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  • Bombay HC Clarifies 2026 IBC Amendment: Section 96(4) Extends to Pending Personal Insolvency Proceedings

    Bombay HC Clarifies 2026 IBC Amendment: Section 96(4) Extends to Pending Personal Insolvency Proceedings

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

    Date: 19.09.2026

    Bombay HC Clarifies 2026 IBC Amendment: Section 96(4) Extends to Pending Personal Insolvency Proceedings

    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 a significant ruling concerning personal guarantors, secured creditors and recovery proceedings under the Insolvency and Bankruptcy Code, 2016 (IBC), the Bombay High Court has held that the newly introduced Section 96(4) of the IBC operates retroactively and therefore applies even to applications under Sections 94 and 95 that were already pending when the amendment came into force on May 26, 2026.

    The Division Bench of Justice Manish Pitale and Justice Shreeram V. Shirsat delivered the judgment on September 18, 2026, in a batch of petitions led by Indian Bank v. Shabbir Abbas Patel & Ors., Writ Petition No. 2819 of 2026. The judgment bears neutral citation 2026:BHC-OS:20542-DB.

    The ruling has potentially wide implications for banks, financial institutions and other creditors facing recovery obstacles because of interim moratoriums triggered by personal insolvency applications against guarantors.

    The Central Question Before the Bombay High Court

    • The core issue was whether Section 96(4), introduced into the IBC with effect from May 26, 2026, applies only to fresh applications filed after that date or whether it also affects applications already filed and pending.
    • The Court framed the issue specifically as whether the amendment operates retroactively, so that the exclusion introduced by Section 96(4) applies to pending personal-guarantor insolvency proceedings as well.
    • This question arose because, before the amendment, filing an application under Sections 94 or 95 could trigger an interim moratorium under Section 96, affecting legal actions or proceedings concerning debts.
    • The petitioning creditors argued that the amendment was introduced to address misuse of this mechanism and must therefore apply to pending cases. The opposing parties contended that the amendment was prospective and could affect only applications filed after May 26, 2026.

    Why Section 96 Was Amended

    • A major part of the creditors’ case concerned what they described as the misuse of the interim moratorium by debtors and personal guarantors.
    • The petitioners relied upon the report of the Select Committee on the IBC (Amendment) Bill, 2025, contending that stakeholders, including members of the NCLT, had highlighted misuse of Sections 94, 95 and 96 by debtors to obstruct legitimate creditor action.
    • Reliance was also placed on the Bombay High Court’s earlier decision in Rozina Firoz Hajiani v. Union of India, where the Court had taken judicial notice of concerns surrounding misuse of the interim moratorium.
    • The creditors consequently argued that restricting the amendment only to future applications would allow the very problem sought to be remedied to continue in all applications that happened to be pending on May 26.

    Creditors Argue Amendment Is Curative and Retroactive

    • The banks and financial institutions argued that the amendment was remedial or curative in nature.
    • They relied upon Supreme Court authorities dealing with retrospective and retroactive operation of statutory amendments, including BCCI v. Kochi Cricket Pvt. Ltd., (2018) 6 SCC 287, and M. Rajendran v. KPK Oils and Proteins India Pvt. Ltd., (2026) 3 SCC 505.
    • It was also argued that the interim moratorium was not a vested right of the debtor or guarantor. Decisions including Vineeta Sharma v. Rakesh Sharma, (2020) 9 SCC 1 and SEBI v. Rajkumar Nagpal, (2023) 8 SCC 274 were relied upon while explaining the concept of retroactive operation.

    Personal Guarantors Oppose Retroactive Application

    • The contesting respondents argued that the normal presumption is that legislation operates prospectively unless retrospective operation is expressly stated or follows by necessary implication.
    • They emphasised the wording of Section 96(4), particularly the expression β€œshall not apply where an application is filed”, contending that it points towards prospective application from May 26, 2026.
    • The respondents further argued that an interim moratorium provides a debtor with significant statutory protection from creditor action and that this protection should not be taken away in already pending proceedings.
    • Reliance was placed, among other authorities, on Rakesh Bhanot v. Gurdas Agro Pvt. Ltd., (2025) 6 SCC 781, concerning the importance of the interim moratorium under Section 96.

    Bombay High Court: Amendment Is Retroactive

    • After examining the statutory language, legislative background, object of the amendment and principles governing retroactive legislation, the Division Bench rejected the argument that Section 96(4) could operate only against applications filed after May 26, 2026.
    • The Court held that the amendment β€œmust operate retroactively” and consequently applies not merely to proceedings initiated on or after May 26, 2026, but also to proceedings already pending on that date.
    • The Court reasoned that the purpose of the amendmentβ€”to address the identified misuse of the interim moratoriumβ€”would be fully achieved only by applying the new provision to pending proceedings as well.
    • It also concluded that the respondents did not possess a vested right to the interim moratorium during the procedural stage governed by Sections 94 to 99 of the IBC.

    Section 96(4) Applies Even to Pending Sections 94 and 95 Proceedings

    • The Court ultimately answered the central question in categorical terms.
    • It held that Section 96(4), introduced with effect from May 26, 2026, applies retroactively and therefore extends to pending proceedings. Although the amendment operates from May 26, 2026 onwards, its effect extends to proceedings under Sections 94 and 95 that were already pending on that date.
    • The Division Bench also agreed with the approach previously adopted by a Single Judge of the Bombay High Court in Tata Capital Financial Services Ltd. v. Neel Motors LLP & Ors., as well as the Delhi High Court’s order in IDBI Trusteeship Services Ltd. v. Manish Jain & Ors.
    • This ruling therefore settles, at least for the batch before the Bombay High Court, the dispute over whether pre-amendment personal-guarantor applications can continue to enjoy the earlier Section 96 interim-moratorium protection after May 26, 2026.

    Indian Bank’s Case: DRT Restraint Set Aside

    • The consequences of this interpretation were directly applied in Indian Bank v. Shabbir Abbas Patel.
    • Indian Bank had challenged orders dated October 3, 2024 and March 13, 2026 passed by DRT-I, Mumbai, restraining the Bank from proceeding with an auction. The restraint was linked to the interim moratorium arising from personal insolvency proceedings.
    • An earlier Section 95 petition had been dismissed by the NCLT on February 18, 2026. The respondents, however, relied upon a subsequent Section 95 petition filed on February 19, 2026 and registered on May 6, 2026.
    • Applying its interpretation of the amended law, the High Court held that even the interim moratorium triggered by the subsequent Section 95 proceeding ceased to operate from May 26, 2026.

    Court Finds Repeated Insolvency Proceedings Highlighted the Mischief

    • The Division Bench considered the facts of the Indian Bank matter to illustrate the problem that the legislative amendment sought to address.
    • The Court observed that allowing the interim moratorium to continue because of the subsequent Section 95 petition would be contrary to the legal position after the amendment and would permit repeated reliance on insolvency proceedings to obstruct creditor action.
    • Accordingly, Writ Petition No. 2819 of 2026 filed by Indian Bank was allowed.

