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Tag: #IndirectTaxLitigations

  • Bombay HC: Trademark Registration Does Not Automatically Protect a Pharma Company from Infringement Proceedings

    Bombay HC: Trademark Registration Does Not Automatically Protect a Pharma Company from Infringement Proceedings

    Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration

    Date: 26.10.2026

    Bombay HC: Trademark Registration Does Not Automatically Protect a Pharma Company from Infringement Proceedings

    This Short Article has been prepared & written by Advocate Ravi Shekhar Jha-Delhi High Court, New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com .  

    The Bombay High Court granted Franco Indian Pharmaceuticals Pvt. Ltd. an interim injunction restraining Corona Remedies Pvt. Ltd. from using the mark STIMULET for pharmaceutical products, finding it deceptively similar to Franco Indian’s long-standing STIMULIV mark.

    The dispute at a glance

    The case concerned two pharmaceutical companies and competing marks:

    • Franco Indian Pharmaceuticals: owner of STIMULIV, an Ayurvedic liver-related preparation sold as syrup and tablets.
    • Corona Remedies: user of STIMULET, an allopathic product used in treatments relating to breast cancer disorders and infertility.

    Although the medicines served different therapeutic purposes, the Court held that the similarity of the names created an unacceptable risk in the pharmaceutical context.

    Why the Court found the marks similar

    The Court treated similarity as the threshold issue. Visually, the two marks share the same dominant portion, β€œSTIMUL,” and differ only in their last two letters: β€œIV” versus β€œET.” The Court concluded that this was not enough to create a reliable phonetic distinction, particularly in India, where English pronunciation may vary widely.

    The Court also rejected the argument that the products’ distinct uses eliminated the risk of confusion. Instead, it emphasized that even slight confusion should be avoided when medicines are involved, especially where one product concerns sensitive treatments such as cancer and infertility.

    Franco Indian’s stronger prior rights

    Franco Indian adopted STIMULIV on 28 June 1974 and obtained registration in 1976 for pharmaceutical preparations related to liver and allied disorders. Its mark was registered in Part A of the old trade mark register, which required distinctiveness.

    The Court found prima facie evidence of sustained and substantial use:

    • Invoices and documentation traced use of STIMULIV back decades.
    • STIMULIV sales reached Rs. 1,311.70 lakhs in 2019–20.
    • Franco Indian’s sales had continued without interruption and showed growth over time.

    By contrast, Corona Remedies claimed adoption of STIMULET in 2010. Its own records showed a multi-year gap in use after 2011–12, before sales resumed. The Court noted that Corona’s 2019–20 sales of approximately Rs. 346.51 lakhs were materially lower than Franco Indian’s sales.

    This evidence supported Franco Indian’s claim to stronger goodwill, reputation, and common-law rights as the prior and continuous user.

    Registration did not end the dispute

    Corona Remedies argued that, because both marks were registered, Franco Indian could not pursue an infringement action. The Court rejected that position.

    It held that a defendant’s registration does not bar an infringement suit. In a conflict between registered proprietors of similar marks, the Court may assess which party has better rights under common law, including priority, continuity of use, sales, and goodwill.

    On those factors, the Court found that Franco Indian’s position was substantially stronger: it had earlier registration, earlier use by decades, continuous sales, and a stronger commercial presence.

    A key inconsistency in Corona Remedies’ defence

    Corona Remedies contended that β€œSTIMUL” or similar expressions were common to the trade. But it had also sought registration for STIMULET and asserted that its own mark was distinctive and capable of identifying its goods.

    The Court found this position difficult to sustain. A party claiming distinctiveness for its own STIMULET mark could not persuasively deny the distinctiveness of the earlier STIMULIV mark on the basis that the shared element was generic or widely used.

    The Court’s order

    The Court made Franco Indian’s interim application absolute and restrained Corona Remedies from using STIMULET in relation to pharmaceutical products. It also dismissed Corona Remedies’ application seeking rejection of Franco Indian’s plaint, finding no fraud, suppression, or material concealment.

    No order as to costs was made.

    What this decision means

    The ruling reinforces the heightened caution applied to pharmaceutical trade marks. Differences in medical use, patient category, or prescription status may not defeat an injunction where the names are visually and phonetically close. In such disputes, priority of use, continuity, sales evidence, and goodwill can outweigh a later user’s registration of a similar mark.

    Aadrikaa Legal Services is a trusted legal and regulatory support partner providing end-to-end legal solutions to law firms, corporate organizations, and businesses across India. We specialize in paralegal services, litigation support, tax and regulatory matters, delivering reliable, efficient, and result-oriented legal assistance.

    Our services include comprehensive paralegal support, drafting and documentation, legal research, case management, litigation handling, and representation support across various judicial and quasi-judicial forums. We also assist in direct and indirect tax matters, customs, GST, corporate regulatory compliance, and legal advisory.

    Source: Bombay High Court

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    Ravi Shekhar Jha – Advocate, Bar Council of Delhi

  • Delhi HC: Invalid Arbitrator Appointment Clause Does Not Invalidate Arbitration Agreement

    Delhi HC: Invalid Arbitrator Appointment Clause Does Not Invalidate Arbitration Agreement

    Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration

    Date: 26.10.2026

    Delhi HC: Invalid Arbitrator Appointment Clause Does Not Invalidate Arbitration Agreement

    This Short Article has been prepared & written by Arbitrator Shobhit Mallik. The views expressed are based on his interpretation of the law. He can be reached at his email id shobhit.Ica23@gmail.com .

    The Delhi High Court has referred a payment and performance dispute between Greentree Building Energy Private Limited and the Bureau of Energy Efficiency (BEE) to arbitration, holding that BEE could not unilaterally appoint the sole arbitrator under the contract.

    Background of the dispute

    The dispute arose from a government engagement for conducting refresher courses for Energy Auditors and Energy Managers across India. BEE issued a request for proposal in December 2023, and Greentree’s bid was accepted through a Letter of Award dated 15 February 2024. The parties then entered into a Memorandum of Agreement/Service Agreement on 29 February 2024.

    Under the arrangement, Greentree was to provide refresher training to about 2,000 candidates through workshops held nationwide. The agreement included an arbitration clause providing that unresolved disputes would be referred to a sole arbitrator appointed by BEE, with New Delhi as the seat and venue of arbitration.

    Greentree’s claims

    Greentree contended that its work was hampered because BEE did not provide a functioning portal, candidate database, and necessary instructions or approvals concerning registration, payment verification and certification. According to Greentree, it had to deploy its own staff and technical resources to establish an alternative portal.

    The contract period was extended twice: first until 14 May 2025 and then until 1 October 2025. Greentree stated that it trained 636 candidates, exceeding the first milestone requirement of 600 candidates.

    For that milestone, Greentree issued an invoice of Rs. 46,11,204, inclusive of IGST, representing 30% of the total contract value of Rs. 1,53,70,680. It said that only Rs. 15,53,350 was released.

    BEE’s payment calculation treated Rs. 44,19,071 as payable but deducted:

    • Rs. 11,52,801 for alleged shortfalls in the minimum number of participants at six workshops; and
    • Rs. 15,37,068 as an alleged maximum 10% penalty on the total contract value.

    Greentree challenged these deductions as unilateral, arbitrary and inconsistent with the agreement. It also claimed a further Rs. 5,14,918 relating to 67 additional candidates trained under the same work order.

    BEE’s position

    BEE disputed Greentree’s claims. It maintained that Greentree had repeatedly failed to perform according to the agreed milestones and timelines, despite earlier communications. BEE also asserted that the deductions from the invoice were justified under the contractual framework.

    The Court did not decide these factual and contractual disputes. It held that questions relating to delay, performance, deductions and payment entitlement must be determined by the arbitral tribunal.

    Why the Court intervened

    Greentree invoked arbitration in April 2026 and asked BEE to agree to an independent and impartial sole arbitrator. While BEE responded to the notice, it did not concur with such an appointment.

    The Court found that the contractual provision allowing BEE to appoint the sole arbitrator could not be enforced. Relying on Supreme Court precedent, the Court reaffirmed that a party interested in the outcome of a dispute cannot unilaterally appoint the sole arbitrator. Such a process creates justified concerns regarding the arbitrator’s independence and impartiality and conflicts with the requirement of equal treatment of parties.

    Importantly, the Court clarified that an invalid appointment procedure does not invalidate the arbitration agreement itself. The parties’ clear intention to resolve disputes through arbitration remained effective; only the agreed method of appointment had failed.

    The Court’s decision

    The Delhi High Court appointed Ms. Manini Brar, Advocate, as the sole arbitrator to decide the disputes arising from the work order and service agreement.

    The arbitration will proceed under the aegis and rules of the Delhi International Arbitration Centre (DIAC). The parties must make the disclosures required under Section 12 of the Arbitration and Conciliation Act, 1996. BEE may raise any preliminary objections concerning jurisdiction or arbitrability before the arbitrator.

    All claims, counterclaims and substantive defences remain open for decision on their merits. The Court expressly stated that its order should not be treated as a view on the correctness of either party’s case.

    Legal significance

    The ruling reinforces a central principle of Indian arbitration law: a party to a dispute cannot retain exclusive control over the appointment of a sole arbitrator. Where such a clause exists, courts can preserve the arbitration agreement while replacing the defective appointment mechanism with an independent judicial appointment.

    For government bodies, contractors and commercial parties, the decision highlights the need to draft arbitration clauses that provide a neutral, balanced and legally sustainable appointment process.

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    Aadrikaa Legal Services is a trusted legal and regulatory support partner providing end-to-end legal solutions to law firms, corporate organizations, and businesses across India. We specialize in paralegal services, litigation support, tax and regulatory matters, delivering reliable, efficient, and result-oriented legal assistance.

    Our services include comprehensive paralegal support, drafting and documentation, legal research, case management, litigation handling, and representation support across various judicial and quasi-judicial forums. We also assist in direct and indirect tax matters, customs, GST, corporate regulatory compliance, and legal advisory.

    Source: Delhi High Court

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  • Bombay High Court Upholds Maha RERA Appellate Tribunal’s Power to Restore Defaulted Proceedings

    Bombay High Court Upholds Maha RERA Appellate Tribunal’s Power to Restore Defaulted Proceedings

    Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration

    Date: 26.10.2026

    Bombay High Court Upholds Maha RERA Appellate Tribunal’s Power to Restore Defaulted Proceedings

    This Short Article has been prepared & written by Advocate Narendra Singh. The views expressed are based on his interpretation of the law. He can be reached at his email id amitnaren@outlook.com .  

    The Bombay High Court has held that the Maharashtra Real Estate Appellate Tribunal may restore proceedings dismissed for non-prosecution when sufficient cause is shown, even though RERA does not expressly state that power.

    Background of the dispute

    Hubtown Ltd. challenged an order of the Maharashtra Real Estate Appellate Tribunal that revived an allottee’s delayed appeal. The allottee had originally filed a complaint under Section 18 of the Real Estate (Regulation and Development) Act, 2016, seeking relief from Maha RERA. Maha RERA dismissed that complaint on 23 April 2024.

    The allottee then appealed to the Appellate Tribunal, accompanied by an application seeking condonation of a 25-day filing delay. On 3 July 2025, the application was dismissed for want of prosecution because the allottee did not appear. As a consequence, the appeal was also disposed of.

    The allottee subsequently sought restoration of both the delay-condonation application and the appeal, along with condonation of the delay in making the restoration request. The Appellate Tribunal allowed those applications, relying in part on its inherent powers under Regulation 25 of the Maharashtra Real Estate Appellate Tribunal Regulations, 2019.

    The promoter’s challenge

    Hubtown argued that the Appellate Tribunal, as a statutory body, could exercise only those Civil Court powers expressly specified in Section 53(4) of RERA. While that provision permits dismissal for default or ex parte proceedings, it does not specifically confer a power to restore a matter dismissed in default.

    The promoter also contended that Regulation 25 could not enlarge the Tribunal’s jurisdiction beyond RERA and its rules, and that the allottee had not shown adequate cause for delay.

    High Court’s reasoning

    Justice N. J. Jamadar rejected the narrow reading of Section 53. The Court emphasized three connected principles:

    • Natural justice governs the Tribunal’s procedure. Section 53(1) states that the Appellate Tribunal is not bound by the strict procedure of the Code of Civil Procedure and must be guided by natural justice.
    • The Tribunal can regulate its own procedure. Section 53(2) authorizes it to do so, subject to RERA.
    • Necessary incidental powers are implied. A tribunal must possess powers that are ancillary and essential to perform its statutory functions effectively, unless the statute expressly prohibits their use.

    The Court found that the power to restore a case dismissed for default is a natural counterpart to the power to dismiss it for non-appearance. A tribunal may dismiss a matter when a party does not appear, but fairness may require it to restore the matter if the party later establishes good cause for the absence.

    Supreme Court precedents relied upon

    The judgment drew support from established Supreme Court decisions:

    • In New India Assurance Co. Ltd. v. R. Srinivasan, the Supreme Court recognized that a judicial or quasi-judicial body which may dismiss a proceeding for non-prosecution also has inherent jurisdiction to restore it upon a showing of good cause.
    • In Union of India v. Paras Laminates (P) Ltd., the Court held that statutory tribunals have powers expressly granted as well as powers necessarily incidental to making their jurisdiction effective.
    • In Grindlays Bank Ltd. v. Central Government Industrial Tribunal, the Supreme Court held that a tribunal may set aside an ex parte award in the interests of justice even without an express provision, absent any statutory prohibition.

    Applying these principles, the Bombay High Court held that the Appellate Tribunal’s restoration power exists independently of Regulation 25 because it is essential to achieving RERA’s purpose and to deciding matters fairly.

    Limited scope for interference with delay condonation

    The Court also declined to interfere with the Tribunal’s decision to condone delay. It observed that once the first adjudicatory forum has exercised positive discretion to condone delay after assessing the explanation and supporting documents, an appellate or supervisory court should not lightly overturn that decision.

    Interference would generally be justified only where the order is perverse or where delay has been condoned without any reasons. The Court found neither circumstance present and held that no substantial question of law arose.

    Outcome and legal significance

    The Bombay High Court dismissed Hubtown’s second appeal and disposed of the related interim application. The ruling confirms that the Maha RERA Appellate Tribunal is not confined to a mechanical reading of its expressly listed powers. Consistent with natural justice, it may restore a proceeding dismissed in default where sufficient cause is established and no statutory prohibition applies.

    This ensures that procedural lapses do not automatically defeat a party’s substantive right to have a real-estate dispute adjudicated on its merits.

    Aadrikaa Legal Services is a trusted legal and regulatory support partner providing end-to-end legal solutions to law firms, corporate organizations, and businesses across India. We specialize in paralegal services, litigation support, tax and regulatory matters, delivering reliable, efficient, and result-oriented legal assistance.

    Our services include comprehensive paralegal support, drafting and documentation, legal research, case management, litigation handling, and representation support across various judicial and quasi-judicial forums. We also assist in direct and indirect tax matters, customs, GST, corporate regulatory compliance, and legal advisory.

    Source: Bombay High Court

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  • Karnataka High Court Declines to Quash Disproportionate-Assets Cases Against Retired Officials

    Karnataka High Court Declines to Quash Disproportionate-Assets Cases Against Retired Officials

    Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration

    Date: 26.10.2026

    Karnataka High Court Declines to Quash Disproportionate-Assets Cases Against Retired Officials

    This Short Article has been prepared & written by Advocate G Sridharamurthy. The views expressed are based on his interpretation of the law. He can be reached at his email id sriadv3@gmail.com . 

    The Karnataka High Court has dismissed two petitions seeking to halt corruption prosecutions against retired public officials, holding that disputed evidence on alleged disproportionate assets must be assessed at trial rather than through quashing proceedings.

    Court’s decision

    In a common order dated 17 October 2026, Justice H.P. Sandesh rejected:

    • Criminal Petition No. 3849 of 2019 filed by H.M. Khyum Ali, a retired Deputy Director in the Department of Mines and Geology; and
    • Writ Petition No. 48145 of 2018 filed by M.K. Baldevakrishna, formerly Managing Director of the Dr. Ambedkar Development Corporation.

    Both petitioners faced proceedings under Section 13(1)(e) read with Section 13(2) of the Prevention of Corruption Act, 1988, concerning assets alleged to be disproportionate to their known sources of income.

    Allegations in the two cases

    H.M. Khyum Ali case

    The Lokayukta police registered a suo motu case in 2008. The prosecution alleged that, during the check period from 11 February 1974 to 27 June 2008, Ali had assets valued at Rs. 62.76 lakh and expenditure of Rs. 53.24 lakh against an income of Rs. 67.89 lakh. The charge sheet assessed the alleged disproportionate assets at approximately Rs. 48.11 lakh, or 70.81% above known income.

    Ali argued that the investigation was incomplete because documents and explanations relating to several asset schedules had not been considered before the charge sheet was filed. He also contended that salary, rental income, fixed-deposit interest, advances, and tuition income were omitted from the calculation.

    The Court found that these assertions involved disputed facts and matters of defence that must be tested during trial. It noted that charges had already been framed and six prosecution witnesses had been examined and cross-examined.

    M.K. Baldevakrishna case

    Baldevakrishna’s case arose from a 2008 raid and investigation. The prosecution alleged assets of about Rs. 2.69 crore, expenditure of about Rs. 1.64 crore, and income of about Rs. 2 crore during the relevant period. The final report alleged disproportionate assets of 116.41% above known income.

    He argued that sanction for prosecution had not been validly obtained and that authorities had delayed proceedings until after his retirement. He also challenged the order taking cognizance, arguing that it did not demonstrate sufficient judicial application of mind.

    The Court held that the sanction issue did not justify quashing the prosecution because the matter had been referred for consideration while he was in service, and he retired during that process. It also ruled that the allegation of disproportionate assets and the adequacy of the petitioner’s explanations were matters for evidence at trial.

    Why the Court refused to intervene

    The Court emphasized three central reasons:

    • Disputed factual questions cannot be resolved in quashing proceedings. Claims about omitted income, asset valuations, explanations for property, and the correctness of the disproportionate-assets calculation require evidentiary scrutiny.
    • The cases had progressed substantially. In Ali’s matter, charges had been framed and prosecution evidence had begun, making intervention under Section 482 of the Criminal Procedure Code inappropriate.
    • Retirement did not require the cases to be terminated. Relying on recent Supreme Court authority, the Court held that the 2018 amendment to Section 19 of the Prevention of Corruption Act could not be used retrospectively to invalidate proceedings initiated under the earlier legal position where the accused had retired.

    Cognizance orders upheld

    Both petitioners challenged brief cognizance orders stating, in substance, that the final report had been perused, cognizance taken, and summons issued. The High Court held that these orders were not mechanical merely because they were concise.

    According to the Court, the reference to having perused the final report showed that the trial court had considered the charge-sheet material before taking cognizance. A detailed order was not necessary at that stage.

    Legal significance

    The ruling reinforces that High Courts will ordinarily not use their inherent or writ jurisdiction to conduct a β€œmini-trial” in disproportionate-assets cases. Where the prosecution presents material supporting the allegation and the defence depends on competing calculations, documents, or explanations, those issues are to be decided through the regular trial process.

    The Court therefore dismissed both petitions, allowing the respective criminal proceedings to continue.

    Aadrikaa Legal Services is a trusted legal and regulatory support partner providing end-to-end legal solutions to law firms, corporate organizations, and businesses across India. We specialize in paralegal services, litigation support, tax and regulatory matters, delivering reliable, efficient, and result-oriented legal assistance.

    Our services include comprehensive paralegal support, drafting and documentation, legal research, case management, litigation handling, and representation support across various judicial and quasi-judicial forums. We also assist in direct and indirect tax matters, customs, GST, corporate regulatory compliance, and legal advisory.

    Source: Karnataka High Court

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  • Bombay HC: Section 27A NDPS Cannot Be Invoked Merely for Paying for Drugs Intended for Personal Consumption

    Bombay HC: Section 27A NDPS Cannot Be Invoked Merely for Paying for Drugs Intended for Personal Consumption

    Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration

    Date: 24.10.2026

    Bombay HC: Section 27A NDPS Cannot Be Invoked Merely for Paying for Drugs Intended for Personal Consumption

    This Short Article has been prepared & written by Advocate Ravi Shekhar Jha-Delhi High Court, New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com .  

    The Bombay High Court granted bail to actor Rhea Chakraborty on 7 October 2020, holding that the material then available did not show her involvement in commercial-quantity drug offences or in financing illicit drug trafficking under Section 27A of the NDPS Act.

