court. It has
accepted the verdict and therefore, the acquittal has reached
266 [2024] 1 S.C.R.
finality. The State cannot on the one hand accept the verdict of
the Court that the presence of Rani Kaur along with the appellant
is doubtful and at the same time, maintain its case that the two
of them were jointly present, committed the offence together and
escaped together.
36. According to us, if the evidence of PW 3 and PW 4 was not sufficient
to prove presence of Rani Kaur at the appellant’s house, as a
natural corollary, such evidence cannot be relied on to conclude
that the appellant was present in the house. The manner in which
the High Court has sought to distinguish the case of the appellant
from Rani Kaur is perverse and does not seem to impress us. The
case of the prosecution has consistently been that the accused
persons were seen present together in the house on the night
of 18.05.99 and seen leaving together in the wee hours of the
next morning. In fact, PW 5 has deposed that he had seen them
together in the jeep travelling towards Hiro Kurd. If the presence
of Rani Kaur in the house on the date of the alleged incident is
doubtful, then, the testimony of PW 5 that he had seen her along
with the appellant in the jeep, will also lose its strength.
37. Seen in this background, we need not go further and consider
the evidence qua other circumstances sought to be proved by
the prosecution since the failure to prove a single circumstance
cogently can cause a snap in the chain of circumstances. There
cannot be a gap in the chain of circumstances. When the conviction
is to be based on circumstantial evidence solely, then there
should not be any snap in the chain of circumstances. If there is
a snap in the chain, the accused is entitled to benefit of doubt. If
some of the circumstances in the chain can be explained by any
other reasonable hypothesis, then also the accused is entitled to
the benefit of doubt. [See: Bhimsingh Vs. State of Uttarakhand,
(2015) 4 SCC 281.]
38. Therefore, we allow this appeal and set aside the concurrent
findings of conviction.

Digital Supreme Court Reports 1706611468

Uploaded by

Copyright:

Available Formats

You might also like

Digital Supreme Court Reports 1706611468

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Digital Supreme Court Reports 1706611468

Uploaded by

Copyright:

Available Formats

Supreme Court Reports

Official Law Report of Supreme Court of India

Citation Style: [ Year ] Volume No. S.C.R. Page no.

2024 | Volume 1 | Part 1

1. Vashist Narayan Kumar v. The State of Bihar & Ors.. . . . . . . . . . . . . 1

2. Mary Pushpam v. Telvi Curusumary & Ors.. . . . . . . . . . . . . . . . . . . . 11

4. Neeraj Sharma v. State of Chhattisgarh . . . . . . . . . . . . . . . . . . . . . . 40

5. Brij Narayan Shukla (D) Thr. Lrs. v.

6. Reliance Life Insurance Company Ltd. & Anr. v.

7. State of NCT of Delhi v.

8. Rajendhiran v. Muthaiammal @ Muthayee & Ors. . . . . . . . . . . . . . . 81

9. Perumal Raja @ Perumal v.

10. DBS Bank Limited Singapore v.

11. Bharti Airtel Limited and Another v.

12. Vishal Tiwari v. Union of India & Ors. . . . . . . . . . . . . . . . . . . . . . . . 171

13. The State of Uttar Pradesh & Ors. v. Association of Retired

14. Satish P. Bhatt v. The State of Maharashtra & Anr. . . . . . . . . . . . . 241

15. Darshan Singh v. State of Punjab. . . . . . . . . . . . . . . . . . . . . 248

Vashist Narayan Kumar

Issue for Consideration

DIGITAL SUPREME COURT REPORTS

List of Citations and Other References

Other Case Details Including Impugned Order and

CIVIL APPELLATE JURISDICTION: Civil Appeal No.1 of 2024.

VASHIST NARAYAN KUMAR v. THE STATE OF BIHAR & ORS.

Judgment / Order of The Supreme Court

DIGITAL SUPREME COURT REPORTS

mandamus to the respondents to consider his claim for selection

VASHIST NARAYAN KUMAR v. THE STATE OF BIHAR & ORS.

DIGITAL SUPREME COURT REPORTS

VASHIST NARAYAN KUMAR v. THE STATE OF BIHAR & ORS.

error in filling up the date of birth when no advantage is derived will

DIGITAL SUPREME COURT REPORTS

VASHIST NARAYAN KUMAR v. THE STATE OF BIHAR & ORS.

DIGITAL SUPREME COURT REPORTS

and also sought for a direction for issuance of an appointment letter.

DIGITAL SUPREME COURT REPORTS

Suit – Suit for possession – Accurate description of the actual

List of Citations and Other References

Lists of Key Words

Judicial Discipline; Judicial Indiscipline; Judicial Propriety; Doctrine

MARY PUSHPAM v. TELVI CURUSUMARY & ORS.

Other Case Details Including Impugned Order and

CIVIL APPELLATE JURISDICTION : Civil Appeal No.9941 of 2016

Judgment / Order of The Supreme Court

DIGITAL SUPREME COURT REPORTS

MARY PUSHPAM v. TELVI CURUSUMARY & ORS.

DIGITAL SUPREME COURT REPORTS

MARY PUSHPAM v. TELVI CURUSUMARY & ORS.

“The courts below found that all the documents produced by

1 (2000) 6 SCC 359

DIGITAL SUPREME COURT REPORTS

decision by the subordinate forum merges in the decision

MARY PUSHPAM v. TELVI CURUSUMARY & ORS.

Bench whose decision has come up for consideration.

DIGITAL SUPREME COURT REPORTS

Radhey Shyam Yadav & Anr. Etc.

Three appellants herein were appointed as Assistant Teachers

Headnotes prepared by: Divya Pandey Result of the case: Appeals