    Auction and Sale Certificate Upheld

    • The High Court granted substantial relief to Indian Bank.
    • The DRT-I orders dated October 3, 2024 and March 13, 2026 were quashed and set aside, resulting in the restraint on the Bank ceasing to operate.
    • The Court further held that the Bank’s action in confirming the sale pursuant to the auction conducted on September 30, 2024, as well as issuance of the sale certificate dated February 25, 2026 and its registration on February 27, 2026, were validly taken in the circumstances.
    • The Court Commissioner was permitted to proceed in accordance with law for taking possession of the secured asset. The police authorities were directed to provide appropriate protection and assistance so that possession could be obtained and handed over to the Bank for delivery to the auction purchaser.
    • The underlying Securitisation Application No. 115 of 2024 was directed to be decided expeditiously by DRT-I, Mumbai.

    Other Banks and Financial Institutions Also Before the Court

    • The judgment did not concern Indian Bank alone. It disposed of a batch of petitions involving several secured creditors and financial institutions, including RBL Bank Ltd., Godrej Finance Ltd., Asset Reconstruction Company (India) Ltd. and Apna Sahakari Bank Ltd.
    • In the ARCIL matter, for example, the Court held that the pending Section 95 petition did not prevent the DRAT from hearing the creditors’ appeals, because Section 96(4) meant that the interim moratorium was no longer operating after May 26, 2026.
    • The judgment therefore has significance beyond the facts of a single borrower-creditor dispute.

    Significance for Banks and Secured Creditors

    • The ruling is important for secured-creditor enforcement because the Court has clarified that the May 2026 amendment cannot be avoided merely because a personal insolvency application was filed before the amendment took effect.
    • Where Section 96(4) applies to a personal guarantor to a corporate debtor, a pending Section 94 or Section 95 application cannot continue to provide the earlier interim-moratorium protection merely on the basis of its pre-May 26 filing date.
    • This can have direct consequences for SARFAESI proceedings, DRT/DRAT proceedings, auctions, recovery proceedings and possession of secured assets where creditors had previously faced objections founded upon Section 96.
    • The judgment, however, does not eliminate every remedy available to personal guarantors or decide the merits of their insolvency applications. Its central holding concerns the effect of Section 96(4) on the interim moratorium from May 26, 2026.

    Key Legal Principle

    The principle emerging from the judgment can be stated as follows:

    • Section 96(4) of the Insolvency and Bankruptcy Code, introduced with effect from May 26, 2026, operates retroactively. Therefore, its effect extends to applications under Sections 94 and 95 that were already pending on May 26, 2026, and the excluded interim-moratorium protection cannot continue merely because the personal insolvency proceeding was instituted before the amendment.
    • This interpretation, according to the Bombay High Court, gives effect to the legislative object of preventing misuse of the interim moratorium while not taking away any vested right, because no such vested right exists in the Section 96 interim moratorium during the procedural stage of Sections 94 to 99.

    Key Takeaway

    The Bombay High Court’s ruling substantially clarifies the effect of the 2026 amendment to Section 96 of the IBC. A personal guarantor cannot claim continuation of the earlier Section 96 interim moratorium after May 26, 2026 merely because the Section 94 or 95 proceeding was filed before that date.

    For Indian Bank, this meant the DRT restraint was set aside, the relevant auction and sale certificate were sustained, and steps for obtaining physical possession of the secured asset were permitted to proceed.

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

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

    Source: Bombay High Court

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  • Karnataka High Court: Non-Compoundable Offences Can Be Quashed Under Section 482 CrPC After Amicable Settlement

    Karnataka High Court: Non-Compoundable Offences Can Be Quashed Under Section 482 CrPC After Amicable Settlement

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

    Date: 19.09.2026

    Karnataka High Court: Non-Compoundable Offences Can Be Quashed Under Section 482 CrPC After Amicable Settlement

    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 quashed criminal proceedings involving allegations under Sections 498A, 323, 448, 341, 504, 506, 143 and 149 of the Indian Penal Code (IPC) after noting that the underlying matrimonial and family dispute had been amicably settled.

    Justice S. Vishwajith Shetty, relying on the Supreme Court’s decision in Ramgopal and Another v. State of Madhya Pradesh, reiterated that notwithstanding the restrictions contained in Section 320 CrPC, a High Court exercising its inherent jurisdiction under Section 482 CrPC can quash proceedings involving non-compoundable offences depending upon the nature of the case, relationship between the parties and gravity of the alleged offences.

    The decision was delivered on 29 June 2026 in Smt. Thuya Mani & Anr. v. State of Karnataka & Anr., Criminal Petition No. 8571 of 2022, bearing neutral citation 2026:KHC:32279.

    Relatives of Accused Husband Approach High Court

    • The petition was filed by Thuya Mani and Velamkani/Velangani, who were arrayed as Accused Nos. 4 and 5.
    • They approached the Karnataka High Court under Section 482 CrPC seeking quashing of proceedings in C.C. No. 51695 of 2019, pending before the XXIX Additional Chief Metropolitan Magistrate, Bengaluru.
    • The proceedings arose from Crime No. 11 of 2018, registered at Vivek Nagar Police Station, Bengaluru, for alleged offences punishable under Sections 143, 448, 498A, 341, 323, 504, 506 read with Section 149 IPC.

    Matrimonial Dispute Amicably Settled

    • When the matter came before the High Court, advocates representing the contesting private parties informed the Court that the dispute between the husband and wife had been amicably settled.
    • The Court was also informed that the criminal proceedings against Accused Nos. 1 to 3 had already been quashed by a Coordinate Bench of the Karnataka High Court in Criminal Petition No. 8383 of 2026, decided on 24 June 2026.
    • The present petitioners were relatives of Accused No. 1. They filed a joint application supported by a joint affidavit under Section 320 CrPC seeking permission to compound the offences and bring the criminal dispute to an end.

    Settlement Voluntary and Without Coercion

    • The parties stated before the Court that the settlement had been reached with the intervention of elders, well-wishers, family members and other responsible persons.
    • Respondent No. 2, Susainathan, informed the Court that he no longer intended to proceed with the criminal case against the petitioners.

    The joint application specifically recorded that the compromise was:

    • voluntary, lawful and genuine;
    • entered into without force, threat or coercion;
    • free from undue influence, pressure or misrepresentation; and
    • intended to finally resolve the personal, matrimonial and family disputes between the parties.

    Respondent No. 2 expressly stated that he had no objection to quashing the criminal proceedings against the two petitioners.

    The parties further submitted that no surviving grievance remained between them and that continuing the criminal prosecution despite settlement would serve no useful purpose and would amount to an abuse of the process of law.

    Can Non-Compoundable Criminal Offences Be Quashed After Settlement?

    • The important legal issue arose because not every criminal offence can be formally compounded under Section 320 CrPC.
    • The High Court therefore considered whether it could nevertheless use its inherent jurisdiction under Section 482 CrPC to terminate the proceedings once the private dispute had been genuinely resolved.

    For this purpose, Justice Shetty relied upon the Supreme Court’s judgment in:

    Ramgopal and Another v. State of Madhya Pradesh, reported in (2022) 14 SCC 531.

    • The Karnataka High Court noted that the Supreme Court had recognised the High Court’s power to quash criminal proceedings involving non-compoundable offences, notwithstanding the restrictions under Section 320 CrPC.

    Section 320 Does Not Completely Restrict High Court’s Section 482 Powers

    Referring to Ramgopal, the Court observed that the power under Section 482 can be exercised depending upon factors such as:

    the nature of the case, the relationship between the parties and the gravity of the alleged offences.

    • Therefore, the fact that an offence is technically non-compoundable under Section 320 does not, by itself, prevent the High Court from examining whether the continuation of criminal proceedings would serve any legitimate purpose after a genuine settlement.
    • This distinction is significant: the High Court was not simply treating every non-compoundable offence as compoundable. Rather, it exercised its separate inherent power of quashing under Section 482 CrPC in light of the nature and circumstances of the dispute.

    Matrimonial and Family Nature of Dispute Considered

    • The underlying controversy arose from a personal and matrimonial dispute, and the parties themselves informed the Court that their differences had been completely resolved.
    • The petitioners were relatives of Accused No. 1, while proceedings against Accused Nos. 1 to 3 had already been quashed following the settlement.
    • Against that background, the High Court concluded that the parties should be permitted to β€œput an end to the dispute.”
    • The decision reflects the distinction courts draw between offences having an overwhelmingly private or personal character and serious crimes involving broader public interest. The Court’s reliance on Ramgopal makes clear that the nature of the offence and gravity of the allegations remain relevant considerations rather than settlement automatically resulting in quashing.

    Criminal Proceedings Quashed Against Accused Nos. 4 and 5

    • The Karnataka High Court ultimately allowed Criminal Petition No. 8571 of 2022.
    • It quashed the entire proceedings in C.C. No. 51695 of 2019 pending before the XXIX Additional Chief Metropolitan Magistrate, Bengaluru, arising from Crime No. 11 of 2018 registered by Vivek Nagar Police Station, insofar as the two petitioners were concerned.
    • Accordingly, the criminal prosecution against Thuya Mani and Velamkani/Velangani (Accused Nos. 4 and 5) came to an end.

    Supreme Court Precedent Relied Upon

    • The principal judicial precedent expressly relied upon in the order was:
    • Ramgopal and Another v. State of Madhya Pradesh, (2022) 14 SCC 531.
    • The Karnataka High Court relied on the judgment for the proposition that High Courts can, in appropriate circumstances, exercise their inherent powers under Section 482 CrPC to quash criminal proceedings involving non-compoundable offences despite the limitations under Section 320 CrPC.

    Why the Judgment Is Significant

    • The order reinforces the legal distinction between compounding an offence under Section 320 CrPC and quashing criminal proceedings through the High Court’s inherent jurisdiction under Section 482 CrPC.
    • A criminal offence that is not statutorily compoundable does not necessarily mean that proceedings must continue irrespective of a subsequent settlement. In an appropriate case, particularly where the controversy is essentially personal or matrimonial in character, the High Court may examine whether continuation of prosecution would serve any meaningful purpose.
    • At the same time, the ruling does not establish that every non-compoundable criminal case can be quashed merely because the parties have reached a compromise. The Court expressly referred to the nature of the case, relationship between the parties and gravity of the alleged offences as relevant considerations.

    Key Takeaway

    The Karnataka High Court has reiterated that the restrictions governing statutory compounding under Section 320 CrPC do not completely curtail the High Court’s inherent powers under Section 482 CrPC.

    Where parties have genuinely settled a personal or matrimonial dispute, the High Court may quash even proceedings involving non-compoundable offences after considering the nature of the case, relationship between the parties and gravity of the offences.

    In the present case, with the matrimonial and family disputes amicably resolved and the complainant having no objection to quashing, the Court concluded that the proceedings against Accused Nos. 4 and 5 should be brought to an end.

    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: Trade Mark Search & Seizure Cannot Be Conducted by Officer Below DSP Rank

    Punjab & Haryana HC: Trade Mark Search & Seizure Cannot Be Conducted by Officer Below DSP Rank

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

    Date: 19.09.2026

    Punjab & Haryana HC: Trade Mark Search & Seizure Cannot Be Conducted by Officer Below DSP Rank

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

    The Punjab and Haryana High Court has quashed a criminal prosecution under Sections 103 and 104 of the Trade Marks Act, 1999, holding that the mandatory safeguards prescribed under Section 115(4) were violated because the search and seizure was conducted by an officer below the rank of Deputy Superintendent of Police and without obtaining the prior opinion of the Registrar of Trade Marks.

    In Ashok Kumar v. State of Punjab & Anr., CRM-M-12823-2021 (O&M), Justice Jasjit Singh Bedi held that the statutory procedure had been breached on two counts and that there was consequently a β€œclear statutory embargo” on the initiation and continuation of the criminal proceedings.

    The judgment was delivered on 10 January 2023.

    Allegations of Selling Duplicate β€œNorth Face” and β€œJansport” Bags

    • The proceedings originated from a complaint submitted by Vishal Joshi, described as an Enforcement Officer of United Overseas Trade Mark Company.
    • The complainant alleged that Ashok Kumar, proprietor of Amar Bag House, was manufacturing, selling and supplying duplicate bags bearing the marks β€œNorth Face” and β€œJansport.”
    • On the basis of the complaint, FIR No. 10 dated 1 February 2019 was registered at Police Station Mahilpur, District Hoshiarpur, initially under Sections 63 and 65 of the Copyright Act, 1957.

    136 Allegedly Fake Bags Recovered During Raid

    • During the investigation, the police raided the petitioner’s shop.
    • According to the judgment, the search resulted in recovery of 60 black bags carrying the β€œNorth Face” mark and 76 bags carrying the β€œJansport” mark, totalling 136 bags.
    • A wooden board carrying a β€œJansport” company sticker was also recovered. The recovered bags were alleged to be fake and were taken into police possession.
    • However, the legality of the manner in which this search and seizure was carried out ultimately became decisive before the High Court.

    Copyright Charges Deleted; Trade Marks Act Invoked

    • After investigation, the police initially prepared the final report under Sections 63 and 65 of the Copyright Act.
    • The matter was thereafter sent to the District Attorney, Hoshiarpur, who opined that offences under Sections 103 and 104 of the Trade Marks Act, 1999 were made out. Consequently, the Copyright Act offences were deleted and the report under Section 173(2) CrPC was presented under Sections 103 and 104 of the Trade Marks Act.
    • Charges were subsequently framed against Ashok Kumar under those provisions on 1 February 2021.
    • The petitioner then approached the High Court under Section 482 CrPC, seeking quashing of the FIR, the order framing charges and all consequential proceedings.

    Petitioner Challenges Search and Seizure Under Section 115(4)

    • Ashok Kumar’s principal argument was that the investigation had failed to comply with the mandatory requirements of Section 115(4) of the Trade Marks Act.
    • He raised two specific objections.
    • First, the search and seizure had been conducted by officers of the rank of Sub-Inspector/Assistant Sub-Inspector, whereas Section 115(4) authorises warrantless search and seizure by a police officer not below the rank of Deputy Superintendent of Police or equivalent.
    • Second, the police had not obtained the opinion of the Registrar of Trade Marks before conducting the search and seizure, as required by the proviso to Section 115(4).
    • The petitioner therefore argued that the entire search and seizure stood vitiated and the resulting criminal prosecution could not legally continue.

    What Section 115(4) of the Trade Marks Act Requires

    • The High Court reproduced Section 115 of the Trade Marks Act and closely examined its statutory safeguards.
    • Under Section 115(3), offences under Sections 103, 104 and 105 are cognizable.
    • However, Section 115(4) provides that a police officer not below the rank of Deputy Superintendent of Police or equivalent may conduct a warrantless search and seizure where satisfied that an offence referred to in Section 115(3) has been, is being, or is likely to be committed.
    • Crucially, the proviso further states that before conducting any search and seizure, the police officer shall obtain the opinion of the Registrar on the facts involved in the offence relating to the trade mark and shall abide by that opinion.
    • Thus, the Court treated the statutory scheme as imposing substantive procedural safeguards upon police action in such trademark prosecutions.

    Search by Sub-Inspector Violated Section 115(4)

    • The High Court found from the recovery memo and the final report under Section 173(2) CrPC that the search and seizure had in fact been conducted by an officer of the rank of Sub-Inspector.
    • Justice Bedi held that this directly violated Section 115(4), because the raid and consequential search and seizure were required to be undertaken by an officer not below the rank of Deputy Superintendent of Police or equivalent.
    • The Court consequently held that the proceedings emanating from the FIR were liable to be quashed on this ground.

    Prior Opinion of Registrar of Trade Marks Was Also Mandatory

    • There was a second and independent statutory violation.
    • The Court found that no opinion of the Registrar of Trade Marks had been obtained before the search and seizure.
    • The Sub-Inspector who conducted the search was therefore not only below the statutorily prescribed rank but had also proceeded without complying with the proviso to Section 115(4).
    • The High Court held that the proceedings were liable to be quashed on this ground as well.

    State Argues Objections Should Be Decided During Trial

    • The State opposed the quashing petition.
    • It argued that after registration of the FIR, the police had completed investigation and presented the report under Section 173(2) CrPC. Charges had also been framed.
    • According to the State, the grounds raised by the petitioner could therefore be adjudicated during the trial rather than being used to quash the prosecution at the threshold.
    • However, the State also conceded that its reply contained no specific denial of the petitioner’s contentions concerning the alleged statutory violations.
    • The High Court ultimately rejected the argument that the petitioner should be relegated to trial because the defect concerned violation of the statutory conditions governing the very search and seizure underlying the prosecution.

    Mandatory Procedure Under Trade Marks Act Cannot Be Ignored

    • The High Court relied on its earlier decisions in Anil Kumar v. State of Punjab & Anr. and Satpal & Anr. v. State of Punjab & Ors..
    • In Anil Kumar, the Court had held that Section 115(4) does not permit an officer below the rank of DSP to conduct the relevant search and seizure. It had further held that obtaining the Registrar’s opinion before such action was mandatory, observing that use of the word β€œshall” indicated the mandatory nature of the requirement.
    • Similarly, in Satpal, the Court held that where the search was conducted by a Sub-Inspector without obtaining the Registrar’s opinion, the proceedings stood vitiated. It emphasised that where a statute creating an offence also prescribes a procedure, authorities cannot simply ignore that procedure.

    Other High Court Precedents Support Mandatory Compliance

    • The judgment also referred to the Madhya Pradesh High Court decision in Kasim Ali v. State of Madhya Pradesh & Anr., where prosecution under the Trade Marks Act was found unsustainable because the mandatory Section 115 procedure had not been followed.
    • That decision similarly recognised that a search under Section 115(4) must be conducted by the prescribed rank of police officer and only after obtaining the Registrar’s opinion.
    • The Punjab and Haryana High Court also considered Pitambra Industries v. State of Madhya Pradesh & Ors., in which the Madhya Pradesh High Court treated obtaining the Registrar’s opinion before search and seizure as a sine qua non and held that compliance with Section 115(4) was mandatory.
    • The Court further referred to the Bombay High Court’s ruling in Shrenik Shantilal Dhadiwal v. State of Maharashtra & Ors., where investigation by an Assistant Police Inspector without the Registrar’s opinion was found contrary to Section 115(4).

    Bhajan Lal Principles Applied

    • The petitioner also relied upon the Supreme Court’s landmark judgment in State of Haryana & Ors. v. Bhajan Lal & Ors., 1992 Supp (1) SCC 335.
    • Among the recognised categories for exercising jurisdiction under Section 482 CrPC is a situation where there exists an express legal bar under the Code or the concerned statute to the institution or continuation of criminal proceedings.
    • Applying this principle, the High Court found that Section 115(4) had been violated in two material respects:
    • the search and seizure was undertaken by an officer below the rank of DSP, and the proceedings were initiated without obtaining the opinion of the Registrar of Trade Marks.
    • The Court therefore concluded that there was a clear statutory embargo on the initiation and continuation of the proceedings.

    FIR, Charges and Entire Criminal Proceedings Quashed

    Having found both statutory violations established, the Punjab and Haryana High Court allowed Ashok Kumar’s petition.

    It quashed:

    • FIR No. 10 dated 1 February 2019 under Sections 103 and 104 of the Trade Marks Act at Police Station Mahilpur, District Hoshiarpur;
    • the order dated 1 February 2021 framing charges against the petitioner; and
    • all subsequent proceedings arising from the FIR.

    Thus, Ashok Kumar succeeded before the High Court, and the prosecution arising from the allegedly counterfeit β€œNorth Face” and β€œJansport” bags was brought to an end because the mandatory statutory procedure governing search and seizure had not been followed.

    Key Takeaway

    The judgment underscores that the procedural safeguards contained in Section 115(4) of the Trade Marks Act cannot be bypassed in criminal enforcement actions involving offences under Sections 103, 104 and 105.

    Where a warrantless search and seizure is undertaken under Section 115(4), the judgment treats two requirements as critical: the officer conducting the statutory search must be not below the rank of Deputy Superintendent of Police or equivalent, and the prescribed opinion of the Registrar of Trade Marks must be obtained before the search and seizure. In Ashok Kumar, failure to satisfy both requirements was sufficient for the High Court to hold that continuation of the prosecution was legally impermissible and to quash the FIR, charge-framing order and all consequential proceedings.

    Connected Matter

    Gujarat HC Quashes Copyright FIR Over Alleged Counterfeit Apple Accessories; Says Trademark Dispute Cannot Be Camouflaged as Copyright Offence to Bypass Statutory Safeguards

    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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    Ravi Shekhar Jha – Advocate, Bar Council of Delhi

  • Gujarat High Court: Customs Refund Limitation Cannot Run Until Final Assessment Is Communicated to Importer; Mere ICEGATE Upload Not Enough

    Gujarat High Court: Customs Refund Limitation Cannot Run Until Final Assessment Is Communicated to Importer; Mere ICEGATE Upload Not Enough

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

    Date: 19.09.2026

    Gujarat High Court: Customs Refund Limitation Cannot Run Until Final Assessment Is Communicated to Importer; Mere ICEGATE Upload Not Enough

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

    The Gujarat High Court has held that merely uploading an order finalising provisional assessment on the Customs electronic portal is not sufficient to start the limitation period for claiming refund under Section 27(1B)(c) of the Customs Act, 1962. The final assessment must be communicated to the assessee before the statutory one-year period can operate against it.

    The Division Bench of Justice Bhargav D. Karia and Justice Niral R. Mehta, in Principal Commissioner, Customs, Ahmedabad Commissionerate v. M/s GAIL (India) Ltd., R/Tax Appeal No. 211 of 2024, dismissed the Revenue’s appeal on 13 June 2024, finding no infirmity in CESTAT’s decision in favour of GAIL. The judgment carries neutral citation 2024:GUJHC:30963-DB.

    Dispute Over Refund of Excess Customs Duty on Imported LNG

    • GAIL (India) Ltd. was engaged in the import of Liquefied Natural Gas (LNG). It filed 16 Bills of Entry, which were initially assessed provisionally under Section 18 of the Customs Act upon execution of a bond. After production of the original documents, the Bills of Entry were subsequently finalised.
    • The table reproduced by the High Court on pages 3 and 4 of the judgment records the provisional and finally assessed quantities, Customs duty paid and the refund claimed for each Bill of Entry. The aggregate excess duty claimed as refund was β‚Ή7,78,98,646.
    • GAIL eventually filed its refund application on 26 October 2016. It also submitted a Chartered Accountant’s certificate dated 7 September 2016 concerning unjust enrichment, stating that the excess Customs duty had been reflected as a receivable in its books and had not been passed on to customers.

    Customs Department Rejected Refund as Time-Barred

    • The adjudicating authority rejected GAIL’s refund claim on limitation.
    • According to Customs, the 16 Bills of Entry had been finally assessed between 7 October 2015 and 20 October 2015. Since the refund application was filed on 26 October 2016, the Department treated it as having been filed beyond the one-year limitation prescribed under Section 27(1B)(c).
    • The Department’s case was essentially that Section 27(1B)(c), where duty has been provisionally paid under Section 18, computes the limitation period from the date of adjustment of duty after final assessment or, in the case of reassessment, from the date of reassessment.

    CESTAT Allowed GAIL’s Appeal

    • GAIL challenged the rejection before CESTAT.
    • The Tribunal allowed the appeal by relying upon Indian Oil Corporation Ltd., 2014 (308) E.L.T. 169, holding that the relevant point for limitation was the date of service of the finalisation of provisional assessment.
    • The precedent emphasised that where an order gives rise to a remedial right, the date on which the order is served upon the person concerned assumes significance for exercising that remedy.
    • CESTAT consequently rejected the Department’s contention that the importer should simply have discovered the finalisation through ICEGATE.

    Revenue Approaches Gujarat High Court

    • The Principal Commissioner of Customs challenged the Tribunal’s order before the Gujarat High Court under Section 130 of the Customs Act.
    • The principal question proposed by Revenue was whether CESTAT was correct in treating the date of service of the finalisation order as the relevant date for limitation when Section 27(1B)(c) refers to the date of adjustment of duty after final assessment or the date of reassessment.
    • Revenue argued that the final assessments had already been uploaded on the ICEGATE system and that GAIL was required to take notice of the assessments made available on the portal. On this basis, Customs contended that the refund application was beyond limitation.

    Section 27(1B)(c): One-Year Limitation After Finalisation

    • The High Court examined Sections 18 and 27 of the Customs Act, 1962.
    • Section 27(1B)(c) provides that where duty has been paid provisionally under Section 18, the one-year limitation is computed from the date of adjustment of duty after final assessment, or, in the case of reassessment, from the date of reassessment.
    • The High Court accepted that once provisional assessment is completed and an assessee becomes entitled to refund, the refund application has to be made within the period prescribed under Section 27 read with Section 27(1B).
    • The crucial question, however, was whether limitation could operate against an assessee before the final assessment had actually been communicated to it.

    GAIL’s August 2016 Letter Became Crucial

    • A significant factual circumstance was GAIL’s letter dated 19 August 2016.
    • The adjudicating authority itself had recorded that this letter requested the Department to finalise the Customs duty/final assessment. Customs rejected GAIL’s argument that this letter itself should be treated as a refund claim, observing that it was merely a request for early finalisation and was unrelated to a refund application.
    • But that finding had another consequence.
    • The Gujarat High Court observed that the very fact that GAIL was requesting finalisation on 19 August 2016 indicated that, until then, the assessee was not aware that the final assessments had already been completed.
    • This became an important factual basis for rejecting Revenue’s limitation argument.

    Mere Upload on Customs Portal Is Not Sufficient Communication

    The most important part of the judgment is the High Court’s finding concerning electronic uploading of the assessment order.

    The Court held:

    • β€œMerely because the Custom Department has uploaded the final assessment orders on portal is not sufficient compliance of intimation to the assessee…”
    • The Court treated communication of the final assessment as a condition sine qua non for the assessee to exercise the statutory right of seeking refund within one year under Section 27(1B)(c).
    • It further held that CESTAT had correctly considered the documents showing when the finalisation of provisional assessments was actually communicated to GAIL.
    • The decision therefore draws an important distinction between an order merely being available electronically on a departmental portal and the order being communicated to the person whose statutory remedy depends upon knowledge of that order.

    Gujarat High Court Dismisses Revenue’s Appeal

    • The High Court found no infirmity in CESTAT’s order and held that no question of law, much less any substantial question of law, arose for consideration.
    • The Revenue’s appeal was therefore dismissed as being devoid of merit.
    • Thus, GAIL (India) Ltd. succeeded before the Gujarat High Court on the limitation dispute concerning its Customs refund claim.

    Why the Judgment Is Important for Importers

    • The decision has considerable practical importance for importers whose Bills of Entry have been provisionally assessed under Section 18 and who subsequently become entitled to refund following finalisation.
    • The judgment establishes that the Department cannot necessarily rely only upon the internal date of final assessment or the fact that the assessment was uploaded on ICEGATE when the importer was not shown to have been duly informed of the finalisation.
    • For refund disputes under Section 27(1B)(c), evidence relating to communication or service of the final assessment can therefore become critical in determining whether the refund application is within limitation.
    • The judgment is particularly relevant where Customs argues that the importer should have independently monitored the portal even though no effective communication of the final assessment was established.

    Key Legal Principle

    The principle emerging from the judgment can be stated succinctly:

    Where refund arises following finalisation of provisional assessment under Section 18 of the Customs Act, the statutory limitation under Section 27(1B)(c) cannot effectively be invoked against the assessee merely on the basis that the final assessment was uploaded on the Customs portal. Communication of the final assessment to the assessee is essential before limitation can operate against the refund claim.

    The ruling therefore reinforces the procedural importance of actual communication of Customs assessment orders, particularly where commencement of a limitation period affects an importer’s substantive right to claim refund.

    Connected Matter

    CESTAT Chennai: Refund Limitation Cannot Begin Before Final Assessment Order Is Communicated to Importer

    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: Gujarat High Court

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  • Supreme Court Acquits Man Sentenced to 10 Years; Finds Serious Lapses in NDPS Sampling Procedure

    Supreme Court Acquits Man Sentenced to 10 Years; Finds Serious Lapses in NDPS Sampling Procedure

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

    Date: 18.09.2026

    Supreme Court Acquits Man Sentenced to 10 Years; Finds Serious Lapses in NDPS Sampling Procedure

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

    The Supreme Court has acquitted a man sentenced to 10 years’ rigorous imprisonment in an NDPS case after finding serious deficiencies in the seizure and sampling process, including failure to draw representative samples in the presence of a Magistrate and non-compliance with the procedure contemplated under Section 52A of the NDPS Act.

    In Nadeem Ahamed v. State of West Bengal, the Court held that the cumulative procedural lapses made the integrity of the seizure and sampling process doubtful. It further held that the Forensic Science Laboratory (FSL) report could not be read in evidence, leaving no acceptable evidence to establish that the substance allegedly recovered from the appellant was heroin. The conviction was consequently set aside and Nadeem Ahamed was acquitted.

    Trial Court Had Sentenced Accused to 10 Years’ Rigorous Imprisonment

    • Nadeem Ahamed had been convicted by the Special Court under the NDPS Act at Alipore, West Bengal, for offences punishable under Sections 21(c) and 29 of the NDPS Act.
    • By its judgment dated August 24, 2021 and sentencing order dated August 26, 2021, the Trial Court sentenced him to 10 years’ rigorous imprisonment and a fine of β‚Ή1 lakh, with a further six months’ rigorous imprisonment in default of payment of the fine.
    • His appeal before the Calcutta High Court was filed with a delay of 1,183 days. The High Court declined to condone the delay and dismissed the appeal without examining the conviction on merits.

    Alleged Recovery of 125 Grams of Heroin

    • According to the prosecution, on July 16, 2018, police received information that two men would arrive near Pragati Maidan Police Station in Kolkata to supply heroin.
    • A raiding team intercepted Nadeem Ahamed and co-accused Amit Dutta alias Rakesh. The accused opted to be searched in the presence of a Gazetted Officer.
    • The prosecution claimed that approximately 130 grams of suspected heroin was recovered from Amit Dutta, while 125 grams was recovered from Nadeem.
    • The combined weight of the substances was 255 grams, and the prosecution treated the recovery as commercial quantity. One sample weighing 10 grams was drawn from each packet and marked S1 and S2.
    • The samples were subsequently sent to the FSL, which reported that both tested positive for heroin.

    Supreme Court Says High Court Was Wrong to Dismiss Appeal Solely on Delay

    • Before considering the merits, the Supreme Court strongly disagreed with the Calcutta High Court’s decision to dismiss the criminal appeal merely because it had been filed late.
    • The Court noted that Nadeem had remained incarcerated since his initial apprehension and did not have the financial means to file his appeal within time.
    • It held that rejecting his statutory appeal solely on delay was β€œtoo harsh and unjustified”. The High Court ought to have condoned the delay and decided the appeal on merits.
    • Instead of remanding the caseβ€”which would have caused further delayβ€”the Supreme Court itself examined the merits of the conviction.

    Two Separate Recoveries Could Not Automatically Be Clubbed Together

    • A major error identified by the Supreme Court concerned the treatment of the two recoveries as one combined commercial quantity.
    • The Court held that merely because Nadeem and Amit Dutta were walking side-by-side, were apprehended simultaneously and were individually carrying suspected narcotics did not establish that either knew about the substance carried by the other.
    • Such circumstances could create suspicion, but the Court reiterated that β€œsuspicion… cannot take place of proof.”
    • To invoke conspiracy under Section 29 and club the quantities recovered from two separate individuals, the prosecution was required to produce positive and tangible evidence demonstrating prior knowledge or conspiracy.
    • The Supreme Court found no such evidence. Apart from the allegation that the two men were walking together and were searched one after another, there was no material establishing a prior conspiracy.

    125 Grams and 130 Grams Could Not Be Clubbed to Cross Commercial-Quantity Threshold

    • The Trial Court had combined the alleged recoveries of 125 grams and 130 grams, resulting in a total of 255 grams, and treated this as exceeding the commercial-quantity threshold of 250 grams.
    • The Supreme Court found this approach legally unsustainable in the absence of evidence proving conspiracy between the two accused.
    • Relying upon Amarsingh Ramjibhai Barot v. State of Gujarat, (2005) 7 SCC 550, the Court held that the Trial Court had committed a grave factual error by clubbing the heroin allegedly recovered from two distinct individuals merely to bring the total above the commercial-quantity threshold.

    Serious Defects Found in Sampling Procedure

    • The Supreme Court then examined the manner in which the alleged contraband was sampled and found several significant deficiencies.
    • The seizure officer had collected only one sample from each packet. The Court noted that this was contrary to Clause 2.2 of Standing Order No. 1 of 1989 dated June 13, 1989, issued by the Anti-Smuggling Unit, Department of Revenue, Ministry of Finance.
    • The Standing Order contemplated that samples from seized narcotic drugs and psychotropic substances should be drawn in duplicate at the spot of recovery, in the presence of the panch witnesses and the person from whom the substance was recovered.
    • The Court referred to Noor Aga v. State of Punjab, (2008) 16 SCC 417, where the Supreme Court had emphasised compliance with such guidelines, particularly in penal proceedings.

    Accused’s Signatures Missing From Sample and Mother Packets

    • Another serious discrepancy concerned the signatures on the seized material.
    • The seizure officer claimed that the accused, Gazetted Officer and witnesses had signed the seizure list and labels. However, when the sample packets were opened during trial, the Court found that the labels did not bear the accused-appellant’s signatures.
    • After examining the evidence, the Supreme Court recorded that neither the mother packet nor the sample packets bore Nadeem’s signatures when they were opened and exhibited before the Trial Court.
    • This discrepancy further undermined the reliability and integrity of the sampling process.

    No Separate Sample Seizure List, Test Memo or Weighment Chart

    • The Court identified additional gaps in the prosecution evidence.
    • No separate seizure list had been prepared for the samples drawn from the appellant. There was also no test memo or weighment chart prepared at the spot, and no specimen seal memo was proved during the seizure officer’s evidence.
    • Although two independent witnesses had allegedly participated in the proceedings, only one was examined by the prosecution, without explaining why the other was withheld.

    Complete Failure to Follow Section 52A Procedure

    • The most significant deficiency identified by the Supreme Court concerned Section 52A(2) of the NDPS Act.
    • The record showed that neither the seizure officer nor the officer-in-charge undertook the statutory procedure concerning inventory and sampling in the presence of a Magistrate.
    • The Trial Court itself had noted that the seizure officer could not even state whether an inventory list had been prepared at the time of the raid.
    • The Supreme Court consequently held that there had been a β€œcomplete and unexplained failure” to adhere to Section 52A.
    • Neither representative samples were drawn in the presence of a Magistrate nor was an inventory prepared and certified as contemplated by law.
    • According to the Court, these lapses went to the root of the prosecution case and rendered the integrity of the seizure and sampling process wholly doubtful.

    Section 52A Not Mandatory Per Se, But Cumulative Lapses Proved Fatal

    • Importantly, the Supreme Court did not hold that every breach of Section 52A automatically results in acquittal.
    • The Court expressly clarified that the procedure under Section 52A had not been considered mandatory by the Supreme Court.
    • However, in the present case, the failure to draw samples in accordance with Standing Order No. 1 of 1989, when considered together with the complete non-compliance with Section 52A, made the seizure and sampling procedure unreliable.
    • The Court went so far as to describe the cumulative procedure as a β€œtotal farce” and β€œunworthy of credence.”
    • This qualification is particularly important: the decision turns on the combined effect of multiple serious procedural defects, rather than laying down a rule of automatic acquittal for every Section 52A irregularity.

    FSL Report Loses Evidentiary Significance

    • The consequence of the defective sampling procedure was decisive.
    • The Supreme Court held that the FSL report lost significance because of the flawed manner in which samples had been collected, coupled with the total failure to comply with Section 52A.
    • It ultimately held that the FSL report could not be read in evidence. Once the forensic report was excluded, there was no acceptable evidence proving that the substance allegedly recovered from Nadeem was heroin within the meaning of the NDPS Act.

    Conviction Set Aside; Nadeem Ahamed Acquitted

    • The Supreme Court consequently set aside the impugned judgments and acquitted Nadeem Ahamed of the charges.
    • It directed that he be released from custody forthwith, unless his detention was required in any other case.
    • The appeals were accordingly allowed.

    Key Takeaway

    The ruling underscores two important safeguards in NDPS prosecutions.

    First, narcotics allegedly recovered separately from two accused cannot automatically be aggregated to reach commercial quantity merely because they were apprehended together. Where the prosecution relies on Section 29 conspiracy to combine the quantities, it must establish conspiracy through positive and tangible evidence rather than suspicion or conjecture.

    Second, although the Supreme Court did not treat Section 52A compliance as invariably mandatory in every case, serious and cumulative deficiencies in sampling, sealing, identification, inventory and Magistrate-supervised procedures can undermine the integrity of the alleged contraband itself.

    Where those deficiencies render the sampling process unreliable, even a positive FSL report may cease to provide a safe evidentiary foundation for conviction.

    Connected Matter

    Supreme Court Acquits Two in NDPS Case Over Broken Chain of Custody: Says FSL Report Cannot Survive Serious Gaps in Sample Integrity

    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: RERA Tribunal Cannot Grant Declaration, Permanent Injunction or Cancel Sanction Plan

    Bombay HC: RERA Tribunal Cannot Grant Declaration, Permanent Injunction or Cancel Sanction Plan

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

    Date: 18.09.2026

    Bombay HC: RERA Tribunal Cannot Grant Declaration, Permanent Injunction or Cancel Sanction Plan

    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 .  

    In a significant ruling concerning the interface between RERA and the jurisdiction of civil courts, the Bombay High Court has dismissed a revision application filed by Macrotech Developers Limited, holding that the bar under Section 79 of the Real Estate (Regulation and Development) Act, 2016 does not extend to reliefs that the RERA authorities are not empowered to grant.

    Justice Milind N. Jadhav held that a dispute involving a cooperative housing society’s substantive rights over an existing clubhouse and internal roads, coupled with prayers for declaration, permanent injunction and cancellation of a sanctioned development plan, could be adjudicated by the Civil Court because RERA does not empower its authorities to grant such reliefs.

    The High Court consequently upheld the Trial Court’s refusal to reject the suit under Order VII Rule 11(d) of the Code of Civil Procedure and dismissed Macrotech Developers’ Civil Revision Application.

    Dispute Relates to Lodha Belmondo Project in Pune

    • Macrotech Developers Limited was the promoter of the Lodha Belmondo development project at Village Gahunje, Taluka Maval, District Pune. The project comprised multiple towers and villas over a large parcel of land.
    • Saint Andrews Co-operative Housing Society represented flat owners in various towers and villas situated within an area described as β€œThe Reserve” in the Lodha Belmondo project.
    • According to the Society, the project had been marketed from around 2012–2013 and agreements for sale had been entered into with purchasers. Its case was that Towers B, C and D and Villas 1–28, along with other towers, were integral parts of β€œThe Reserve.”

    Multiple Sanction Plans and Clubhouse at Centre of Dispute

    • The judgment records a series of sanctioned development plans.
    • A third sanctioned plan dated April 30, 2013 showed six buildings and 28 villas as part of β€œThe Reserve”. A fifth sanctioned plan dated June 22, 2018 specifically referred to a clubhouse for members of β€œThe Reserve”. A subsequent seventh sanctioned plan dated September 20, 2021, however, showed the clubhouse near Tower No. 26 as proposed to be demolished.
    • Members of the Society had received possession of their flats in 2017 following issuance of an Occupation Certificate, while the Society itself was registered in March 2021.
    • The dispute escalated in October 2022 when Macrotech’s workers allegedly prevented Society members from entering and using the clubhouse on the ground that the existing facility was to be demolished and replaced.

    Society Approaches Civil Court

    • The Society instituted a civil suit seeking, among other things, a declaration regarding the clubhouse situated behind Tower No. 26 and an injunction restraining the developer and its representatives from preventing members from accessing the clubhouse.
    • It also sought to prevent demolition or additional construction pursuant to changes made in the layout and the seventh sanctioned plan.
    • The Trial Court rejected Macrotech Developers’ application under Order VII Rule 11(d) CPC seeking rejection of the plaint as barred by law.
    • Macrotech thereafter approached the Bombay High Court by way of the present Civil Revision Application challenging that order.

    Macrotech: Section 79 RERA Bars Civil Court Jurisdiction

    • Macrotech argued that the Civil Court had no jurisdiction because Section 79 of RERA expressly bars Civil Courts from entertaining matters that fall within the jurisdiction of the authorities constituted under RERA.
    • The developer contended that once a project is registered under RERA, disputes arising out of or incidental to that project must be pursued before the competent forum under the statute.
    • Macrotech also relied upon Section 149 of the Maharashtra Regional and Town Planning Act and argued that the suit was barred under that enactment as well.
    • It relied, inter alia, on the Supreme Court’s ruling in New Tech Promoters and Developers Pvt. Ltd. v. State of Uttar Pradesh & Ors., 2021 SCC OnLine SC 1044, to contend that RERA applies to ongoing projects which had not received completion certificates before the legislation came into force.
    • Macrotech also relied on Imperia Structures Ltd. v. Anil Patni & Anr., (2020) 10 SCC 783, and argued that the Society could pursue appropriate remedies before the RERA forum or Consumer Forum rather than the Civil Court.

    Society: RERA Cannot Grant the Declaratory Reliefs Sought

    • The Society opposed the revision and argued that it was itself a separate legal entity registered under the Maharashtra Cooperative Societies Act, 1960 and was not an individual β€œallottee” within the meaning of RERA.
    • It further argued that Section 79 could not operate as a blanket exclusion of Civil Court jurisdiction in disputes between a cooperative housing society and a promoter.
    • More importantly, the Society contended that it had sought declaratory and other civil reliefs that RERA authorities could not grant.
    • According to the Society, Civil Courts retain jurisdiction over civil disputes unless expressly or impliedly barred, and the nature of the relief sought was therefore crucial in deciding jurisdiction.

    Bombay HC Explains Test Under Order VII Rule 11(d)

    • The High Court reiterated that while considering rejection of a plaint under Order VII Rule 11, the Court must examine the averments contained in the plaint along with its annexures as a whole.
    • At this stage, material outside the plaint cannot be added or subtracted to determine whether the suit is barred by law.
    • The Court observed that rejection under Order VII Rule 11(d) is justified only when the plaint itself discloses that the action is legally barred.
    • In the present case, the Society sought a declaration that the clubhouse behind Tower No. 26 was an integral part of β€œThe Reserve”, a permanent injunction against its demolition, and a declaration challenging the September 20, 2021 sanction plan to the extent it contemplated demolition of the existing clubhouse and construction of another structure in its place.

    Section 79 RERA Is Not a Blanket Bar Against Civil Suits

    • The High Court then examined Sections 79, 88 and 89 of RERA.
    • Section 79 bars Civil Courts from entertaining suits or proceedings concerning matters that the RERA Authority, Adjudicating Officer or Appellate Tribunal is empowered to determine.
    • However, Section 88 expressly provides that RERA operates β€œin addition to, and not in derogation of” other laws, while Section 89 gives RERA overriding effect where inconsistency exists.
    • Reading these provisions together, the High Court held that RERA is not the sole remedy for every dispute between allottees and promoters/developers.
    • The Section 79 bar applies only to those matters that the authorities constituted under RERA are actually empowered to determine.

    Can RERA Authority Grant the Same Relief as a Civil Court? Bombay HC Applies Supreme Court Test

    • The High Court relied upon the Supreme Court’s judgment in State of Tamil Nadu v. Ramalinga Samigal Madam, (1985) 4 SCC 10.
    • The principle applied was that even where a special statute creates a tribunal and accords finality to its decisions, exclusion of Civil Court jurisdiction depends materially upon whether the statutory tribunal is capable of granting the relief that a Civil Court would ordinarily grant.
    • Where the specialised forum does not possess the power to grant such relief, exclusion of Civil Court jurisdiction cannot readily be inferred.
    • This became the decisive principle in the case.

    RERA Tribunal Cannot Grant Declaration, Permanent Injunction and Cancellation of Sanction Plan: Bombay HC

    Applying the above principle, Justice Jadhav held that the dispute involved the Society’s substantive right to use an existing clubhouse and its challenge to a subsequent sanctioned plan allegedly validated without its approval.

    The Court specifically found an β€œapparent and glaring absence” of provisions under RERA empowering its authorities to adjudicate reliefs in the nature of:

    • declaration;
    • permanent injunction; and
    • cancellation of a sanction plan approved by the Planning Authority.

    Consequently, such a dispute could not be said to fall exclusively within the jurisdiction of the authorities constituted under RERA.

    Society’s Right to Use Clubhouse Had β€œCrystallized”

    • The High Court also took note of the factual history of the clubhouse.
    • The clubhouse had appeared in the fifth sanctioned plan dated June 22, 2018, had subsequently been constructed, and was being used by members of the Society.
    • The seventh sanctioned plan dated September 20, 2021 proposed its demolition. The Court noted that the Society’s consent had admittedly not been obtained before the seventh plan was validated or proposed.
    • The Court observed that the Society members’ right to use the clubhouse had already β€œstood crystallized and in place since inception and on construction of the Clubhouse.”
    • The dispute also involved internal roads that were allegedly proposed to be constructed upon pursuant to the seventh sanctioned plan without the Society’s consent.

    Civil Court Alone Can Grant Appropriate Relief in Such Circumstances

    • The High Court concluded that the substantive rights claimed by the Society could be protected through the civil suit seeking declaratory and injunctive relief.
    • It rejected Macrotech Developers’ contention that the Society’s remedy lay before the RERA Tribunal and held that, in the circumstances before it, the Civil Court could entertain the dispute and grant appropriate reliefs.
    • Accordingly, the Court upheld the Trial Court’s order refusing to reject the plaint and dismissed Macrotech Developers’ Civil Revision Application.

    Important Clarification: Merits of Society’s Suit Not Finally Decided

    • The ruling should not be read as a final determination that the seventh sanctioned plan is invalid or that the Society has conclusively established all of the substantive rights asserted in its suit.
    • The High Court expressly clarified that its findings were prima facie and restricted to the revision proceedings, and that they should not influence the ultimate adjudication of the underlying suit. The parties’ other contentions and remedies were kept open.
    • Thus, Saint Andrews Co-operative Housing Society succeeded on the jurisdiction/maintainability issue, while the underlying civil dispute remains to be adjudicated on merits.

    Key Legal Takeaway

    The judgment reinforces that Section 79 of RERA does not create a universal bar against Civil Court jurisdiction merely because a dispute concerns a RERA-registered real estate project.

    The decisive inquiry is whether the particular matter and relief sought are within the statutory powers of the RERA Authority, Adjudicating Officer or Appellate Tribunal. Where the dispute requires relief such as a civil declaration, permanent injunction or cancellation of a sanctioned development plan that the RERA forum is not empowered to grant, the Civil Court’s jurisdiction may remain available.

    Connected Matter

    Bombay High Court: Section 79 RERA Bars Civil Suit Where Reliefs Can Be Granted by RERA Authority

    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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  • Bombay High Court: Arbitral Tribunal’s Mandate Can Be Extended Even After Expiry if β€œSufficient Cause” Is Shown

    Bombay High Court: Arbitral Tribunal’s Mandate Can Be Extended Even After Expiry if β€œSufficient Cause” Is Shown

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

    Date: 18.09.2026

    Bombay High Court: Arbitral Tribunal’s Mandate Can Be Extended Even After Expiry if β€œSufficient Cause” Is Shown

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

    The Bombay High Court has allowed a petition filed by SAP India Private Limited seeking extension of the mandate of an arbitral tribunal constituted by the Supreme Court, holding that where arbitral proceedings could not conclude for reasons beyond the control of the party or tribunal, and the delay was not attributable to wilful or deliberate default, refusing an extension despite sufficient cause could defeat the purpose of arbitration.

    Justice Arif S. