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  • Bombay HC: Section 49 Purchase Notice Cannot Be Rejected for Want of Development Application Where Landowner Invokes Clauses (a) and (e) of MRTP Act

    Bombay HC: Section 49 Purchase Notice Cannot Be Rejected for Want of Development Application Where Landowner Invokes Clauses (a) and (e) of MRTP Act

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

    Date: 24.09.2026

    Bombay HC: Section 49 Purchase Notice Cannot Be Rejected for Want of Development Application Where Landowner Invokes Clauses (a) and (e) of MRTP Act

    This Short Article has been prepared & written by Advocate Madhumita Jha. The views expressed are based on her interpretation of the law. She can be reached at her email id jhamadhumita27@gmail.com .  

    In an important ruling concerning land reservation and Purchase Notices under the Maharashtra Regional and Town Planning Act, 1966 (MRTP Act), the Bombay High Court has held that a Purchase Notice issued under Sections 49(1)(a) and 49(1)(e) cannot be rejected merely because the landowner had not first submitted a development application to the Planning Authority.

    The Division Bench of Justices R.I. Chagla and Firdosh P. Pooniwalla quashed the Director of Town Planning’s order dated 9 September 2024 rejecting the Purchase Notice issued by Devi Construction LLP and directed the authority to decide the notice afresh on merits, without insisting upon an application under Section 49(2).

    Dispute Over Land Reserved for Garden

    • Devi Construction LLP owns property bearing Bhumapan No. 107/B at Village Vadgaon, measuring approximately 2.10 hectares or 21,000 sq. metres.
    • On 28 February 2024, Vadgaon Nagar Panchayat, acting as the Planning Authority under the MRTP Act, published a Draft Development Plan under Section 26. Under the draft plan, 12,290 sq. metres of the petitioner’s property was reserved for a Garden under Reservation No. 40.
    • The developer objected to the reservation through a letter dated 12 March 2024. Three days later, on 15 March 2024, it issued a Purchase Notice under Section 49, specifically invoking Sections 49(1)(a) and 49(1)(e).

    Director of Town Planning Rejected Purchase Notice

    • The Director of Town Planning rejected the Purchase Notice on 9 September 2024.
    • The rejection was based on the view that Section 49(2) required the Purchase Notice to be accompanied by a copy of an application made to the Planning Authority along with any order or decision passed on such application.
    • Devi Construction challenged this interpretation before the Bombay High Court, contending that Section 49(2) had been incorrectly applied to a Purchase Notice founded upon Sections 49(1)(a) and (e).

    What Does Section 49 of the MRTP Act Provide?

    Section 49 creates a statutory mechanism enabling a landowner or affected person, in specified circumstances, to require the appropriate authority to purchase an interest in land affected by planning restrictions.

    Among the circumstances contemplated by Section 49(1):

    • Clause (a) concerns land designated by a plan as subject to compulsory acquisition.
    • Clause (e) applies where, because of the designation or allocation of land in a plan, the owner claims that the property cannot be sold except at a price lower than what could reasonably have been obtained had the designation or allocation not existed.
    • Section 49(2), meanwhile, states that the Purchase Notice shall be accompanied by a copy of any application made by the applicant to the Planning Authority and any order or decision of that authority or the State Government in respect of which the notice is given.
    • The dispute therefore centred on whether Section 49(2) makes such a prior application mandatory in every case under Section 49(1).

    Developer: Section 49(1) Contemplates Independent Situations

    • Devi Construction argued that the various situations contemplated under Sections 49(1)(a) to (e) are mutually exclusive and independent.
    • According to the petitioner, a prior development application becomes relevant where the Purchase Notice arises from a refusal of development permission or permission granted subject to conditions, as contemplated by Section 49(1)(d).
    • But where the landowner invokes Section 49(1)(e) because the planning reservation or designation has itself depressed the property’s saleability or value, no separate development application is required.
    • The petitioner also invoked Article 300A of the Constitution, arguing that the purpose of Section 49 is to prevent a landowner from being deprived of the enjoyment and value of property merely because of a planning reservation.

    State: Prior Application Was Mandatory

    • The State authorities defended the rejection.
    • They argued that a Purchase Notice under Section 49(1) must be accompanied by the documents referred to in Section 49(2). According to the State, Devi Construction was required to lodge a claim before the Municipal Council concerning its inability to obtain a reasonable price and submit a copy along with the Purchase Notice.
    • Since this had not been done, the authorities maintained that the Purchase Notice had been correctly rejected.

    Bombay HC: Issue Already Settled by Aone Land Developers

    • The High Court rejected the State’s interpretation and held that the issue was no longer res integra.
    • The Bench relied substantially upon Aone Land Developers v. State of Maharashtra & Ors., 2019 SCC OnLine Bom 9845.
    • In Aone Land Developers, the Bombay High Court had interpreted Section 49(2) to mean that the requirement of accompanying a Purchase Notice with a prior application applies where such an application was actually made and resulted in an order or decision.
    • Section 49(2), therefore, cannot be mechanically extended to every independent contingency contained in Section 49(1).

    Each Contingency Under Section 49(1) Is Independent

    • The Court reiterated that Section 49(1) contains several independent circumstances capable of triggering the statutory right to issue a Purchase Notice.
    • The use of the word β€œor” between the different clauses supports a disjunctive reading of the provision.
    • In particular, Section 49(1)(e) creates an independent situation where the landowner claims that, because of designation or allocation under a plan, the land cannot be sold except at a lower price.
    • That situation does not depend upon the landowner first applying for development permission and having that permission refused or conditionally granted.

    Section 49(2) Does Not Create a Universal Prior-Application Requirement

    • The Court emphasized that Section 49(2) is not to be interpreted as imposing an independent requirement that every landowner must first make a development application before invoking Section 49.
    • The earlier Aone Land Developers judgment had specifically held that Section 49(2) applies to a situation where an application was made to the Planning Authority and an order or decision arose from that application.
    • It cannot be read as imposing the same requirement upon every contingency enumerated under Section 49(1).

    Court Also Relies on Gopal Kashinath Lad

    • The Division Bench also relied upon Gopal Kashinath Lad v. State of Maharashtra & Ors., in which the Aurangabad Bench of the Bombay High Court had followed Aone Land Developers.
    • That decision similarly held that where a Purchase Notice is based solely upon Section 49(1)(e), insisting upon a prior development application under Section 49(2) is unnecessary.
    • If no such application was made and consequently no decision exists, there is simply no question of annexing a non-existent application or decision to the Purchase Notice.
    • The Court quoted the earlier ruling to reiterate that the contingencies under Section 49(1)(e) and the documentary requirement under Section 49(2) operate independently in such circumstances.

    Purchase Notice Under Sections 49(1)(a) and (e) Was Maintainable Without Prior Application

    • Applying those principles to Devi Construction, the Bombay High Court noted that the Purchase Notice had specifically been issued under both Sections 49(1)(a) and 49(1)(e).
    • Section 49(1)(a) applies where land is designated by a plan as subject to compulsory acquisition, while Section 49(1)(e) addresses the situation where designation or allocation causes the owner to be unable to sell the property except at a lower price.
    • The Court held that neither situation required Devi Construction to first submit an application to the Planning Authority or obtain an order or decision on such application.
    • Accordingly, the Purchase Notice dated 15 March 2024 was not required to be accompanied by an application under Section 49(2).

    Director’s Rejection Held Incorrect

    • Since the Director of Town Planning had rejected the Purchase Notice specifically because it was not accompanied by an application contemplated under Section 49(2), the High Court held that the reason for rejection was legally incorrect.
    • The order dated 9 September 2024 was therefore quashed and set aside.

    Important: Court Did Not Itself Confirm the Purchase Notice

    • An important distinction in the judgment is that although Devi Construction succeeded in challenging the rejection order, the High Court did not itself finally confirm the Purchase Notice.
    • Instead, it directed the Director of Town Planning to reconsider and decide the Purchase Notice on its own merits under Sections 49(1)(a) and (e), without insisting upon a Section 49(2) application.
    • The authority has been directed to complete this exercise within six weeks from the date of uploading of the High Court’s order.
    • Thus, the judgment represents a clear procedural and statutory-interpretation victory for Devi Construction, while the substantive merits of its Purchase Notice remain for determination by the competent authority.

    What Happens After Confirmation of a Purchase Notice?

    • Section 49 itself contains an important consequence where a Purchase Notice is confirmed.
    • Under Section 49(7), if the appropriate authority fails within one year from confirmation of the Purchase Notice to make the required application to acquire the land under Section 126, the relevant reservation, designation, allotment, indication or restriction on development is deemed to lapse.
    • The land is then deemed released and becomes available to the owner for development otherwise permissible for adjacent land under the relevant plan.
    • That statutory consequence was part of the Section 49 framework considered by the Court; however, the present judgment does not hold that the Garden Reservation over Devi Construction’s property has already lapsed.

    Key Takeaway

    The Bombay High Court’s ruling clarifies that Section 49(2) of the MRTP Act does not impose a blanket requirement that every Purchase Notice must be preceded by a development application to the Planning Authority.

    Where a landowner invokes the independent contingencies under Sections 49(1)(a) and 49(1)(e), the Purchase Notice cannot be rejected merely because no such application or consequent order has been annexed. For landowners whose properties are affected by reservations or designations in development plans, the judgment is significant because it prevents authorities from imposing a procedural precondition that the Court found is not required by the statutory scheme.

    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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  • Supreme Court: State Cannot Raise New Defence at Award-Challenge Stage When It Was Never Taken Before Arbitrator

    Supreme Court: State Cannot Raise New Defence at Award-Challenge Stage When It Was Never Taken Before Arbitrator

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

    Date: 24.09.2026

    Supreme Court: State Cannot Raise New Defence at Award-Challenge Stage When It Was Never Taken Before Arbitrator

    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 Supreme Court of India, while deciding a dispute arising from the construction and operation of the Bharatpur bypass in Rajasthan, held that an arbitral tribunal cannot travel beyond its terms of reference and that a contractor cannot recover toll-based compensation for expenditure it never incurred.

    The Court recognised the contractor’s contractual right to collect tolls on the Bharatpur–Deeg section of the project. However, it also found that the contractor had failed to execute the second phase of the project and that this failure was material to determining its financial entitlement.

    Accordingly, the Supreme Court referred two issues back to the arbitral tribunal for reconsideration. It limited the contractor’s immediate entitlement to β‚Ή26.34 lakh, with 10% interest, for the delay in issuing the traffic-restriction notification, subject to adjustment or prior payment.

    Background: The Bharatpur Bypass BOT Project

    • The dispute originated in September 1997, when the Public Works Department of Rajasthan decided to construct a bypass connecting Bharatpur and Mathura to divert traffic away from the congested market area of Bharatpur.
    • The project was awarded on a Build, Operate and Transfer (BOT) basis. It covered approximately 10.85 kilometres, comprising 9.6 kilometres of new construction and 1.25 kilometres of widening and strengthening of the existing Bharatpur–Deeg Road.
    • MSK Projects submitted a bid of β‚Ή13.25 crore, which the State accepted in February 1998. The parties subsequently entered into a concession agreement on 19 August 1998, granting the contractor the right to collect tolls during a concession period of 111 months, including construction.
    • The contractor completed the bypass on 10 April 2000 and began collecting tolls on 28 April 2000. However, agitation by local residents and difficulties in diverting commercial vehicles through the bypass affected toll collection.
    • The State issued a notification dated 1 September 2000 restricting the entry of vehicles into Bharatpur city, with effect from 1 October 2000. The contractor subsequently invoked arbitration, alleging delay in issuing and implementing the notification and disputing its entitlement to collect tolls from vehicles using the Bharatpur–Deeg section.