    Background of the case

    Rhea Chakraborty was arrested by the Narcotics Control Bureau (NCB) on 8 September 2020 in connection with Crime No. 16/2020. The case arose from an NCB investigation into an alleged drug-supply network. The agency alleged that Chakraborty had helped procure drugs for Sushant Singh Rajput, managed or contributed to payments, and was connected to deliveries involving his associates and her brother, Showik Chakraborty.

    The NCB relied on statements of co-accused persons, alleged WhatsApp communications, and claimed financial transactions. It argued that Chakraborty had facilitated drug deliveries and payments and was therefore liable for offences including financing illicit traffic and harbouring offenders under Section 27A of the Narcotic Drugs and Psychotropic Substances Act, 1985.

    Chakraborty denied that Section 27A applied. Her defence emphasized that no contraband was recovered from her or from Rajput’s residence, that the allegations concerned procurement for alleged personal consumption, and that she had no connection with the commercial quantity of LSD recovered from another accused, Anuj Keshwani.

    NCB investigation was separate from the death investigation

    One preliminary issue was whether the NCB had authority to investigate because the Supreme Court had directed the CBI to investigate the death of Sushant Singh Rajput and related circumstances.

    The High Court rejected the challenge to the NCB’s jurisdiction. It found that the NCB inquiry began independently after information led to the arrest of Abbas Lakhani and later expanded through disclosures and recoveries involving multiple alleged drug suppliers. The court held that the drug-trafficking investigation was distinct from the inquiry into Rajput’s death, even though allegations regarding Rajput’s alleged drug use emerged during the investigation.

    All NDPS offences are non-bailable, court says

    The judgment examined whether offences involving small quantities under the NDPS Act could be treated as bailable under the Criminal Procedure Code.

    The court concluded that all offences under the NDPS Act are non-bailable. It relied on the Supreme Court’s interpretation in State of Punjab v. Baldev Singh, which described Section 37 as making all NDPS offences cognizable and non-bailable. The court distinguished between two issues:

    • Whether an offence is bailable: The court held that NDPS offences are non-bailable.
    • Whether Section 37’s stricter bail conditions apply: Those special restrictions apply to offences under Sections 19, 24 and 27A, and to offences involving commercial quantities.

    This distinction was important because a non-bailable offence does not automatically trigger the stringent β€œtwin conditions” of Section 37.

    What the court said about financing and harbouring

    The High Court’s central legal finding concerned Section 27A, which punishes financing illicit traffic and harbouring persons engaged in it.

    The court held that β€œfinancing” means more than paying money for a particular drug purchase. In its interpretation, financing requires providing funds or financial support that makes an illicit drug trade or business operational or sustains it. Treating every payment connected with a drug transaction as financing would erase the NDPS Act’s separate punishment framework based on quantity.

    Similarly, the court found that β€œharbouring” requires more than allowing a person to reside somewhere or providing ordinary support. It involves sheltering or concealing a person engaged in the prohibited activity, with the necessary mental element and in a manner connected to avoiding apprehension.

    Applying these principles, the court held that allegations that Chakraborty spent money to procure drugs for Rajput’s alleged consumption did not, by themselves, amount to financing illicit traffic. It also found no basis to say that she harboured him: he lived in his own house, no criminal case was pending against him at the relevant time, and there was no indication that he was being concealed from law enforcement.

    Why bail was granted

    The court noted that no contraband was recovered from Chakraborty or from Rajput’s residence. It also found that the investigation had not produced material showing that her alleged conduct involved a commercial quantity of narcotic drugs or psychotropic substances.

    The court further observed that:

    • Chakraborty had no criminal antecedents.
    • The available allegations did not show that she was part of a chain of drug dealers.
    • There was no allegation that she forwarded drugs to others for monetary or other gain.
    • The NCB did not seek her custodial interrogation at her first remand, which the court treated as relevant to whether continued custody was necessary.
    • The concern that she would alert others or cause destruction of evidence had no identified factual basis.

    The court also rejected the argument that a celebrity or public figure should face a harsher approach to bail. It stated that everyone is equal before the law and that neither special privilege nor special liability should follow from a person’s status.

    Bail conditions

    The court directed Chakraborty’s release on a personal-recognizance bond of Rs. 1 lakh with one or two sureties of the same amount. It imposed several conditions, including:

    • depositing her passport with the investigating agency;
    • not leaving India without prior permission from the NDPS Special Court;
    • informing the investigating officer in advance before travelling outside Greater Mumbai;
    • reporting monthly to the investigating agency for six months;
    • attending court proceedings unless prevented by reasonable cause; and
    • not tampering with evidence or the investigation.

    She was initially allowed to furnish cash bail of Rs. 1 lakh for one month while arranging sureties. The court also required her to report to the nearest police station for ten days after release.

    Significance of the ruling

    The ruling is significant for its detailed interpretation of Section 27A of the NDPS Act. It draws a clear legal boundary between an allegation of paying for or arranging drugs for consumption and the far more serious accusation of financing an illicit drug-trafficking operation. The decision also reinforces that Section 37’s strict bail restrictions apply independently to Section 27A and commercial-quantity offences.

    However, the prosecution must first show material capable of connecting the accused to those specific offences. In Chakraborty’s case, the High Court found that threshold was not met at the bail stage, while making clear that its observations were confined to deciding bail rather than determining guilt at trial.

    Aadrikaa Legal Services is a trusted legal and regulatory support partner providing end-to-end legal solutions to law firms, corporate organizations, and businesses across India. We specialize in paralegal services, litigation support, tax and regulatory matters, delivering reliable, efficient, and result-oriented legal assistance.

    Our services include comprehensive paralegal support, drafting and documentation, legal research, case management, litigation handling, and representation support across various judicial and quasi-judicial forums. We also assist in direct and indirect tax matters, customs, GST, corporate regulatory compliance, and legal advisory.

    Source: Bombay High Court

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    Ravi Shekhar Jha – Advocate, Bar Council of Delhi

  • Calcutta HC: Patent Applications Cannot Be Rejected on Public Health Grounds Without Scientific Evidence

    Calcutta HC: Patent Applications Cannot Be Rejected on Public Health Grounds Without Scientific Evidence

    Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration

    Date: 24.10.2026

    Calcutta HC: Patent Applications Cannot Be Rejected on Public Health Grounds Without Scientific Evidence

    This Short Article has been prepared & written by Advocate Ravi Shekhar Jha-Delhi High Court, New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com .  

    The Calcutta High Court has set aside the Patent Controller’s rejection of ITC Limited’s application for a β€œHeater Assembly to Generate Aerosol,” holding that the decision under Section 3(b) of the Patents Act lacked adequate reasons, misconstrued the invention, and breached principles of natural justice.

    Background of the dispute

    ITC’s patent application concerns a heater assembly designed for handheld aerosol-generating devices. Its stated technical purpose is to provide uniform heat distribution across an aerosol-forming substrate. The substrate may be solid or liquid and may, but need not, contain tobacco compounds.

    On 21 August 2024, the Controller of Patents rejected the application under Section 3(b) of the Patents Act, 1970. That provision excludes inventions whose primary or intended use, or commercial exploitation, would be contrary to public order or morality or seriously prejudice human, animal or plant life, health, or the environment.

    The Controller treated the invention as one exclusively connected with tobacco-containing substrates and concluded that it was harmful to human life and health. ITC appealed this decision before the Intellectual Property Rights Division of the Calcutta High Court.

    What the High Court decided

    In its judgment dated 20 May 2025, Justice Ravi Krishan Kapur set aside the rejection order and remanded the application to the Controller for a fresh decision. The Controller must reconsider the matter in accordance with law, after giving the parties a hearing, within three months of communication of the Court’s order.

    The Court did not grant the patent or decide the application’s merits. Instead, it found that the earlier decision-making process and reasoning were legally deficient.

    Key findings

    1. Section 3(b) requires an assessment of the invention’s actual primary or intended use

    The Court emphasized that Section 3(b) focuses on the primary or intended use or commercial exploitation of the specific invention. The inquiry cannot rest on an assumption that every possible use of a product associated with tobacco necessarily makes the invention unpatentable.

    The heater assembly was not limited to tobacco substrates. By treating the invention as necessarily and exclusively tobacco-based, the Controller fundamentally misunderstood its scope.

    2. A patent does not give permission to commercialize an invention

    A central point in the ruling is the distinction between a patent right and regulatory permission. A patent is an exclusionary or negative right: it enables the patentee to prevent others from making, using, selling, or exploiting the claimed invention without consent. It does not itself authorize the patent holder to manufacture, sell, market, or use the invention.

    The Court held that the Controller’s reasoning wrongly assumed that granting a patent would automatically permit commercialization of the product. Whether a product may lawfully be made, marketed, or sold is governed by other applicable laws and regulations, not by the patent grant alone.

    3. Health and morality objections need cogent reasoning and evidence

    The Court found that the conclusion that the invention caused serious prejudice to human life and health was unsupported by reasons or justification. Tobacco-related products are not, by themselves, categorically unpatentable in India.

    A refusal under Section 3(b) must show a clear connection between the invention’s actual intended use and the alleged harm, supported by cogent reasoning. The Court rejected a subjective or preconceived view that all tobacco-related products necessarily fall within the statutory exclusion, particularly where there is no independent scientific or technical evidence supporting the conclusion.

    4. β€œPublic order” and β€œmorality” cannot be applied as vague objections

    The Court held that the Controller’s finding that the invention was contrary to public order and morality was cryptic and unreasoned. It noted that Section 3(b) should not become a vehicle for refusing patents based solely on broad, subjective concerns about morality, public order, or health.

    In interpreting the provision, the Court referred to international patent-law concepts, including the notion of ordre public in TRIPS and the European Patent Convention. These materials indicate that the exclusion is directed at inventions likely to induce riot, public disorder, criminal conduct, or generally offensive behaviour, rather than at every invention that may raise a policy concern.

    5. New materials could not be relied on without giving ITC an opportunity to respond

    The Controller relied on three additional documents in the rejection order even though those documents had not been disclosed in the First Examination Report or hearing notices. ITC was therefore denied the opportunity to address them.

    The Court treated this as a serious procedural defect and a violation of natural justice. A patent applicant must have a fair opportunity to respond to material relied upon in a decision against it.

    6. The e-cigarette prohibition law did not justify the rejection order

    During the appeal, the Controller relied on the Prohibition of Electronic Cigarettes Act, 2019. However, the Court noted that this ground was not part of the original rejection order or the pleadings.

    The Court further observed that the 2019 legislation regulates activities such as production, manufacture, import, export, sale, distribution, storage, and advertising. It does not itself determine whether a patent should be granted. The Controller could not defend the rejection by adding new grounds after issuing the decision.

    7. Constitutional and public-health provisions were improperly invoked

    The Controller had relied on Article 47 of the Constitution, which directs the State to improve public health. The Court held that this reliance was misplaced in deciding patentability under Section 3(b). It also found that Section 83(e) of the Patents Act had been incorrectly applied on the assumption that a patent grant necessarily results in commercialization and public-health consequences.

    Why the ruling matters

    The decision reinforces several important limits on patent examination in India:

    • Patentability must be assessed on the claimed invention, not on assumptions about a particular product category.
    • Section 3(b) demands evidence-based and reasoned analysis, especially where an objection concerns health, public order, or morality.
    • A patent is not a regulatory licence. Granting a patent does not authorize commercial activity prohibited or regulated under other laws.
    • Procedural fairness is essential. Applicants must be informed of and allowed to answer the material used against their applications.
    • Post-hoc reasons cannot repair an invalid order. The Controller’s decision must stand or fall on the reasons contained in the order itself.

    Outcome

    The High Court set aside the Controller’s rejection of ITC’s patent application and returned the matter for fresh consideration. All substantive questions remain open, meaning the Controller must now reassess the application independently, give the parties a proper hearing, and issue a reasoned decision based on the law and the record.

    The ruling clarifies that Section 3(b) is a narrow, evidence-based safeguard against genuinely harmful or morally impermissible inventions, not a blanket basis for rejecting inventions merely because they may be associated with tobacco or aerosol-generating products.

    Aadrikaa Legal Services is a trusted legal and regulatory support partner providing end-to-end legal solutions to law firms, corporate organizations, and businesses across India. We specialize in paralegal services, litigation support, tax and regulatory matters, delivering reliable, efficient, and result-oriented legal assistance.

    Our services include comprehensive paralegal support, drafting and documentation, legal research, case management, litigation handling, and representation support across various judicial and quasi-judicial forums. We also assist in direct and indirect tax matters, customs, GST, corporate regulatory compliance, and legal advisory.

    Source: Calcutta High Court

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  • Delhi High Court Refuses to Condone Customs Department’s Delay

    Delhi High Court Refuses to Condone Customs Department’s Delay

    Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration

    Date: 24.10.2026

    Delhi High Court Refuses to Condone Customs Department’s Delay

    This Short Article has been prepared & written by Advocate Ravi Shekhar Jha-Delhi High Court, New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com .  

    The Delhi High Court has dismissed the Customs Department’s appeal against Spectro Lab Equipments Pvt. Ltd. after finding that its 154-day delay was supported by no reasonable, specific, or substantiated explanation.

    The ruling, delivered on 15 October 2026 in Commissioner of Customs Air Cargo Complex (Import) v. Spectro Lab Equipments Pvt. Ltd., reinforces a settled principle: government departments are subject to limitation laws just like any other litigant. Internal file movement, procedural delay, or an unsupported allegation that prior counsel failed to act will not automatically establish β€œsufficient cause” for a delayed appeal.

    Background of the dispute

    The Commissioner of Customs, Air Cargo Complex (Import), sought to challenge a Customs, Excise and Service Tax Appellate Tribunal order dated 29 January 2025. The appeal was brought under Section 130 of the Customs Act, 1962.

    The Department stated that it received the Tribunal’s order on 13 February 2025 but filed its High Court appeal only on 9 January 2026. Because the filing exceeded the prescribed period, the Department submitted an application seeking condonation of a 154-day delay.

    Its explanation was that the complete case file had been handed to an earlier counsel on 26 June 2025. According to the Department, that counsel neither filed the appeal nor informed it of any issue. The file was then said to have been assigned to present counsel on 16 October 2025, after which additional documents were obtained and the appeal was filed.

    Why the Court rejected the explanation

    The Division Bench of Justice Avneesh Jhingan and Justice Shail Jain found material deficiencies in the Department’s explanation.

    1. More than four months passed before the file was given to counsel

    The Department received the impugned order on 13 February 2025 but claimed to have handed the file to its earlier counsel only on 26 June 2025. The Court noted this substantial initial period of inactivity.

    No detailed explanation was offered for why the Department took over four months to transfer the matter for filing an appeal.

    2. The Department did not show that it followed up with earlier counsel

    After allegedly handing over the file on 26 June 2025, the Department did not plead that it had made any inquiry about the appeal’s status. It also did not state when the file was retrieved from the earlier counsel.

    The Court treated this lack of follow-up as significant. A party seeking condonation must show diligence in protecting its legal rights; it cannot merely assert that a file was given to a lawyer and then remain inactive.

    3. The allegation against earlier counsel was unsupported

    Although the Department blamed its former counsel, it did not disclose that counsel’s details or submit an affidavit from the counsel supporting the account. This was especially relevant because the Department had its own panel of counsel.

    The Court found the allegation vague and unsubstantiated rather than a reliable factual basis for excusing the delay.

    4. The explanation was internally inconsistent

    The pleadings stated that a β€œcomplete” file was supplied to earlier counsel. However, the Department’s counsel also argued that additional documents had to be obtained after the present counsel received the matter, contributing to the filing delay.

    The Court considered these positions contradictory. If the first counsel received a complete file, the later assertion that necessary documentation was still unavailable required a clear explanation. None was provided.

    Government departments cannot claim special treatment under limitation law

    The Court relied on established Supreme Court decisions holding that the law of limitation applies equally to the government.

    In Postmaster General v. Living Media India Ltd., the Supreme Court held that administrative negligence, routine file movement, and bureaucratic red tape do not constitute sufficient cause unless the department provides a reasonable and acceptable explanation and demonstrates bona fide efforts to act in time.

    The Delhi High Court also referred to State of Bihar v. Deo Kumar Singh, which confirms that delay cannot be condoned merely because of lethargic governmental functioning. It further cited Rajneesh Kumar v. Ved Prakash, where the Supreme Court cautioned that litigants cannot escape responsibility for a prolonged delay simply by shifting all blame to their advocates.

    The Court additionally relied on Pathapati Subba Reddy v. Collector (LA), emphasizing that a liberal or justice-oriented approach does not remove the threshold requirement of β€œsufficient cause.” Courts cannot mechanically revive stale claims where negligence, inaction, or lack of bona fides is apparent.

    The Court’s decision

    The High Court held that the condonation application was cursory, vague, and lacking in particulars. The period between 26 June 2025 and 15 October 2025 had effectively been left unexplained, apart from the unsupported attempt to blame earlier counsel.

    Finding no reasonable explanation for the 154-day delay, the Court dismissed the application for condonation. As a result, the Customs appeal itself was also disposed of.

    Key legal takeaway

    This decision is a clear reminder that condonation of delay is an exception, not an anticipated benefit for government litigants. A department seeking relief must present a coherent, evidence-based timeline showing prompt action, regular monitoring, and a genuine cause for missing the limitation period. General references to internal processing or counsel-related delay, without supporting facts, will not meet that standard.

    For litigants and public authorities alike, the ruling underscores that vigilance in pursuing appeals is essential: limitation periods are binding, and courts will not overlook unexplained inactivity simply because the appellant is a government department.

    Aadrikaa Legal Services is a trusted legal and regulatory support partner providing end-to-end legal solutions to law firms, corporate organizations, and businesses across India. We specialize in paralegal services, litigation support, tax and regulatory matters, delivering reliable, efficient, and result-oriented legal assistance.

    Our services include comprehensive paralegal support, drafting and documentation, legal research, case management, litigation handling, and representation support across various judicial and quasi-judicial forums. We also assist in direct and indirect tax matters, customs, GST, corporate regulatory compliance, and legal advisory.

    Source: Delhi High Court

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  • Mumbai Customs Finds No BIS Violation in GE Vernova’s Imported Cable Harness following Advocate Ravi Shekhar Jha’s Legal Representation

    Mumbai Customs Finds No BIS Violation in GE Vernova’s Imported Cable Harness following Advocate Ravi Shekhar Jha’s Legal Representation

    Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration

    Date: 24.10.2026

    Mumbai Customs Finds No BIS Violation in GE Vernova’s Imported Cable Harness following Advocate Ravi Shekhar Jha’s Legal Representation

    This Short Article has been prepared & written by Advocate Ravi Shekhar Jha-Delhi High Court, New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com .  

    Advocate Ravi Shekhar Jha, practising before the Delhi High Court, represented M/s GE Renewable R&D India Private Limited (GE Vernova) through virtual personal hearing proceedings before the Assistant Commissioner of Customs, Jawaharlal Nehru Custom House (JNCH), Nhava Sheva, Mumbai. His detailed legal submissions, supported by technical documentation and a comprehensive legal opinion, contributed to securing a favourable finding on the applicability of mandatory Bureau of Indian Standards (BIS) certification to customised electrical cable harness assemblies under the relevant Quality Control Orders (QCOs).

    The matter concerned an imported OEM-specific control cable harness assembly designed for wind turbine applications, raising important questions regarding BIS certification, applicable Indian Standards and Customs Tariff classification.

    BIS Certification and HSN Classification: The Central Legal Issue

    The imported cable harness was initially declared under CTH 85447090, relating to optical-fibre cables. During assessment, the alternative classification under CTH 85444220, concerning insulated electrical conductors fitted with connectors, was examined.

    The principal legal issue was whether a customised, factory-assembled electrical harness automatically attracted mandatory BIS certification requirements applicable to conventional electrical cables.

    Advocate Ravi Shekhar Jha emphasised that customs tariff classification and BIS/QCO applicability are independent legal determinations. Classification under a particular HSN code cannot, by itself, establish mandatory BIS certification requirements.

    Relevant BIS Standards and Technical Submissions

    The legal representation examined the scope and applicability of several Indian Standards, including:

    • IS 694: PVC-insulated electrical cables.
    • IS 1554 (Part 1): PVC-insulated heavy-duty electric cables.
    • IS 9968 (Part 1): Elastomer-insulated cables.
    • IS 9968 (Part 2): Elastomer-insulated cables for specified higher-voltage applications.
    • IS 17048:2018: Halogen-free, flame-retardant cables.
    • IS 7098: XLPE-insulated power cables under the relevant voltage categories.

    The submissions highlighted that the imported product was not a conventional standalone electrical cable but an integrated OEM assembly comprising power conductors, control wiring, CAT5 Ethernet cables, fibre-optic links and specialised connectors.

    It was further argued that product-specific exclusions, insulation materials, voltage ratings and technical specifications must be examined before applying mandatory BIS requirements.

    Favourable BIS/QCO Determination

    Following consideration of the technical documents, legal submissions and personal hearing representations, the adjudicating authority concluded that a violation of mandatory BIS requirements had not been established in respect of the imported cable harness assembly.

    The Order-in-Original recognised that the applicability of BIS/QCO requirements must be assessed with reference to the relevant product specifications and notified standards, rather than inferred solely from customs tariff classification.

    The goods were therefore not held liable to confiscation on BIS/QCO violation grounds.

    The order separately determined the applicable customs classification under CTH 85444220 and imposed consequential differential duty and penalties. Accordingly, the favourable outcome related specifically to the BIS/QCO issue and should not be construed as complete relief on all customs issues.

    Legal Significance for Industrial Importers

    This matter highlights the importance of technical and legal assessment when determining BIS applicability to customised industrial products.

    Importers of OEM cable harnesses, electrical assemblies, industrial automation components and specialised machinery should carefully examine the scope of applicable QCOs and Indian Standards before determining certification obligations.

    The presence of electrical conductors or connectors within a customised industrial assembly does not automatically establish mandatory BIS certification applicability.

    Aadrikaa Legal Services – BIS, Customs and Regulatory AdvisoryAadrikaa Legal Services (ALS) provides specialised legal assistance in Customs & Allied laws, customs tariff classification, import regulatory compliance, legal opinions, adjudication proceedings and representation before Customs authorities, DGFT, Ministry, DGFT office and any other related Govt agencies.

    Aadrikaa Legal Services is a trusted legal and regulatory support partner providing end-to-end legal solutions to law firms, corporate organizations, and businesses across India. We specialize in paralegal services, litigation support, tax and regulatory matters, delivering reliable, efficient, and result-oriented legal assistance.

    Our services include comprehensive paralegal support, drafting and documentation, legal research, case management, litigation handling, and representation support across various judicial and quasi-judicial forums. We also assist in direct and indirect tax matters, customs, GST, corporate regulatory compliance, and legal advisory.

    Source: DPIIT, CBIC

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    Ravi Shekhar Jha – Advocate, Bar Council of Delhi

  • Punjab & Haryana HC Denies Anticipatory Bail in LLP Partnership Dispute Involving Alleged Forgery

    Punjab & Haryana HC Denies Anticipatory Bail in LLP Partnership Dispute Involving Alleged Forgery

    Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration

    Date: 24.10.2026

    Punjab & Haryana HC Denies Anticipatory Bail in LLP Partnership Dispute Involving Alleged Forgery

    This Short Article has been prepared & written by Advocate Narendra Singh. The views expressed are based on his interpretation of the law. He can be reached at his email id amitnaren@outlook.com .  

    The Punjab and Haryana High Court has declined anticipatory bail to two partners of M/s GLK Homes LLP in a case involving allegations of forged retirement documents, unpaid settlement amounts, and an alleged attempt to remove a partner from the business.

    Background of the dispute

    The case arose from a dispute within M/s GLK Homes LLP, a firm incorporated in June 2020. The complainant, Devender Singh, alleged that he had joined the firm as a partner and contributed to its business and management. According to the complaint, disagreements later developed between the partners, after which the accused allegedly conspired to exclude him from the firm and deny him his share in its capital, profits, and goodwill.

    The complainant alleged that the accused had offered to dissolve the business arrangement by paying him β‚Ή13.50 crore. While β‚Ή50 lakh was transferred through RTGS, he claimed that the remaining amount was not paid. Three cheques dated 1 April 2022 were allegedly issued for the balance, but the account from which they were drawn had been closed.

    He further alleged that a retirement deed was fabricated to show that he had voluntarily retired from the LLP after receiving a full and final settlement. The allegedly forged document was submitted to the Registrar of Companies to create a record that he had left the firm.

    Petitioners’ defence

    The petitioners argued that the matter was essentially a delayed commercial dispute concerning land transactions and partnership arrangements. They maintained that β‚Ή50 lakh had been paid to the complainant because it represented his agreed capital contribution to the LLP, not a settlement of β‚Ή13.50 crore.

    Their case was that the alleged larger payment arrangement was oral, undocumented, and implausible. They also contended that the complainant had resigned voluntarily in September 2020 and that his entitlement to payment depended on conditions relating to acquisition of land and regulatory approvals.

    The petitioners relied on a video recording which they claimed showed voluntary execution of the relevant documents. They also stressed that they had cooperated with the investigation and that the disputed original documents were already in the investigating agency’s possession.

    Land transaction context

    The dispute was connected with approximately 11.26 acres of land in Village Sihi, Faridabad. The petitioners described a sequence of earlier agreements involving landowners, M/s Bonanza Promoters Pvt. Ltd., M/s Crown Township Pvt. Ltd., and entities associated with the complainant.

    According to their submissions, M/s GLK Homes LLP acquired the land in July 2020 through registered transactions worth more than β‚Ή47 crore. The petitioners claimed that they had arranged substantial funds for the transaction after the complainant and another associate were unable to finance the project.

    They also referred to a separate dispute involving M/s Shail Developers Ltd., which had advanced β‚Ή2.50 crore. That amount was later returned by M/s GLK Homes LLP under a compromise arrangement.

    Forensic findings weighed heavily with the Court

    The State and the complainant opposed anticipatory bail, relying on findings of the Regional Forensic Science Laboratory, Bhondsi. The forensic examination reportedly found the compromise deed, retirement deed, and board-meeting minutes to be forged.

    Most significantly, the Court noted that the complainant’s signatures on the disputed retirement documents were found to have been lifted from another document. The Court also found that the petitioners’ video-recording claim did not displace the forensic material at the bail stage.

    The Court observed that it appeared doubtful that the complainant would have resigned shortly after sale deeds were executed in the LLP’s favour in July 2020 merely in exchange for β‚Ή50 lakh, particularly given the scale of the underlying land transaction and the complainant’s asserted financial involvement.

    Court’s decision

    Justice Shalini Singh Nagpal held that anticipatory bail is an extraordinary form of protection and cannot be claimed as a matter of right. While the Court acknowledged that custodial interrogation might not be necessary solely because the petitioners had previously joined the investigation, it held that this was not enough to justify pre-arrest bail.

    The seriousness of the alleged forgery, the forensic findings, and the petitioners’ attributed role were treated as decisive factors. The Court concluded that no strong or exceptional circumstances had been shown to warrant anticipatory bail.

    The petition was therefore dismissed.

    Key legal takeaway

    The decision illustrates that in allegations of business-partnership fraud, the existence of documentary evidence does not automatically favour anticipatory bail. Where forensic material indicates that signatures or corporate records may have been fabricated, courts may treat the allegations as serious enough to deny pre-arrest protection even if the dispute also has commercial and civil dimensions.

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    Aadrikaa Legal Services is a trusted legal and regulatory support partner providing end-to-end legal solutions to law firms, corporate organizations, and businesses across India. We specialize in paralegal services, litigation support, tax and regulatory matters, delivering reliable, efficient, and result-oriented legal assistance.

    Our services include comprehensive paralegal support, drafting and documentation, legal research, case management, litigation handling, and representation support across various judicial and quasi-judicial forums. We also assist in direct and indirect tax matters, customs, GST, corporate regulatory compliance, and legal advisory.

    Source: Punjab & Haryana High Court

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  • Bombay High Court Upholds Rs. 2.675 Crore Arbitration Award in Goregaon Redevelopment Dispute

    Bombay High Court Upholds Rs. 2.675 Crore Arbitration Award in Goregaon Redevelopment Dispute

    Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration

    Date: 24.10.2026

    Bombay High Court Upholds Rs. 2.675 Crore Arbitration Award in Goregaon Redevelopment Dispute

    This Short Article has been prepared & written by Arbitrator Shobhit Mallik. The views expressed are based on his interpretation of the law. He can be reached at his email id shobhit.Ica23@gmail.com .

    The Bombay High Court has dismissed Kumar Urban Development Private Limited’s challenge to an arbitral award requiring it to pay the Jal Ratn Deep Co-operative Housing Society Rs. 2.675 crore, reaffirming that a genuine liquidated-damages clause can be enforced when delay is established and actual loss is difficult to quantify.

    The dispute at a glance

    The case arose from the proposed redevelopment of Jal Ratn Deep Co-operative Housing Society’s property at Bangur Nagar, Goregaon (West), Mumbai. The society owns land containing five buildings and 97 occupied flats. After its members approved redevelopment in 2010, Kumar Builders Mumbai Realty Private Limited was appointed as developer; its rights and obligations later vested in Kumar Urban Development Private Limited through a merger.

    The parties executed their original Development Agreement on 12 January 2011. It included a time-bound construction schedule and a liquidated-damages provision. Under Clause 26, if the developer failed to complete the work and hand over the completed new building within the prescribed period, and the default continued beyond 60 days, it had to pay Rs. 10 lakh per week of delay or part thereof. The clause expressly described the amount as liquidated damages and β€œnot as penalty.”

    How the redevelopment stalled

    The redevelopment was affected by delays in approvals, revised plans, negotiations with members, and changes in development-control rules. The developer had initially paid the society Rs. 1.10 crore as security deposit and stated that it had also paid Rs. 2.425 crore towards hardship compensation and corpus.

    Following the introduction of fungible FSI in 2012, the developer offered larger rehabilitation flats and submitted revised proposals. The parties eventually entered into a fresh development agreement in August 2013, under which the developer was to load sufficient TDR for rehabilitation premises first and load the remaining TDR later.

    However, disagreements emerged over the sequence of obligations, including members’ vacation of flats, loading of TDR, payment of corpus and provision of a bank guarantee. The situation was further complicated by regulatory developments, including changes following the Supreme Court’s decision in the Kohinoor Mills matter. The society ultimately invoked Clause 26 and claimed liquidated damages for the developer’s alleged delay.

    Arbitration award and court challenge

    A sole arbitrator found that the developer had committed delays and awarded liquidated damages for 62 weeks at Rs. 10 lakh per week, totaling Rs. 6.20 crore. After adjusting the security deposit and hardship compensation/corpus amounts, the arbitrator directed payment of Rs. 2.675 crore, together with interest and quantified costs.

    The developer challenged the award under Section 34 of the Arbitration and Conciliation Act, 1996. Its central argument was that the society had not proved any real loss or legal injury. The developer stressed that members had continued to live in their existing flats and had not been displaced or required to obtain alternative accommodation. It also argued that the stipulated weekly amount had no demonstrated commercial basis and was, in substance, a penalty rather than a genuine pre-estimate of loss.

    The society responded that Clause 26 was a negotiated commercial term, expressly excluded a penalty character, and operated as a genuine pre-estimate of loss. It argued that the arbitrator had already found delay and breach, and that the nature of a delayed construction and redevelopment project made precise quantification of the loss difficult.

    Why the High Court refused to interfere

    Justice Aarti Sathe held that the court’s role under Section 34 is narrow. It cannot reassess evidence or substitute its own view merely because another interpretation may be possible. Interference is reserved for exceptional cases, such as awards affected by patent illegality, perversity, lack of reasons or findings based on no evidence.

    The Court found that Clause 26 clearly fixed Rs. 10 lakh per week as the agreed consequence of continuing delay and expressly stated that the payment was not a penalty. It accepted the arbitrator’s conclusion that the clause represented a genuine pre-estimate of loss in a construction-related redevelopment arrangement, where exact loss may be difficult to prove.

    The Court also noted the arbitrator’s findings of significant inaction and delay by the developer, including periods of approximately five months and eleven months in processing approvals. The arbitrator had also considered correspondence showing the society’s frustration with the prolonged delays and its loss of confidence in the developer.

    On this basis, the Court held that proof of actual loss or legal injury was not required in the circumstances. It distinguished authorities relied on by the developer by emphasizing that Section 74 of the Indian Contract Act permits reasonable compensation up to the stipulated amount, and that genuine pre-estimated damages may be awarded where actual loss is difficult to establish.

    Key legal principles from the ruling

    • Contractual wording matters: A carefully drafted liquidated-damages clause can be enforceable where it identifies the trigger for payment, specifies the agreed rate and indicates that the sum is not penal.
    • Delay can support liquidated damages: Once breach and delay are established, precise proof of financial loss may not be necessary if the stipulated sum is a genuine pre-estimate and the loss is difficult to quantify.
    • Section 34 review is limited: A court will not re-evaluate evidence or replace an arbitrator’s plausible interpretation of a contract with its own view.
    • Reasoned arbitral findings are protected: Findings based on the contract, correspondence and evidence will generally withstand challenge unless they are perverse, unsupported by evidence or fundamentally unlawful.
    • Adjustments may be permitted: The arbitrator’s adjustment of sums already paid by the developer against the liquidated-damages award was upheld because the relevant amounts arose under the parties’ contractual arrangement.

    Outcome

    The Bombay High Court dismissed the developer’s petition and left the arbitral award intact. The developer remains liable for the adjusted award of Rs. 2.675 crore, along with interest and costs as determined in arbitration.

    The Court also directed that any money deposited in court be released after one month from the judgment’s upload date, and it made no separate order as to costs.

    This decision highlights the importance of precise delay-damages clauses in redevelopment agreements and confirms the high threshold for setting aside a reasoned arbitral award in India.

    Aadrikaa Legal Services is a trusted legal and regulatory support partner providing end-to-end legal solutions to law firms, corporate organizations, and businesses across India. We specialize in paralegal services, litigation support, tax and regulatory matters, delivering reliable, efficient, and result-oriented legal assistance.

    Our services include comprehensive paralegal support, drafting and documentation, legal research, case management, litigation handling, and representation support across various judicial and quasi-judicial forums. We also assist in direct and indirect tax matters, customs, GST, corporate regulatory compliance, and legal advisory.

    Source: Bombay High Court

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