    Arbitral Tribunal Awarded β‚Ή9.90 Crore With 18% Interest

    • On 1 December 2003, the arbitral tribunal ruled in favour of MSK Projects.
    • It held that the State had delayed issuing and implementing the traffic-restriction notification and that the contractor was entitled to collect tolls from vehicles using the Bharatpur–Deeg portion of the road.
    • The tribunal directed the State to pay approximately β‚Ή9.90 crore for losses assessed up to 31 December 2003, together with interest at 18% from that date.
    • The State challenged the award under Section 34 of the Arbitration and Conciliation Act, 1996. The District Judge set it aside, holding, among other things, that the concession agreement did not expressly require the State to issue a notification prohibiting vehicles from entering Bharatpur city. The District Judge also reduced the interest rate from 18% to 10%.
    • On appeal, the Rajasthan High Court recognised the contractor’s right to collect tolls on the Bharatpur–Deeg section but rejected compensation based on an alleged obligation to issue the traffic-diversion notification. It maintained the reduced interest rate. Both parties subsequently approached the Supreme Court.

    Arbitrator Cannot Decide Matters Beyond the Reference

    • One of the principal questions before the Supreme Court concerned the limits of an arbitral tribunal’s jurisdiction.
    • The Court explained that an arbitral tribunal derives its authority from the reference made to it. It cannot materially enlarge that reference or decide matters outside its jurisdiction.
    • At the same time, the Court distinguished between an error in interpreting a contract, which may fall within an arbitrator’s jurisdiction, and deciding a matter that the parties never referred to arbitration, which constitutes a jurisdictional error.
    • Applying those principles, the Supreme Court noted that Rajasthan had not raised, during arbitration, the defence that it had never agreed to issue the traffic-restriction notification. The dispute framed before the tribunal concerned the delay in issuing and implementing that notification.
    • The District Judge and the High Court had therefore erred in deciding the case on a defence that the State had not taken before the arbitral tribunal.

    Contractor Entitled to Collect Toll on Bharatpur–Deeg Section

    • The State separately argued that the 1.25-kilometre Bharatpur–Deeg stretch was not part of the tollable project because it was an existing road rather than a newly constructed bypass.
    • The Supreme Court rejected that argument.
    • It examined the bid documents, traffic-survey data, pre-bid clarifications and concession agreement. These established that the Bharatpur–Deeg stretch formed an integral part of the composite project.
    • The Court also noted that the contractor had widened and strengthened the existing road. It was not a temporary service road intended to provide free passage during construction.
    • Consequently, the contractor’s right to collect tolls from vehicles using this section was upheld.

    Toll Collection Must Remain Compensatory

    • The judgment also examined the legal character of toll collection.
    • Referring to the Indian Tolls Act, 1851 and the applicable statutory notification dated 10 February 1997, the Supreme Court explained that tolls are compensatory in nature. They are intended to recover the costs of constructing and maintaining infrastructure, together with permissible interest and collection expenses.
    • The Court emphasised that toll collection cannot become an unrestricted source of revenue unrelated to the costs of the project.
    • This distinction was particularly important because MSK Projects had undertaken to execute the project in two phases, but the second phase had never been completed.

    Failure to Execute Second Phase Was Material to Compensation

    • The project documents contemplated an investment of approximately β‚Ή10.45 crore in Phase I and β‚Ή3.55 crore in Phase II.
    • The second phase involved repairs, maintenance and laying an additional bitumen layer over the road. The Supreme Court noted that MSK Projects had admittedly not executed this phase.
    • The Court further observed that the contractor had recovered its first-phase investment, together with some profit, although the precise amount of toll revenue collected had not been disclosed.
    • In these circumstances, the contractor could not claim compensation calculated on the entire projected investment of β‚Ή13.25 crore when it had not actually incurred the expenditure contemplated for Phase II.
    • The State had raised the non-execution of Phase II in its counter-affidavit before the Supreme Court. The contractor responded that the issue had not formed part of the original arbitration proceedings. The Court noted that there was no specific denial of the underlying allegation that the second phase remained unexecuted.
    • Although the issue arose after the original arbitral award and could not have been determined within that reference, the Supreme Court considered it necessary to examine its financial consequences to avoid awarding compensation disconnected from the contractor’s actual investment.

    Interest Reduced From 18% to 10%

    • The contractor also challenged the reduction of interest from 18% to 10%, arguing that the contractual arrangements contemplated a higher interest rate.
    • The Supreme Court declined to interfere with the reduced rate.
    • Referring to the Interest Act, 1978 and its earlier decisions, the Court explained that interest must be determined with regard to the circumstances of the case and the prevailing economic environment. It noted that interest rates had changed substantially following economic reforms.
    • The Court therefore maintained the 10% interest rate fixed by the courts below.

    Supreme Court’s Final Decision

    The Supreme Court did not restore the original arbitral award of β‚Ή9.90 crore. Instead, it directed the arbitral tribunal to reconsider two specific questions:

    1. What amount could the contractor legitimately have recovered from vehicles using the Bharatpur–Deeg section?
    2. What was the effect on the concession agreement as a whole of the contractor’s failure to execute Phase II?

    The Court requested the tribunal to decide these questions expeditiously after giving both parties an opportunity to be heard.

    It further held that MSK Projects was entitled to β‚Ή26.34 lakh for the delay in issuing the traffic-restriction notification, together with 10% interest, unless already paid. The amount could also be adjusted in the final accounts.

    Both appeals were disposed of without costs.

    Legal Significance

    The judgment addresses two distinct principles relevant to infrastructure contracts and commercial arbitration.

    First, an arbitral tribunal must remain within the scope of the dispute referred to it. Equally, a party cannot ordinarily introduce an entirely new defence at the judicial challenge stage and seek to overturn an award on that basis.

    Second, compensation under a BOT concession must be examined in light of the governing contract, statutory framework and expenditure actually incurred. A contractor’s entitlement to collect tolls does not, by itself, establish entitlement to recover the cost of contractual works that were never executed.

    The decision also illustrates the distinction between recognising a contractor’s contractual right and determining the amount ultimately payable under that right. In this case, the Supreme Court upheld the right to collect tolls on the disputed road section while leaving the financial consequences of the unexecuted second phase for further adjudication.

    Connected Matter

    Karnataka HC: Courts Cannot Re-Appreciate Evidence to Find Patent Illegality in Arbitral Award

    Listen to this on our #YouTube Channel

    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: Supreme Court

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  • Karnataka High Court Grants Bail to Accused Who Missed Trial Dates; Says He Was β€œSufficiently Punished” by Return to Custody

    Karnataka High Court Grants Bail to Accused Who Missed Trial Dates; Says He Was β€œSufficiently Punished” by Return to Custody

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

    Date: 24.09.2026

    Karnataka High Court Grants Bail to Accused Who Missed Trial Dates; Says He Was β€œSufficiently Punished” by Return to Custody

    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 granted regular bail to an accused who had earlier been released on bail but was subsequently taken back into judicial custody after failing to appear before the Trial Court on regular hearing dates.

    Justice S. Vishwajith Shetty observed that the accused had already been granted bail on the merits of the criminal case and had no other criminal antecedents. Noting that he had remained in custody after his presence was secured before the Trial Court, the High Court held that β€œfor the mistake committed by the petitioner, he has been sufficiently punished” and ordered his release on bail subject to stringent conditions.

    Background of the Case

    • The petitioner, Mohammed Shahid, is Accused No. 8 in S.C. No. 5065/2025, pending before the IV Additional District and Sessions Judge, Shivamogga, sitting at Bhadravathi.
    • The prosecution arose from Crime No. 12/2025 registered by Paper Town Police Station, Shivamogga for offences punishable under Sections 132, 121(1), 109(1), 61 and 58(b) of the BNS, 2023, along with Sections 3 and 25(1B) of the Arms Act, 1959.
    • The present petition was filed under Section 483 of the BNSS, 2023, seeking regular bail. The petition’s introductory portion also records the proceeding as one under Section 439 CrPC, filed under Section 483 BNSS.

    Accused Had Already Been Granted Bail in 2025

    • A crucial factor in the High Court’s decision was that this was not the petitioner’s first application for bail on the merits.
    • Mohammed Shahid had been arrested at the crime stage on 27 February 2025. He subsequently approached the Karnataka High Court and was granted regular bail in Criminal Petition No. 9948/2025 by an order dated 20 August 2025.
    • Thus, his entitlement to bail on the merits of the underlying criminal case had already been considered by the High Court.

    Failure to Appear Before Trial Court Led to Fresh Custody

    • After obtaining bail, however, the petitioner failed to appear before the Trial Court on the regular dates fixed for hearing.
    • Consequently, coercive steps were initiated against him. His presence was ultimately secured before the Trial Court on 13 July 2026, following which he was remanded to judicial custody.
    • The petitioner then filed another bail application before the Trial Court in S.C. No. 5065/2025. That application was rejected on 11 August 2026, prompting him to once again approach the Karnataka High Court.

    No Other Criminal Antecedents

    • During the hearing, counsel appearing for Mohammed Shahid submitted that the petitioner had no other criminal antecedents.
    • Significantly, the High Court Government Pleader appearing for the State did not dispute this assertion.
    • The absence of other criminal antecedents became relevant when the Court considered whether continued incarceration was necessary merely because of the petitioner’s earlier non-appearance.

    Bail on Merits Had Already Been Granted

    • The High Court emphasised that Mohammed Shahid had already secured regular bail on the merits of the criminal case through the Court’s earlier order dated 20 August 2025.
    • His return to custody was therefore not because the Court had subsequently found him undeserving of bail on the substantive allegations. Rather, the immediate reason was his failure to attend the Trial Court regularly.

    Justice Shetty recorded:

    • β€œOnly for the reason that petitioner had not appeared before the Trial Court on the regular dates of hearing, he has now been arrested and remanded to judicial custody…”
    • The Court therefore distinguished the underlying merits of the bail claim from the petitioner’s subsequent breach concerning his appearance before the Trial Court.

    β€œFor the Mistake Committed, He Has Been Sufficiently Punished”: Karnataka HC

    • The central observation in the order came while considering whether the petitioner should continue to remain in judicial custody for his failure to appear.

    The High Court observed:

    • β€œFor the mistake committed by the petitioner, he has been sufficiently punished.”
    • On that basis, and taking into account the earlier grant of bail on merits and the absence of disputed criminal antecedents, the Court allowed the petition and directed that Mohammed Shahid be released on regular bail.
    • The ruling therefore does not excuse the petitioner’s previous failure to attend the Trial Court. Instead, the Court considered the period of renewed custody sufficient in the circumstances and restored his liberty subject to conditions specifically designed to ensure his future attendance and compliance.

    High Court Imposes β‚Ή1 Lakh Bond and Two Sureties

    • The grant of bail was accompanied by several conditions.
    • The petitioner was directed to execute a personal bond of β‚Ή1,00,000 with two sureties for the like sum, to the satisfaction of the jurisdictional court.
    • Given that his earlier non-appearance had resulted in his return to custody, the High Court expressly directed him to appear regularly on every date of hearing before the Trial Court, unless his personal appearance is exempted for valid reasons.
    • The Court further restrained him from directly or indirectly threatening or tampering with prosecution witnesses and directed that he should not involve himself in similar offences in the future.
    • Finally, he was prohibited from leaving the jurisdiction of the Trial Court without its permission until disposal of the criminal case.

    What the Order Means

    • The ruling is important in the context of bail cancellation, non-appearance and subsequent applications for restoration of liberty.
    • The order indicates that failure to attend trial dates can legitimately result in coercive steps and renewed custody. At the same time, where an accused had already been granted bail on merits, has no other criminal antecedents, and has undergone further incarceration because of the default, continued detention is not necessarily required indefinitely.
    • The High Court’s approach also shows that the consequences of earlier non-appearance can be addressed through stricter bail conditions, particularly a specific obligation to attend future hearings, restrictions on leaving the Trial Court’s jurisdiction and safeguards against witness intimidation.
    • Importantly, the order does not decide the guilt or innocence of Mohammed Shahid in the pending criminal case. The prosecution under the BNS and Arms Act continues before the Sessions Court; the High Court’s ruling is confined to his entitlement to regular bail.

    Final Order

    The Karnataka High Court allowed Criminal Petition No. 13175 of 2026 and directed that Mohammed Shahid be enlarged on bail in S.C. No. 5065/2025 arising from Crime No. 12/2025 of Paper Town Police Station. His release is subject to the β‚Ή1 lakh personal bond with two sureties and the conditions concerning regular attendance, witnesses, future conduct and restriction on leaving the Trial Court’s jurisdiction.

    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: Interest & Penalty Under RERA Recoverable as Land Revenue; Possession Through Civil Court

    Bombay HC: Interest & Penalty Under RERA Recoverable as Land Revenue; Possession Through Civil Court

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

    Date: 23.09.2026

    Bombay HC: Interest & Penalty Under RERA Recoverable as Land Revenue; Possession Through Civil Court

    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 at Goa has clarified the two distinct mechanisms contemplated under Section 40 of the Real Estate (Regulation and Development) Act, 2016 for enforcement of RERA ordersβ€”monetary directions for payment of interest, penalty or compensation are recoverable through the revenue machinery, whereas directions requiring a person to do or refrain from doing an act can be enforced in the manner prescribed for execution of such directions.

    A Division Bench of Justice Valmiki Menezes and Justice Amit S. Jamsandekar dismissed petitions filed by M/s Sunstar Homes, finding that the complainants had followed the correct routes for enforcing the different components of a composite Goa RERA order. The Court, however, expressly declined to decide the constitutional/statutory validity of Rule 4 of the Goa RERA Rules, holding that the issue had become academic in the facts of the case.

    Sunstar Homes Challenged Rule 4 of Goa RERA Rules

    • The principal challenge raised by Sunstar Homes concerned the vires of Rule 4 of the Goa Real Estate (Regulation and Development) (Recovery of Interest, Penalty, Compensation, Fine Payable, Forms of Complaints and Appeal, etc.) Rules, 2017.
    • Sunstar argued that Section 40 of RERA itself provides two different mechanisms for enforcing orders.
    • According to the developer, Section 40(1) governs recovery of interest, penalty or compensation, while Section 40(2) deals with enforcement of orders directing a person to perform an act or refrain from performing an act.
    • The developer contended that Rule 4 impermissibly prescribed a single method for executing both categories by treating RERA orders as if they were decrees of a civil court and providing for execution under the Code of Civil Procedure.

    RERA Had Directed Possession, Penalty and Interest

    • The dispute arose from a composite order passed against Sunstar Homes by the Goa Real Estate Regulatory Authority.
    • The order contained three principal directions: the developer was required to hand over possession of certain premises, pay penalty, and pay interest to the complainants.
    • Sunstar Homes challenged the order before the RERA Appellate Tribunal. However, the Tribunal dismissed its appeal, resulting in confirmation of the original RERA order.
    • This created the central issue before the High Court: how should different parts of a composite RERA order be enforced when some directions are monetary and others require performance of an act?

    Possession Order Executed Through Civil Court

    • The complainants approached the Civil Court under Order XXI of the Code of Civil Procedure read with Rule 4 of the Goa Rules for enforcement of the portion of the RERA order directing delivery of possession.
    • By the time the matter came before the High Court, that execution had already been completed.
    • The Civil Court had handed over possession of the apartments to the concerned complainants, and therefore nothing further remained to be executed as regards the possession direction.

    Interest and Penalty Recovery Taken Before Revenue Authorities

    • The complainants followed a different route for the monetary component of the RERA order.
    • For recovery of the interest and penalty, proceedings were initiated before the Mamlatdar under the Goa Land Revenue Code, 1971.
    • The High Court recorded that the Revenue Authorities had quantified the interest and penalty amount and that those recovery proceedings were still pending.
    • This distinction became decisive in the High Court’s assessment.

    Section 40(1): Interest, Penalty and Compensation Recoverable as Arrears of Land Revenue

    • The High Court explained that Section 40(1) deals with monetary liabilities such as interest, penalty and compensation.
    • Such amounts are to be recovered through proceedings for recovery as arrears of land revenue.
    • Accordingly, the proceedings initiated before the revenue authorities for recovery of interest and penalty were within the statutory mechanism contemplated by Section 40(1).
    • The Court specifically found that the pending proceedings under the Goa Land Revenue Code were within the powers of the Revenue Authorities under Section 40(1) of RERA.

    Section 40(2): Possession Direction Can Be Executed Through Civil Court

    • The other component of the RERA order was materially different.
    • The direction requiring Sunstar Homes to hand over possession was not merely an order for payment of money. It required the developer to perform an act.
    • The High Court treated this as falling within Section 40(2).
    • The complainants had approached the Civil Court and sought enforcement through the CPC, and the possession order had already been successfully executed.
    • The Court held that the complainants had adopted the correct course by taking the possession component falling under Section 40(2) to the Civil Court, while pursuing the monetary component under Section 40(1) before the revenue authorities.

    One RERA Order Can Therefore Require Two Different Execution Routes

    • An important practical consequence of the judgment is that a single composite RERA order can contain directions that require different modes of enforcement.
    • Where an order simultaneously directs a promoter to hand over possession and pay interest, penalty or compensation, the entire order need not necessarily be enforced through one forum or procedure.
    • The nature of each direction determines its enforcement route.

    Thus, in the present case:

    Component of RERA OrderRelevant ProvisionEnforcement Route
    Handing over possessionSection 40(2)Civil Court/CPC mechanism prescribed under the Rules
    Payment of interestSection 40(1)Recovery as arrears of land revenue
    Payment of penaltySection 40(1)Recovery as arrears of land revenue

    The High Court found that this was precisely the course followed by the complainants.

    High Court Does Not Decide Validity of Rule 4

    • Although Sunstar Homes had mounted a direct challenge to the vires of Rule 4, the High Court did not adjudicate that larger question.
    • This is an important qualification to the judgment.
    • The possession portion of the RERA order had already been executed through the Civil Court, while the monetary recovery proceedings were validly pending before the Revenue Authorities under Section 40(1).
    • Consequently, deciding the vires of Rule 4 would have been merely academic in the circumstances of these petitions.
    • The Court therefore expressly left the validity challenge open to be considered in an appropriate future petition.
    • Accordingly, the judgment should not be read as either upholding or striking down Rule 4 of the Goa RERA Rules on its merits.

    Sunstar Homes’ Petitions Dismissed

    • The High Court ultimately declined to entertain the petitions insofar as they challenged Rule 4 and dismissed all the petitions without costs.
    • The Rule was discharged in each matter.
    • Thus, the execution already completed for delivery of possession remained undisturbed, while the revenue proceedings concerning recovery of interest and penalty could continue.

    Why This Judgment Matters for RERA Execution Proceedings

    • The ruling provides useful guidance on a recurring issue in RERA litigation: the distinction between enforcement of monetary awards and enforcement of non-monetary directions.
    • A RERA order may contain multiple forms of relief. The execution mechanism cannot necessarily be determined simply by calling the entire decision a β€œRERA order.” Instead, the nature of the particular relief being enforced must be examined.
    • For promoters, allottees and practitioners, the decision indicates that Section 40(1) and Section 40(2) operate in different fields. Monetary recovery of interest, penalty or compensation travels through the land-revenue recovery mechanism, whereas a direction such as handing over possession may be executed through the mechanism applicable to non-monetary directions.
    • At the same time, the judgment leaves an important legal question unresolved: whether Rule 4 of the Goa RERA Rules itself is valid in all its applications. The Bombay High Court deliberately left that question open for determination in a case where deciding it would have a live practical consequence.

    Key Takeaway

    The Bombay High Court’s ruling establishes, in the context of the Sunstar Homes dispute, that the complainants correctly used two separate enforcement routes for a composite RERA order: Civil Court execution for delivery of possession under Section 40(2), and revenue recovery proceedings for interest and penalty under Section 40(1). The Court did not adjudicate the vires of Rule 4 and therefore did not pronounce a general ruling validating or invalidating the Goa RERA execution rule.

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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: Bombay High Court

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  • NPPA Cannot Apply Blanket Drug Price Ceiling Without Following DPCO Formula: Bombay HC Quashes Notifications and β‚Ή13-Crore-Plus Demand

    NPPA Cannot Apply Blanket Drug Price Ceiling Without Following DPCO Formula: Bombay HC Quashes Notifications and β‚Ή13-Crore-Plus Demand

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

    Date: 23.09.2026

    NPPA Cannot Apply Blanket Drug Price Ceiling Without Following DPCO Formula: Bombay HC Quashes Notifications and β‚Ή13-Crore-Plus Demand

    This Short Article has been prepared & written by Advocate Madhumita Jha. The views expressed are based on her interpretation of the law. She can be reached at her email id jhamadhumita27@gmail.com .  

    The Bombay High Court has delivered a significant ruling on pharmaceutical price control, holding that the National Pharmaceutical Pricing Authority (NPPA) cannot bypass the statutory mechanism prescribed under the Drugs (Price Control) Order, 1995 (DPCO 1995) and impose a ceiling price upon a formulation merely because it contains a scheduled drug as one of its ingredients.

    Allowing a writ petition filed by Pharmed Limited, the Division Bench of Justice Manish Pitale and Justice Shreeram V. Shirsat struck down NPPA’s notification dated 30 January 2009 in its entirety, while quashing the notification dated 27 September 2007 to the extent it was sought to be applied to Pharmed’s β€œCartigen Forte” formulation. Consequently, the authorities were restrained from acting upon the impugned recovery demands against the company.

    The dispute had culminated in recovery proceedings demanding amounts running beyond β‚Ή13 crore, including alleged overcharging and interest. Earlier, a recovery notice dated 21 November 2016 had sought β‚Ή13,41,06,802 under the Maharashtra Land Revenue Code, 1966.

    Dispute Over Price Control of Cartigen Forte

    • Pharmed Limited manufactures and markets pharmaceutical formulations. The dispute concerned its product β€œCartigen Forte Tablets”, a formulation used for treatment of osteoarthritis.
    • Pharmed’s central case was that the Government had never specifically fixed a ceiling price for Cartigen Forte, either for its formulation existing before January 2010 or for its altered composition thereafter.
    • The controversy arose under the DPCO 1995, issued by the Central Government in exercise of powers under Section 3 of the Essential Commodities Act. The statutory framework empowered the Government to fix, among other things, retail and ceiling prices of scheduled formulations.

    NPPA’s 2007 Notification Covered Multivitamin and Mineral Formulations

    • On 27 September 2007, NPPA issued a notification fixing ceiling prices for multivitamin and mineral tablets and capsules.
    • Pharmed contended that Cartigen Forte was not such a formulation and that the 2007 notification could not simply be extended to it. The company also challenged a subsequent NPPA notification dated 30 January 2009 as impermissibly broad and contrary to the DPCO itself.
    • The 2009 notification purported to provide that any formulation or composition not already covered in NPPA’s tables, but containing any scheduled drug as an ingredient, would become subject to the ceiling price mentioned against that ingredient in the relevant notification unless the manufacturer subsequently obtained a specific price from NPPA.
    • That blanket approach ultimately became central to the High Court’s ruling.

    Initial Overcharging Demand of β‚Ή10.97 Crore

    • NPPA issued a show-cause notice to Pharmed on 13 October 2010, alleging that Cartigen Forte had been sold above the applicable ceiling price.
    • The authority initially proposed recovery of approximately β‚Ή10.97 crore as estimated overcharging.
    • Pharmed replied on 31 January 2011, contending, among other things, that Cartigen Forte was not a multivitamin formulation, its composition had changed from January 2010, and NPPA could not impose a blanket ceiling in the manner proposed.

    Demand Continued to Escalate With Interest

    • In September 2014, NPPA recalculated the alleged overcharged amount at β‚Ή6,33,62,316 and added β‚Ή4,90,71,525 as interest, taking the amount to β‚Ή11,24,33,841.
    • A further demand dated 26 November 2014 called upon Pharmed to deposit β‚Ή11,42,82,631.
    • Subsequent recovery action under Section 267 of the Maharashtra Land Revenue Code demanded β‚Ή12,05,92,401 and threatened attachment proceedings. An earlier writ petition resulted in the matter being sent back to NPPA for reconsideration and a speaking order.
    • After remand, however, further demands followed: β‚Ή12,73,36,583 on 7 March 2016, β‚Ή12,93,41,609 on 12 May 2016, and eventually a recovery notice for β‚Ή13,41,06,802 on 21 November 2016.

    Bombay HC: Cartigen Forte Is Neither a Multivitamin Nor Mineral Tablet

    • A significant part of the Court’s analysis concerned the actual composition of Cartigen Forte.
    • Before January 2010, the formulation contained, among other ingredients, Glucosamine Sulfate Potassium Chloride, Chondroitin Sulfate Sodium, Methyl Sulfonyl Methane, Vitamin D3, Vitamin E and Vitamin C. From January 2010, its composition changed.
    • The Court observed that prior to January 2010, Vitamin C and Vitamin E were scheduled bulk drugs included in the First Schedule to DPCO 1995. However, those two ingredients were no longer present in the formulation from January 2010.
    • More importantly, the Court accepted Pharmed’s contention that the product’s active pharmaceutical ingredients for treatment of osteoarthritis were Glucosamine Sulfate Potassium Chloride, Chondroitin Sulfate Sodium and Methyl Sulfonyl Methane.
    • After examining the undisputed composition, the Bench agreed that Cartigen Forte was neither a multivitamin nor a mineral tablet/capsule.

    Presence of a Scheduled Ingredient Does Not Eliminate Statutory Price-Fixation Exercise

    • The Court did accept an important part of NPPA’s legal position.
    • It held that the authorities possess power under Paragraphs 4 and 11 of DPCO 1995 to fix a formulation’s price based on available information where a manufacturer fails to furnish the information or application required under the DPCO.
    • It also accepted that a formulation containing a bulk drug specified in the First Schedule could fall within the definition of a β€œscheduled formulation.”
    • But that did not end the statutory exercise.
    • The Court held that the Central Government or NPPA was still required to actually fix the ceiling price of the particular scheduled formulation, and while exercising power under Paragraph 9, the authority was required to do so in accordance with the formula prescribed by Paragraph 7.
    • Accordingly, merely establishing that a product contained a scheduled bulk drug could not substitute the statutory price-fixation process.

    Paragraph 7 Formula Must Be Applied

    The judgment places considerable emphasis on the pricing formula prescribed under Paragraph 7 of DPCO 1995:

    R.P. = (M.C. + C.C. + P.M. + P.C.) Γ— (1 + MAPE/100) + E.D.

    The calculation therefore required consideration of factors including:

    • Material Cost (M.C.)
    • Conversion Cost (C.C.)
    • Packing Material Cost (P.M.)
    • Packing Charges (P.C.)
    • Maximum Allowable Post-Manufacturing Expenses (MAPE)
    • Excise Duty (E.D.)

    The statutory provisions themselves contemplated that the Government would fix the retail price of a scheduled formulation in accordance with this formula.

    Similarly, Paragraph 9 contemplated fixation of a ceiling price for a scheduled formulation by notification in the Official Gazette in accordance with the Paragraph 7 formula.

    The High Court found that no such exercise had been undertaken specifically for Cartigen Forte.

    2007 Multivitamin Notification Could Not Be Applied to Cartigen Forte

    • The Court therefore rejected NPPA’s attempt to apply the notification dated 27 September 2007 to Pharmed’s product.
    • That notification had specifically fixed prices for multivitamin and mineral tablets/capsules. The Court found that Cartigen Forte was a different formulation and its ceiling price had not independently been calculated by applying the statutory formula.
    • The Court also noted the significant differences in composition. Before January 2010, Cartigen Forte contained Vitamin C and Vitamin E only in quantities lower than those specified in the multivitamin/mineral formulations covered by the 2007 notification. From January 2010, those ingredients were no longer present.
    • The High Court therefore held that the 2007 notification could not form the basis for treating Cartigen Forte as having breached a notified ceiling price.

    Specific Gazette Notification Required for the Formulation

    • The Court laid down an important principle concerning the structure of DPCO 1995.
    • Even where Paragraphs 4 and 11 empower the authorities to determine price on the basis of available information, the procedure prescribed by Paragraph 9 read with Paragraph 7 must still be followed.
    • A specific order by way of notification in the Official Gazette was required in respect of the formulation concerned before the authorities could assert that a particular ceiling price applied.
    • Since no such exercise was undertaken for Cartigen Forte, the Court found that the very foundation of NPPA’s allegation of overcharging disappeared.
    • Accordingly, the notification dated 27 September 2007 was liable to be set aside only insofar as NPPA sought to apply it to Pharmed’s Cartigen Forte formulation.

    2009 NPPA Notification Declared Ultra Vires DPCO 1995

    • The Court went considerably further with respect to the 30 January 2009 notification.
    • The notification essentially attempted to make a price ceiling fixed for a scheduled ingredient applicable to any formulation containing that ingredient, unless a specific price had subsequently been obtained.
    • The Bombay High Court found this approach fundamentally inconsistent with the DPCO 1995.
    • According to the Bench, the notification was β€œextremely widely worded” and effectively dispensed with the statutory formula under Paragraph 7.
    • The Court reasoned that if the ceiling price for a formulation could simply be deemed to exist because one of its ingredients was covered by another pricing notification, the entire statutory exercise of calculating a formulation-specific ceiling price under Paragraphs 7 and 9 would be bypassed.
    • The Court therefore held the notification dated 30 January 2009 to be ultra vires the DPCO 1995.

    Notification Was Overbroad and Beyond NPPA’s Power: Bombay HC

    • The High Court further characterised the 2009 notification as overbroad and expansive, operating contrary to the provisions of the DPCO itself.
    • The Bench found that it went beyond the power vested in NPPA and effectively amounted to an abdication of the responsibility imposed upon the Central Government and NPPA to specifically determine a ceiling price under Paragraph 9 by applying the rigorous formula prescribed under Paragraph 7.
    • The Court consequently held that NPPA’s exercise of power under Paragraphs 9 and 11 for issuing the 2009 notification was arbitrary and unsustainable.

    β‚Ή13-Crore-Plus Recovery Proceedings Lose Their Foundation

    • Once the Court found the two notifications incapable of supporting NPPA’s case, the consequential demands could not survive.
    • The Court reasoned that the very foundation of the allegation that Pharmed had overcharged customers for Cartigen Forte had been removed.
    • Consequently, the demand notices issued by NPPA and the recovery proceedings initiated by the Collector under the Maharashtra Land Revenue Code were also liable to be quashed.
    • The Court held that there was no independent basis for the Collector to pursue recovery once NPPA’s underlying demand itself became unsustainable.

    Court Also Flags Interest Calculation

    • The High Court separately found substance in Pharmed’s challenge to the huge interest component.
    • It noted that considerable time had elapsed because of delay attributable to NPPA itself in granting a hearing, while earlier demand notices had also been set aside on natural justice grounds.
    • The Court held that time consumed because of the authority’s own fault could not operate to its advantage and to Pharmed’s detriment when calculating interest.
    • Relying on Franco Indian Remedies Private Limited & Anr. v. Union of India & Anr., 2016 SCC OnLine Bom 16344, the Court observed that, at worst, interest could have been calculated from the demand notice issued after the earlier proceedings were remanded.

    Natural Justice and SSI Exemption Issues Left Open

    • Pharmed had also raised questions regarding violation of natural justice, including the alleged failure to pass a proper speaking order after remand, as well as its entitlement and that of its contract manufacturer to a small-scale industrial unit exemption.
    • However, the High Court found it unnecessary to finally determine those issues.
    • Since the notifications forming the foundation of the alleged overcharging were themselves unsustainable, the writ petition could be decided on that basis alone.

    Final Order: Pharmed Wins; NPPA Notifications and Demands Set Aside

    • The Bombay High Court ultimately allowed Pharmed Limited’s writ petition.
    • Crucially, the Court drew a distinction between the two impugned notifications:
    • Notification dated 27 September 2007 was quashed only to the extent it was sought to be applied to Pharmed’s Cartigen Forte formulation.
    • Notification dated 30 January 2009 was quashed and set aside in its entirety.
    • As a consequence, the authorities were directed not to act upon the impugned demand notices against Pharmed.
    • Thus, Pharmed Limited succeeded in eliminating the legal foundation of the substantial overcharging and interest demands raised against it.

    Why the Judgment Matters for Pharmaceutical Price Control

    The ruling is significant because it distinguishes between two separate propositions under DPCO 1995.

    A formulation may qualify as a scheduled formulation because it contains a scheduled bulk drug. But that classification does not, by itself, permit NPPA to automatically import the ceiling price of some other formulation or ingredient and impose it on the manufacturer’s product.

    Where the DPCO requires the ceiling price of a formulation to be determined under Paragraph 9 in accordance with the Paragraph 7 pricing formula, the authority cannot replace that statutory calculation with a blanket deeming mechanism.

    The judgment therefore reinforces the principle that drug-price regulation must remain within the pricing methodology and statutory powers conferred by the DPCO itself.

    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 HC: Courts Cannot Re-Appreciate Evidence to Find Patent Illegality in Arbitral Award

    Karnataka HC: Courts Cannot Re-Appreciate Evidence to Find Patent Illegality in Arbitral Award

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

    Date: 23.09.2026

    Karnataka HC: Courts Cannot Re-Appreciate Evidence to Find Patent Illegality in Arbitral Award

    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 Karnataka High Court has reaffirmed the limited scope of judicial interference with arbitral awards, holding that courts exercising jurisdiction under Section 34 of the Arbitration and Conciliation Act, 1996 cannot re-appreciate evidence or interfere merely because another interpretation of the contract may be possible.

    A Division Bench comprising Chief Justice Vibhu Bakhru and Justice C.M. Joshi dismissed an appeal filed by the State Project Director, Rashtriya Madhyamika Shikshana Abhiyana, thereby leaving undisturbed an arbitral award of β‚Ή60,24,774 towards price escalation, along with interest, in favour of Mycon Construction Ltd.

    Dispute Over Price Adjustment Clause in Government Construction Contract

    • The dispute arose from a tender floated for the construction of model schools and the upgrading and strengthening of existing Government High Schools across 30 districts of Karnataka.
    • Mycon Construction Ltd. emerged as the successful bidder for construction work under Package A-B. The parties consequently executed a construction agreement dated 15 May 2013, consisting of General Conditions of Contract and Special Conditions of Contract. Additional work was subsequently entrusted to Mycon, leading to a supplementary agreement dated 14 March 2017.
    • The controversy centred on Clause 39 β€” the Price Adjustment Clause.
    • Although the original tender material available on the e-procurement portal contained a note stating that the β€œprice adjustment clause may be treated as deleted,” the agreements actually executed by the parties in 2013 and 2017 continued to contain Clause 39.

    Arbitrator Awards β‚Ή60.24 Lakh Against Claim of β‚Ή1.22 Crore

    • During execution of the project, Mycon raised bills claiming amounts under the price adjustment mechanism. The State objected, eventually resulting in arbitration.
    • The Arbitral Tribunal adopted the fast-track procedure and delivered its award on 8 September 2023.
    • Against Mycon’s claim of β‚Ή1,22,81,956, the Tribunal partly allowed the claim and awarded β‚Ή60,24,774 along with interest, holding that the Price Adjustment Clause was valid.
    • The State challenged the award under Section 34, but the Commercial Court dismissed its petition on 2 December 2024. This led to the Section 37 appeal before the Karnataka High Court.

    State: Price Adjustment Clause Was Intended to Be Deleted

    • The State’s principal argument was that the tender/RFP had indicated that the Price Adjustment Clause was to be treated as deleted.
    • It contended that Clause 39 had found its way into the final agreement only because the agreement was erroneously signed by the State Project Engineer. According to the State, Mycon could therefore not claim any amount under that provision.
    • The State further argued that when the tender note expressly contemplated deletion of the Price Adjustment Clause, the authority signing the contract on behalf of the Government could not subsequently incorporate that clause into the agreement.
    • The State also invoked Article 299 of the Constitution, contending in effect that Clause 39 should be treated as non-existent because it had allegedly been incorporated without authority.

    Signed Contract Expressly Contained Clause 39

    • The High Court considered it significant that there was no dispute that the final agreement signed by the parties expressly contained Clause 39.
    • While the e-procurement portal carried the note that Clause 39 β€œmay be treated as deleted,” the agreement ultimately executed by the parties neither contained such a note nor had Clause 39 scored out.
    • The State did not dispute that the signed agreement contained the provision.
    • Clause 39 itself provided for adjustment of the contract price for increases or decreases in rates and prices of labour, materials, fuels and lubricants, subject to the contractual formula and conditions.
    • The High Court further recorded that there was no controversy regarding the calculation of the β‚Ή60,24,774 escalation amount in accordance with Clause 39. The dispute was essentially whether Clause 39 formed part of the parties’ agreement at all.

    Mycon: Bid Was Reduced Because Price Adjustment Protection Was Available

    • Mycon’s original bid was β‚Ή7,22,96,246.41, which was subsequently reduced during negotiations to β‚Ή6,70,56,696.
    • The contractor contended that it had agreed to the reduction because the contract contained a Price Adjustment Clause. It also claimed that during a meeting held on 13 February 2013, the concerned authorities had indicated that higher premiums were unnecessary because price adjustment protection was available.
    • Mycon additionally relied upon a Government Order dated 26 November 2004, under which a price adjustment clause was to be included in works contracts where the estimated cost put to tender was β‚Ή100 lakh or more and the completion period was 12 months or more.

    Tribunal Was Entitled to Interpret the Contract: High Court

    • The Arbitral Tribunal had rejected the State’s contention that the words β€œmay be treated as deleted” automatically meant that Clause 39 had ceased to form part of the contract.
    • The Tribunal instead relied upon the final signed agreement, which retained Clause 39 without any note stating that it should be deleted.
    • It therefore held that the executed agreement could not be read as excluding Clause 39 merely because of the note appearing in the RFP on the e-procurement portal.
    • The Tribunal had also rejected the State’s argument concerning lack of authority of the State Project Engineer. The State had neither rescinded nor rectified the contract and the contractor had executed the works between 2013 and 2018 without the Government taking steps to modify or rescind the agreement.
    • The High Court found that the real dispute was therefore not about the existence of the contract, but about the terms of that contract. Such a dispute fell squarely within the jurisdiction of the Arbitral Tribunal.

    Error in Contract Interpretation Is Ordinarily Within Arbitrator’s Jurisdiction

    • The Division Bench referred to the Supreme Court’s ruling in MSK Projects India (JV) Ltd. v. State of Rajasthan, (2011) 10 SCC 573.
    • The principle highlighted by the Court was that an error committed by an arbitrator while construing a contract is an error within the arbitrator’s jurisdiction. A jurisdictional error arises when the arbitrator travels outside the contract and deals with matters not entrusted to arbitration.
    • The High Court also relied upon SAIL v. Gupta Brother Steel Tubes Ltd., (2009) 10 SCC 63, where the Supreme Court distinguished between an arbitrator travelling beyond the contract and an arbitrator merely interpreting the contractual provisions.
    • Where the arbitrator’s conclusion represents a possible view, courts should not interfere merely because another view may also be possible. Courts cannot examine the correctness of arbitral findings as though exercising appellate jurisdiction.

    Courts Cannot Substitute Their Own Interpretation of Contract

    • The Karnataka High Court further relied upon State of Rajasthan v. Puri Construction Co. Ltd., (1994) 6 SCC 485.
    • The Supreme Court had distinguished between an error within jurisdiction and an error in excess of jurisdiction, holding that courts cannot substitute their own evaluation of the facts or contractual interpretation merely because they might have reached a different conclusion.
    • Where the arbitrator’s interpretation of a contract represents a possible view, the award cannot be reopened simply to reassess the contractual materials and evidence.

    Construction of Contract Lies Within Province of Arbitral Tribunal

    • The Bench also referred to Assam SEB v. Buildworth (P) Ltd., (2017) 8 SCC 146, reiterating that questions concerning construction of contractual provisions ordinarily fall within the province of the Arbitral Tribunal.
    • Where the arbitrator’s interpretation is supported by relevant evidentiary material, courts cannot interfere merely because they might prefer another construction.

    Section 34 Courts Cannot Re-Appreciate Evidence

    • The High Court agreed with the Commercial Court that the Tribunal’s conclusions were based upon evidence and could not be characterised as patently illegal or contrary to the public policy of India.
    • It reiterated that courts cannot re-appreciate evidence while examining an arbitral award, and that interference must remain confined to the grounds expressly provided under Section 34.
    • The Bench relied upon Delhi Airport Metro Express Pvt. Ltd. v. Delhi Metro Rail Corporation Ltd., AIR Online 2021 SC 78, where the Supreme Court emphasised that Section 34 courts must act strictly within the confines of the statutory provision and refrain from appreciation or re-appreciation of facts and evidence.

    Every Error of Law Is Not β€œPatent Illegality”

    • The High Court also reiterated the restrictive meaning of patent illegality under Section 34(2A).
    • An illegality must go to the root of the matter. Every legal error or erroneous application of law does not amount to patent illegality.
    • Interference may be justified where, among other circumstances, the arbitrator adopts a view that is not even a possible one, interprets a contractual clause in a manner no fair-minded or reasonable person could adopt, travels outside the contract, bases conclusions on no evidence, or ignores vital evidence.
    • Courts, however, cannot re-appreciate evidence merely to reach the conclusion that an award is patently illegal.

    Article 299 Argument Rejected

    • The State had relied on K.P. Chowdhry v. State of Madhya Pradesh, AIR 1967 SC 203 to challenge the contractual provision.
    • The Karnataka High Court found that decision inapplicable because it concerned a situation where no written agreement had been entered into after the auction.
    • In Mycon’s case, there was an undisputed signed agreement between the parties, and there was no dispute that the Government had awarded the works contract and that an agreement for execution of those works was authorised.
    • The controversy was therefore confined to whether Clause 39 formed part of the contractual terms, a question that the Arbitral Tribunal had already considered and decided in Mycon’s favour.
    • The Tribunal had also taken note of the State’s failure to rescind or rectify the executed agreement.

    Karnataka HC Dismisses State’s Appeal; Mycon’s Award Stands

    • The Division Bench ultimately held that the State’s challenge could not be sustained under either Section 34(2) or Section 34(2A) of the Arbitration and Conciliation Act.
    • Finding no ground to interfere with the arbitral award and no infirmity in the Commercial Court’s refusal to set it aside, the High Court dismissed the State’s appeal.
    • Accordingly, Mycon Construction Ltd. succeeded in defending the arbitral award of β‚Ή60,24,774 towards price escalation, along with interest, against the State’s Section 34 and Section 37 challenges.

    Key Takeaway

    The ruling reinforces a fundamental principle of Indian arbitration law: interpretation of contractual terms is primarily the domain of the arbitrator. A court exercising jurisdiction under Sections 34 or 37 cannot substitute its preferred contractual interpretation merely because another view is possible.

    Where an executed government contract expressly contains a price adjustment clause, and the arbitrator adopts a possible interpretation of that agreement based on the contractual documents and evidence, judicial interference cannot be justified simply by pointing to a conflicting note in the earlier tender material.

    Connected Matter

    Supreme Court: State Cannot Raise New Defence at Award-Challenge Stage When It Was Never Taken Before Arbitrator

    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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  • Karnataka HC Refuses to Quash ED Proceedings

    Karnataka HC Refuses to Quash ED Proceedings

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

    Date: 23.09.2026

    Karnataka HC Refuses to Quash ED Proceedings

    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 . 

    In a significant judgment concerning homebuyer complaints, delayed real-estate projects, alleged diversion of project funds and proceedings under the Prevention of Money Laundering Act (PMLA), the Karnataka High Court has refused to terminate criminal and money-laundering proceedings concerning the Ozone Urbana project.

    Justice M. Nagaprasanna dealt together with six writ petitions filed by Ozone Urbana Infra Developers Pvt. Ltd. and its office-bearers, challenging various criminal complaints/FIRs as well as Enforcement Directorate proceedings, including ECIRs and a Provisional Attachment Order (PAO) covering properties stated to be worth β‚Ή423.38 crore.

    The Court held, in substance, that serious allegations involving multiple homebuyers, alleged diversion and siphoning of substantial funds, non-delivery of homes and complex financial transactions could not, at the threshold, simply be reduced to private contractual disputes.

    Ozone Urbana Project at Centre of Multiple Proceedings

    • Ozone Urbana Infra Developers was developing a township known as β€œOzone Urbana”, comprising 12 projects with single-unit houses, low- and mid-rise units, high-rise apartments and associated infrastructure.
    • According to the judgment, land for the development was acquired during 2006–2007 and construction commenced in 2012. The litigation involved the company, its Chairman and Managing Director Vasudevan Sathyamoorthy, other office-bearers, several homebuyers, police authorities and the Directorate of Enforcement.
    • The connected petitions arose from different complaints and investigations but involved overlapping allegations concerning the project and its financial affairs.

    Homebuyers Alleged Payment of Substantial Consideration Without Delivery of Flats

    • The judgment records several complaints by individual homebuyers and the Ozone Urbana Buyers Welfare Association.
    • One complaint concerned a senior-citizen homebuyer who allegedly paid β‚Ή64,52,418 in full for a flat in β€œOzone Urbana Pavilion”. According to the complaint, even after about 10 years from the initial booking, the construction remained incomplete and possession had not been delivered.
    • Another homebuyer alleged payment of β‚Ή1,32,10,000 towards a flat in β€œOzone Urbana Avenue”. The complaint alleged that despite payment of the entire consideration, the flat was not handed over and was subsequently sold to a third person.
    • These were allegations under investigation, not findings of guilt.

    Buyers’ Association Alleged Project Was Only 49% Complete

    • The Ozone Urbana Buyers Welfare Association also lodged a complaint.
    • According to the allegations recorded in the judgment, the Ozone Urbana Township commenced in 2012 with a projected 1,800 units and was represented as being completed by 2017. The complaint alleged that only about 49% of the construction had been completed.
    • The homebuyers further alleged that they had been induced through subvention schemes, tripartite arrangements and buy-back schemes. In some instances, banks and housing finance companies allegedly released up to 90% of the loan amount without adequately verifying construction progress, title or the project’s financial position.
    • It was further alleged that the developer had undertaken to service pre-EMI/EMI payments until possession but subsequently stopped doing so, leaving the homebuyers to service the loans themselves.

    β€œNeither the Home Nor the Money”: Allegations Before Court

    • The judgment records the complainants’ case that the affected buyers were left with β€œneither the home nor the money”, while banks had initiated proceedings under the SARFAESI Act for non-payment of loan instalments.
    • Crime No. 77 of 2024 consequently involved allegations under Sections 406, 409, 420, 120-B and 34 IPC and Section 9 of the Karnataka Protection of Interest of Depositors in Financial Establishments Act, 2004 (KPIDFE Act).

    Developer: Disputes Were Civil, Contractual and Already Before RERA

    • Ozone Urbana and its office-bearers argued that the controversies were fundamentally civil and contractual disputes arising from delayed construction, payment obligations and real-estate agreements.
    • They contended that the essential ingredients of cheating and criminal breach of trust were absent because there was no fraudulent intention from the inception of the transactions.
    • The petitioners also relied on the fact that certain homebuyers had already invoked remedies under RERA, arguing that parallel criminal proceedings based on the same underlying transaction amounted to abuse of process.
    • Reliance was placed, among other authorities, on the principles governing quashing of criminal proceedings laid down in State of Haryana v. Bhajan Lal, 1992 Supp (1) SCC 335.

    RERA Remedy Does Not Automatically Convert Criminal Allegations Into a Civil Dispute

    • The broader reasoning of the judgment is important for real-estate disputes.
    • The mere existence of contractual remedies, RERA proceedings or insolvency proceedings does not, by itself, require criminal allegations to be terminated where the complaint independently discloses facts capable of constituting criminal offences.
    • The Court treated the allegations in the connected homebuyer matters as requiring investigation rather than a premature determination at the quashing stage.
    • The judgment therefore underscores the distinction between an ordinary case of delayed possession or contractual breach and allegations extending to matters such as double sale of units, alleged diversion of funds, alleged misappropriation, subvention arrangements and other financial transactions.

    2022 ECIR Also Survives Despite Technical Quashing of Predicate FIR

    • A particularly significant issue concerned the 2022 ECIR β€” ECIR No. BGZO/70/2022.
    • The ED had registered the ECIR following predicate proceedings arising from complaints concerning the Ozone Urbana project. The petitioners argued that subsequent developments affecting the predicate FIRs destroyed the foundation of the PMLA proceedings.
    • The High Court rejected that contention.
    • It drew a distinction between a predicate proceeding being quashed on merits, thereby striking at the substratum of the scheduled offence, and quashing based upon a technical defect, which does not necessarily erase the underlying allegations of criminality.
    • The Court found that the underlying private complaint continued to subsist. It therefore held that the 2022 ECIR and the summons issued under Section 50 PMLA could not be treated as automatically foundationless merely because a predicate FIR had suffered quashing on a technical ground.

    Fresh 2025 ECIR and β‚Ή423.38 Crore Attachment Challenged

    • The company also challenged ECIR/BGZO/01/2025, registered by the ED in 2025.
    • The ECIR was based on multiple predicate crimes. Meanwhile, the ED conducted search and seizure proceedings on 1 and 2 August 2025, during which digital devices and books of account were collected. Section 50 summons followed on 4 August 2025.
    • A further major development arose from proceedings before the Supreme Court concerning homebuyers, builders, banks and housing finance companies operating under subvention schemes.
    • The Supreme Court proceedings eventually led to a CBI investigation and registration of an FIR alleging offences under Section 420 read with Section 120-B IPC and Sections 13(2) read with 13(1)(d) of the Prevention of Corruption Act, 1988.
    • That CBI FIR was subsequently added to the 2025 ECIR.

    ED Provisionally Attached Properties Worth β‚Ή423.38 Crore

    • On 4 October 2025, the Directorate of Enforcement issued a Provisional Attachment Order under Section 5(1) PMLA.
    • According to the ED’s press release reproduced in the judgment, immovable properties valued at β‚Ή423.38 crore were provisionally attached.
    • The attached assets were stated to include unsold inventory comprising 92 flats in the Avenue project and 13 flats in Aqua 2, approximately 4.5 acres of commercial land, and personal properties of the promoter and his wife, including land at Kannehalli Village, Mudigere.
    • The ED alleged that the company and its promoter had generated proceeds of crime of approximately β‚Ή927.22 crore through alleged diversion of funds. Importantly, these figures represent the ED’s allegations recorded in the proceedings, not a final judicial determination of money laundering or the quantum of proceeds of crime.

    Karnataka HC Refuses to Quash 2025 ECIR

    • The High Court rejected the argument that the 2025 ECIR lacked a surviving predicate offence.
    • It observed that the predicate proceedings remained alive and that one of the underlying crimes arose from a CBI investigation pursuant to directions of the Supreme Court.
    • The allegations had yet to undergo investigation and trial. At this stage, the High Court said it could not presume that those proceedings had ceased to exist and, on that assumption, terminate consequential PMLA proceedings.
    • The Court accordingly held that so long as the scheduled offence subsists and the proceedings concerning it have not been obliterated, the ECIR cannot be treated as foundationless.

    Provisional Attachment Is Not Final Determination of β€œProceeds of Crime”

    • The Court also refused to interfere with the PAO at this stage.
    • An important qualification in the judgment is that a provisional attachment is not a final judicial determination that the property constitutes proceeds of crime.
    • Questions concerning the nexus between alleged criminal activity and the attached property, whether the assets satisfy the statutory definition of β€œproceeds of crime”, and whether the attachment can ultimately be sustained are matters for the adjudicatory mechanism prescribed under the PMLA.
    • The Court therefore rejected the attempt to have those questions conclusively determined in the writ proceedings at the provisional-attachment stage.

    PMLA Provides Complete Statutory Mechanism Against Attachment

    • The High Court relied upon the Supreme Court’s decision in JSW Steel Ltd. v. Enforcement Directorate, 2025 SCC OnLine SC 2150.
    • It emphasised the statutory structure under which Section 5 permits provisional attachment, Section 8 provides adjudication and confirmation before the Adjudicating Authority, and Section 26 provides an appellate remedy before the Appellate Tribunal.
    • The High Court held that interfering with a provisional attachment at its threshold would effectively short-circuit the adjudicatory mechanism established by Parliament.

    Economic Offence Allegations Cannot Be Viewed Through Narrow Contractual Lens: HC

    • One of the strongest parts of the judgment concerns the Court’s treatment of the alleged economic offences.
    • The High Court observed that the allegations were not confined to a single complainant or an isolated contractual transaction. They involved allegations of financial transactions of considerable magnitude, diversion and siphoning of funds and use of money for purposes different from those for which it had allegedly been collected.
    • The Court noted that such allegations affected numerous stakeholders, particularly homebuyers.
    • It observed that for a homebuyer, purchase of a home is often not merely an investment in property but the culmination of years of savings coupled with the continuing burden of a housing loan.
    • The allegations therefore could not, at this stage, be examined merely through the narrow prism of individual contractual disputes.

    Court Calls for β€œFull and Unhindered Investigation”

    • Considering the alleged movement and diversion of substantial funds and the number of affected persons, the Court held that the matter had wider economic and societal ramifications.
    • It found that such allegations warranted a full and unhindered investigation in accordance with law.
    • At a stage when the allegations remained to be tested through the legally prescribed process, interdiction of the proceedings was held to be inappropriate.

    Civil and Criminal Remedies Can Operate in Their Own Fields

    • The judgment is particularly relevant to developers and homebuyers because it demonstrates that resort to RERA, civil proceedings or insolvency remedies does not necessarily create immunity against criminal investigation.
    • The crucial inquiry remains whether the allegations, taken at face value, disclose ingredients of an independent criminal offence.
    • Thus, an ordinary contractual delay may stand on one footing; allegations involving dishonest inducement, double sale, diversion of money, breach of trust, conspiracy or laundering of alleged proceeds of crime may stand on another.
    • The existence of a civil remedy is therefore not, by itself, decisive of whether criminal proceedings should be quashed.

    Court Also Examines KPIDFE Act in Context of Homebuyer Funds

    • Another important question concerned the applicability of the Karnataka Protection of Interest of Depositors in Financial Establishments Act.
    • The petitioners argued that developers were not financial establishments and that purchasers of flats could not simultaneously be treated as β€œdepositors”.
    • The judgment examined authorities dealing with similarly worded depositor-protection legislation, including decisions addressing the breadth of the expressions β€œdeposit” and β€œfinancial establishment” and their potential application to money collected by builders from flat purchasers.
    • This aspect assumes particular importance where funds are collected from the public against a promise to provide property or another specified service and the transaction is alleged to have resulted in fraudulent default.

    Key Principle on PMLA Predicate Offences

    • Another significant legal principle emerging from the ruling is that quashing of a predicate FIR does not invariably and mechanically result in termination of an ECIR.
    • The reason for quashing the predicate proceeding matters.
    • Where the scheduled offence itself is extinguished on merits, the consequences under PMLA may be materially different. But where a particular FIR is quashed because of a procedural or technical defect while the underlying complaint and allegations remain alive, the Court held that PMLA proceedings cannot necessarily be treated as having lost their foundation.
    • That distinction could have wider implications for future PMLA litigation.

    Ozone Urbana’s Challenge to ED Proceedings Fails

    • Ultimately, the High Court declined to halt the ED’s investigation and refused to interfere with the provisional attachment at this stage.
    • The ruling does not amount to a finding that Ozone Urbana, its promoters or office-bearers are guilty of cheating, diversion of funds or money laundering. Those allegations remain subject to investigation, statutory adjudication and, where applicable, trial.
    • What the Court decided at this stage was that the allegations and surviving predicate proceedings provided sufficient legal basis for the investigations and statutory processes to continue, and that the High Court’s extraordinary jurisdiction could not be used to terminate them prematurely.

    Why the Judgment Matters

    The 210-page ruling is important at the intersection of RERA, criminal law, PMLA, depositor-protection legislation and insolvency law.

    For homebuyers, it reinforces that pursuing remedies under RERA or other civil/statutory forums does not necessarily prevent them from invoking criminal law where the factual allegations independently disclose criminality.

    For developers and promoters, the judgment illustrates that the defence of a β€œpurely civil dispute” will not automatically succeed at the quashing stage where allegations extend beyond mere delay in construction or contractual non-performance to alleged dishonest inducement, multiple sales, diversion of funds or other financial wrongdoing.

    For PMLA proceedings, the ruling reiterates that a provisional attachment under Section 5 is only an interim statutory measure and that disputes regarding whether the attached assets actually constitute β€œproceeds of crime” ordinarily have to travel through the statutory adjudication and appellate process.

    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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  • Punjab & Haryana HC: Serious Real Estate Fraud Allegations Cannot Be Treated as Mere Civil Dispute Under RERA

    Punjab & Haryana HC: Serious Real Estate Fraud Allegations Cannot Be Treated as Mere Civil Dispute Under RERA

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

    Date: 22.09.2026

    Punjab & Haryana HC: Serious Real Estate Fraud Allegations Cannot Be Treated as Mere Civil Dispute Under RERA

    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 refused regular bail to an accused in an alleged real estate fraud concerning the commercial project β€œRoselyn Square”, holding that the allegations went beyond a simple dispute over delayed possession or non-payment of assured returns and prima facie involved fabrication and alteration of documents, cheating, criminal breach of trust and conspiracy.

    Justice Virinder Aggarwal dismissed the regular bail petition filed by Bhupinder Singla, while expressly clarifying that the Court was not expressing any final opinion on the merits of the criminal case.

    Regular Bail Sought in Roselyn Square Fraud Case

    • Bhupinder Singla approached the High Court under Section 483 of the Bharatiya Nagarik Suraksha Sanhita, 2023, corresponding to Section 439 of the Code of Criminal Procedure, seeking regular bail during trial.
    • The proceedings arose from FIR No. 228 dated 4 May 2026, registered at Police Station Zirakpur, District S.A.S. Nagar (Mohali), Punjab, for offences under Sections 61(2), 316(2), 318(4), 336(2), 338 and 336(3) of the Bharatiya Nyaya Sanhita, 2023. The judgment identifies their corresponding IPC provisions as Sections 120-B, 406, 420, 465, 467 and 468.
    • The FIR followed a complaint by Ashok Kumar Loomba against several persons associated with the Roselyn Square project, including Bhupinder Singla. The allegations concerned conspiracy, cheating, criminal breach of trust and related financial fraud in connection with investments in the commercial real estate project.

    Investors Allegedly Induced by 15% Assured Returns

    • According to the prosecution case recorded in the judgment, the complainant and co-investor Anil Kumar Syal were allegedly induced to invest substantial sums in Roselyn Square on the basis of various representations.
    • They were allegedly promised assured returns at 15% per annum, payable quarterly in advance until possession, followed by lease rental of β‚Ή100 per square foot of super area after possession.
    • The units were also allegedly promised to be delivered in a fully furnished condition by 1 January 2024.
    • The judgment records alleged investments of β‚Ή1.19 crore for Unit No. 121 and β‚Ή2.125 crore each for Unit Nos. 123 and 124, besides β‚Ή8,38,870 towards GST, taking the alleged aggregate investment to approximately β‚Ή5.44 crore.

    Allegation of β‚Ή1.43 Crore Outstanding Assured Returns

    • The complainants alleged that despite receipt of the basic sale consideration, the accused neither executed the requisite Buyer’s Agreement nor delivered possession.
    • According to the complaint, assured returns were initially paid but subsequently discontinued. As of June 2025, the alleged outstanding assured returns were stated to be β‚Ή31,23,750 for Unit No. 121, β‚Ή56,63,806 for Unit No. 123 and β‚Ή55,78,125 for Unit No. 124, aggregating to approximately β‚Ή1.43 crore.
    • The prosecution further alleged that although the actual sale consideration was substantially higher, agreements reflected a nominal consideration of β‚Ή55 lakh per unit and that the remaining amount was allegedly dealt with through off-record transactions.
    • These remained prosecution allegations at the bail stage and were not finally adjudicated by the High Court.

    Partial Completion Certificate Allegedly Projected as Final

    • The complaint also alleged that the project remained incomplete and that a Partial Completion Certificate dated 21 July 2023 had been projected as though it were a final Completion Certificate.
    • There were further allegations regarding alienation of common areas and attempts to commercially exploit or sell parking spaces contrary to applicable statutory provisions and regulatory norms.
    • A preliminary inquiry was conducted following the complaint, after which the FIR was registered.

    Petitioner: Dispute Is Civil and Commercial in Nature

    • Senior Counsel appearing for Bhupinder Singla argued that the dispute arose essentially from a real estate transaction and was civil and commercial in nature, but had been given an unwarranted criminal colour.
    • The defence contended that Agreements to Sell had been duly executed and that the complainant himself had failed to pay the complete agreed consideration, with substantial amounts allegedly still outstanding.
    • It was also submitted that Roselyn Square was duly registered under the Real Estate (Regulation and Development) Act, 2016 (RERA) and possessed statutory approvals, including an Occupancy Certificate dated 21 July 2023.
    • The petitioner further claimed that his wife was the promoter/proprietor of the project and that he was merely a Director of M/s Robus Landcorp Pvt. Ltd., without a direct role in the project’s day-to-day management.

    Defence Disputed β‚Ή5.44 Crore Investment Claim

    • The petitioner also disputed the prosecution’s financial allegations.
    • His counsel argued that the claim of an investment of β‚Ή5.44 crore was unsupported by documentary evidence and asserted that only approximately β‚Ή1.53 crore had been received through banking channels, while more than β‚Ή55 lakh allegedly remained recoverable from the complainant.
    • It was further argued that the petitioner had cooperated with the investigation even before registration of the FIR and supplied relevant documents.
    • According to the defence, no further recovery was required, the investigation had substantially progressed and continued incarceration would serve no meaningful investigative purpose. Counsel invoked the general principle that β€œbail is the rule and jail is the exception.”

    State: Allegations Reveal Planned Economic Fraud

    • The State and the complainant strongly opposed bail.
    • They contended that the allegations disclosed a well-planned conspiracy to defraud investors of substantial amounts. The Court was informed that Bhupinder Singla had been arrested on 6 May 2026, while co-accused Rosy Singla remained absconding and was allegedly concealing incriminating documents and proceeds of the alleged offence.
    • The prosecution also maintained that the complainant and co-investors had been cheated of approximately β‚Ή5.44 crore, besides an alleged outstanding liability of β‚Ή2,11,65,681 towards assured returns.
    • It claimed to possess documentary evidence relating to payments through banking channels as well as alleged cash transactions.

    Electronic Chats Allegedly Corroborated Cash Payments

    • The prosecution further disputed the petitioner’s reliance upon the project’s completion-related documents.
    • It contended that information obtained under the Right to Information Act contradicted the petitioner’s characterization of the relevant Occupancy Certificate and that the No Objection Certificate relied upon by the petitioner had already expired.
    • Of particular significance, the High Court noted the prosecution’s case that a substantial portion of the sale consideration had allegedly been received in cash.
    • Although the petitioner denied receiving cash payments, the investigating agency claimed to have collected electronic chat communications allegedly acknowledging and corroborating receipt of those amounts. The High Court carefully clarified that the evidentiary value of this material would be examined during trial.

    Not a Simple RERA Dispute: High Court

    • The High Court rejected, at the bail stage, the attempt to characterize the allegations merely as a civil dispute relating to real estate.
    • Justice Virinder Aggarwal observed that this was β€œnot a simpliciter case of delayed delivery of possession or non-payment of assured returns by a developer” for which the complainant could simply have invoked the statutory remedy under Section 31 of the Real Estate (Regulation and Development) Act, 2016.
    • Instead, the allegations prima facie disclosed serious offences involving fabrication and alteration of documents, cheating, criminal breach of trust and conspiracy.
    • The ruling is therefore significant in distinguishing between an ordinary builder-buyer dispute capable of being pursued under RERA and allegations containing an additional criminal element such as fraud, forgery or conspiracy.

    Absconding Co-Accused Weighed Against Bail

    • Another major factor was the status of co-accused Rosy Singla.
    • The Court recorded that she had not been apprehended despite repeated efforts by the investigating agency and, according to the prosecution, was absconding while allegedly concealing incriminating documents and proceeds of the offence.
    • In these circumstances, the High Court held that if Bhupinder Singla were released at that stage, the possibility of his absconding or otherwise frustrating the course of investigation could not be ruled out.

    Punjab & Haryana High Court Refuses Regular Bail

    • Taking into account the gravity and nature of the allegations, stage of investigation, role attributed to the petitioner, abscondence of the co-accused and material collected by the investigating agency, the High Court concluded that no case had been made out for grant of regular bail.
    • The petition was accordingly dismissed.
    • Crucially, the Court expressly stated that it was not expressing any opinion on the merits of the case, so that neither side would be prejudiced during trial. Thus, the order represents a refusal of bail and not a final determination of the petitioner’s guilt.

    Key Legal Takeaway

    The decision demonstrates that the availability of a remedy under RERA does not, by itself, convert every dispute connected with a real estate project into an exclusively civil or regulatory matter.

    Where the allegations prima facie extend beyond delayed possession or assured returns and include matters such as forged or altered documents, fraudulent inducement, alleged cash transactions, cheating, criminal breach of trust and conspiracy, criminal proceedings may stand on a different footing from the remedies available under Section 31 of RERA.

    At the same time, because the present proceeding concerned regular bail, the High Court did not finally determine whether those allegations were true. Their evidentiary worth and the petitioner’s criminal liability remain matters for investigation and 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: Punjab & Haryana High Court

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  • Supreme Court: Unsigned Arbitration Agreement Can Still Bind Parties If Correspondence Shows Consensus

    Supreme Court: Unsigned Arbitration Agreement Can Still Bind Parties If Correspondence Shows Consensus

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

    Date: 22.09.2026

    Supreme Court: Unsigned Arbitration Agreement Can Still Bind Parties If Correspondence Shows Consensus

    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 Supreme Court has held that an arbitration agreement need not necessarily bear the signatures of both parties if their correspondence and conduct provide a written record demonstrating consensus on the arbitration arrangement. The Court emphasized that, while examining such an agreement, courts should determine whether the parties were ad idem, or of the same mind, regarding the contractual terms and arbitration mechanism.

    In Govind Rubber Ltd. v. Louis Dreyfus Commodities Asia Pvt. Ltd., the Supreme Court upheld enforcement of a foreign arbitral award arising from commodity transactions governed by terms referring disputes to the Singapore Commodity Exchange, and dismissed Govind Rubber’s challenge.

    Dispute Arose From International Rubber Supply Contracts

    • Govind Rubber Ltd., based in Mumbai, entered into commercial dealings with Singapore-based Louis Dreyfus Commodities Asia Pvt. Ltd. for the purchase of natural rubber.
    • One transaction involved 200 MT of Thai RSS-3 natural rubber at US$2,880 per MT, CIF Nhava Sheva, while another sales contract involved 201.6 MT of SIR20 at US$2,895 per MT, CIF Nhava Sheva. The respondent’s sales contracts stated the governing terms as the Singapore Commodity Exchange.
    • The dispute eventually went to arbitration before the Singapore Commodity Exchange.

    Foreign Award Directed Govind Rubber to Pay US$716,283

    • During the arbitration proceedings, Govind Rubber raised objections to the jurisdiction of the Singapore Commodity Exchange and contended that jurisdiction lay in Mumbai.
    • At the same time, however, Govind Rubber lodged a counterclaim of US$3,734,036.25 and agreed to the nomination of the sole arbitrator.
    • The arbitral tribunal ultimately passed an award dated 18 December 2009, directing Govind Rubber to pay US$716,283 to Louis Dreyfus for breach of contract, along with arbitration costs and expenses of Singapore Dollar 20,330. The counterclaim was rejected.

    Bombay High Court Permitted Enforcement of Foreign Award

    • Govind Rubber did not challenge the arbitral award itself. Instead, it subsequently instituted a suit against the respondent before the Bombay High Court seeking, among other reliefs, damages.
    • Louis Dreyfus thereafter filed proceedings for enforcement and execution of the foreign award.
    • The Bombay High Court allowed the enforcement petition, finding that Govind Rubber had failed to establish a ground for refusing enforcement. The High Court held that the foreign award was enforceable under Part II of the Arbitration and Conciliation Act, 1996 and binding upon the parties under Section 46.
    • Govind Rubber then approached the Supreme Court.

    Govind Rubber: Sales Contract Containing Arbitration Clause Was Never Signed

    • The principal argument before the Supreme Court was that the sales contract containing the reference to arbitration before the Singapore Commodity Exchange had not been signed and returned by Govind Rubber.
    • The appellant argued that its own purchase order contained separate commercial terms, including exclusive jurisdiction of the Bombay High Court. It therefore contended that there was no consensus between the parties to submit their disputes to arbitration before the Singapore Commodity Exchange.
    • Govind Rubber also argued that merely making a counterclaim after receiving notice from the arbitrator did not amount to waiver of its jurisdictional objection.

    Respondent: Parties Had Acted Upon the Sales Contract

    • Louis Dreyfus argued that the sales contract was a concluded commercial arrangement and that Govind Rubber had itself acted upon its terms.
    • The respondent pointed out that Govind Rubber had requested amendments to the payment terms contained in the sales contractβ€”from 100% Letter of Credit to 10% advance by Telegraph Transfer and the remaining 90% by Documents Against Paymentβ€”and those changes had been accepted.
    • The respondent therefore argued that the conduct and correspondence between the parties demonstrated consensus regarding the sales contract, including its dispute-resolution mechanism.

    Supreme Court: Arbitration Agreement Need Not Always Be Signed

    • The Supreme Court examined Section 7 of the Arbitration and Conciliation Act, 1996, particularly Section 7(3), Section 7(4)(a)-(c) and Section 7(5).
    • The Court explained that while an arbitration agreement must be in writing, it does not invariably need to be contained in a document formally signed by both parties.
    • Section 7(4)(b), for example, recognizes an arbitration agreement evidenced through an exchange of letters, telex, telegrams or other means of telecommunication providing a record of the agreement. Section 7(4)(c) also recognizes an agreement arising from an exchange of statements of claim and defence where its existence is alleged by one party and not denied by the other.
    • The Supreme Court consequently held that a written arbitration agreement β€œneed not be signed by the parties” where the requisite record of agreement is established through communications contemplated by Section 7.
    • The Court added that where the parties are prima facie shown to be ad idem, the mere fact that one party did not sign the agreement does not by itself absolve that party from its obligations.

    E-Commerce and Electronic Communications Recognised

    • The judgment is particularly notable for recognizing the practical realities of modern commercial transactions.
    • The Supreme Court referred to internet purchases, tele-purchases, online ticket bookings and standard-form contracts, observing that where the parties’ identity is established and there is a record of their agreement, an arbitration agreement may arise if the arbitration clause reflects consensus between them.
    • The Court expressly stated that a signature is not a formal requirement under Sections 7(4)(b), 7(4)(c) or 7(5) of the Arbitration Act.

    Commercial Agreements Should Be Interpreted to Give Them Effect

    • The Supreme Court further held that a commercial document containing an arbitration clause should be interpreted, where appropriate, in a manner that gives effect to the agreement rather than invalidating it.
    • It referred to Astro Vendeor Compania Naviera SA v. Mabanaft GmbH, (1970) 2 Lloyd’s Rep. 267 and Paul Smith Ltd. v. H and S International Holdings Inc., (1991) 2 Lloyd’s Rep. 127, in support of an approach that seeks to give effect to the parties’ intentions when construing arbitration agreements.
    • The Court also relied upon Union of India v. D.N. Revri & Co., AIR 1976 SC 2257, reiterating that commercial documents should receive a common-sense construction that gives efficacy to the contract rather than a narrow, pedantic or overly legalistic interpretation that defeats it.

    Correspondence Showed Meeting of Minds

    • Applying those principles, the Supreme Court examined the parties’ actual communications.
    • The Court noted that Govind Rubber had itself requested amendments to the payment terms of the sales contract. Its communication specifically requested the respondent to β€œamend your sale contract accordingly” and send the amended sales contract and pro forma invoice.
    • The Court also found that invoices had been split at Govind Rubber’s request, that the relevant request referred to the sales contract, and that the parties proceeded on the terms contained in that contract.
    • From this correspondence, the Supreme Court concluded that there was a meeting of minds and that the parties were ad idem regarding the terms of the sales contract, which provided for dispute resolution through the Singapore Commodity Exchange.

    Filing Counterclaim Also Showed Submission to Arbitration

    • Another important consideration was Govind Rubber’s conduct after commencement of arbitration.
    • The company responded to the arbitration proceedings by lodging a substantial counterclaim before the arbitral tribunal.
    • The Supreme Court held that by making the counterclaim, Govind Rubber had submitted to the jurisdiction of the arbitrator.
    • The Court referred in this context to Cairncross v. Lorimer, (1860) 7 Jur NS 149, Sarat Chunder Dey v. Gopal Chunder Laha, 19 IA 203, and Chowdhri Murtaza-Hossein v. Mt. Bibi Bechunnissa, 3 IA 209, while discussing the consequences of participating in arbitration despite having knowledge of a possible jurisdictional objection.

    Supreme Court Upholds Foreign Award

    • The Court ultimately held that the material on record clearly showed that Govind Rubber had acted pursuant to the sales contract. Consequently, whether the contract itself had been formally signed was not decisive in the circumstances.
    • The Court also noted that Govind Rubber had never challenged the 18 December 2009 arbitral award before any court.
    • Finding no valid ground to oppose enforcement, the Supreme Court upheld the Bombay High Court’s conclusion that the foreign award was enforceable under Part II of the Arbitration and Conciliation Act and binding upon the parties.
    • The appeal filed by Govind Rubber Ltd. was dismissed, with no order as to costs. 

    Key Takeaway

    The decision establishes an important principle for commercial arbitration: absence of signatures does not automatically mean absence of an arbitration agreement.

    Where the correspondence, electronic communications and conduct of the parties demonstrate that they were ad idem on contractual terms incorporating arbitration, the requirement of a written arbitration agreement under Section 7 can be satisfied even without a formally signed contract. At the same time, the judgment turns on the particular documentary record and conduct of the partiesβ€”including Govind Rubber’s requests to amend the sales contract and its participation in arbitration through a counterclaimβ€”rather than laying down that every unsigned arbitration clause is automatically binding.

    Connected Matter

    Delhi High Court: Prior Emails Cannot Override Clear Terms of Final Signed Contract; Grants Anti-Arbitration Injunction Against London Arbitration

    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: Supreme Court

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  • Bombay HC Orders Return of Deposit and Discharge of Bank Guarantee

    Bombay HC Orders Return of Deposit and Discharge of Bank Guarantee

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

    Date: 22.09.2026

    Bombay HC Orders Return of Deposit and Discharge of Bank Guarantee

    This Short Article has been prepared & written by Advocate Madhumita Jha. The views expressed are based on her interpretation of the law. She can be reached at her email id jhamadhumita27@gmail.com .  

    The Bombay High Court has permitted Kunal Sancheti Associates to withdraw the amount it had deposited before the Court pursuant to an interim stay order, along with accrued interest, if any, and has also ordered discharge of the corresponding bank guarantee after noting that the underlying recovery notice had already been declared illegal, null and void by the competent civil court.

    Justice Gauri Godse held that once the decree was in favour of the applicant and the impugned recovery notice stood declared illegal, there was no surviving liability requiring the applicant to make payment to the State.

    Dispute Originated From Section 48 Maharashtra Land Revenue Code Notice

    • The dispute originated from a notice issued against Kunal Sancheti Associates under Section 48 of the Maharashtra Land Revenue Code, 1966.
    • The firm challenged the notice by instituting a civil suit. However, the plaint was initially rejected under Order VII Rule 11 of the Code of Civil Procedure, 1908, following which the applicant preferred First Appeal No. 784 of 2010 before the Bombay High Court.
    • During the pendency of the first appeal, the High Court granted an interim stay subject to conditions requiring the applicant to deposit part of the amount covered by the notice and furnish a bank guarantee for another part of the amount. The applicant complied with those conditions, and both the deposit and bank guarantee remained with the Court.

    Appeal Transferred to District Court; Suit Ultimately Restored

    • Subsequently, because of a change in pecuniary jurisdiction, the first appeal was transferred to the District Court.
    • The District Court allowed the appeal and restored the applicant’s civil suit. The litigation thereafter proceeded before the trial court.
    • Eventually, by a judgment and decree dated 20 October 2021, the suit was decreed in favour of Kunal Sancheti Associates.
    • The impugned notice was specifically declared β€œillegal, null and void”, and Defendant No. 3 was restrained from executing the order for recovery of the amount.

    Deposit and Bank Guarantee Continued Despite Decree in Applicant’s Favour

    • Despite the decree, the amount deposited before the High Court and the bank guarantee furnished pursuant to the earlier interim order dated 12 January 2011 continued to remain with the Court.
    • Kunal Sancheti Associates therefore filed Interim Application No. 3183 of 2026, seeking permission to withdraw the deposited amount and requesting discharge and cancellation of the bank guarantee.
    • The applicant argued that because the recovery notice itself had already been declared illegal and the decree in its favour had not been challenged, there was no longer any justification for retaining either the deposited money or the bank guarantee.

    State Unable to Confirm Any Challenge to Decree

    • The High Court recorded that the learned Assistant Government Pleader had been granted time on various occasions to verify whether the decree passed in favour of Kunal Sancheti Associates had been challenged.
    • However, the State’s counsel had no instructions as to whether any such challenge had been filed.
    • Counsel for Kunal Sancheti Associates stated that, to the applicant’s knowledge, the respondents had never challenged the decree.

    No Liability Survives After Recovery Notice Declared Illegal: Bombay HC

    • After examining the application and the decree passed by the trial court, Justice Gauri Godse accepted the applicant’s submission.
    • The High Court held that, in view of the decree in the applicant’s favour, there was no liability upon Kunal Sancheti Associates to make payment to the respondents under the impugned notice, because that notice had already been declared illegal.
    • The Court also emphasised the purpose for which the money had originally been deposited. It had not been deposited as satisfaction of a final adjudicated liability; rather, the deposit was made as a condition for obtaining an interim stay against implementation of the disputed recovery notice.
    • Once the underlying notice itself ceased to have legal effect following the decree, the basis for continuing to retain the security also disappeared.

    Bombay High Court Allows Withdrawal With Accrued Interest

    • The High Court accordingly allowed the interim application and permitted Kunal Sancheti Associates to withdraw the amount deposited pursuant to the order dated 12 January 2011, together with accrued interest, if any.
    • The Court further directed that the amount should be released in favour of the applicant upon production of an authenticated copy of the order.
    • This part of the order is particularly relevant in disputes where substantial sums remain deposited before courts for extended periods solely because of interim protection granted during litigation.

    Bank Guarantee Stands Discharged

    • The Court also granted the second substantive relief sought by the applicant.
    • The bank guarantee furnished pursuant to the High Court’s order dated 12 January 2011 was declared discharged.
    • The Court directed that the bank guarantee be returned to Kunal Sancheti Associates so that it could be submitted to the concerned bank for cancellation.
    • The Interim Application was consequently allowed in these terms.

    Legal Significance of the Order

    • The order illustrates an important procedural consequence when a litigant has furnished money or security merely as a condition for interim protection.
    • Where the underlying demand is subsequently adjudicated against the authority and declared illegal, continued retention of the security may lose its foundation. In the present case, the Bombay High Court expressly linked the applicant’s entitlement to withdrawal and cancellation of the bank guarantee to the fact that the recovery notice had been declared illegal and, consequently, no liability remained payable under that notice.
    • The ruling should, however, be understood in its procedural context. This order did not itself decide the original legality of the Section 48 notice. That issue had already been decided by the trial court through its decree dated 20 October 2021. The High Court’s order dealt specifically with the consequential release of the amount deposited and discharge of the bank guarantee.

    Key Takeaway

    The Bombay High Court’s order makes the position straightforward in this case: once the underlying recovery notice had been declared illegal, null and void, and the applicant consequently had no liability to make payment under that notice, the amount earlier deposited merely as a condition of interim stay could not continue to be retained.

    Kunal Sancheti Associates was therefore permitted to recover its court deposit along with accrued interest, if any, while the bank guarantee furnished in 2011 was ordered to be discharged and returned for cancellation.

    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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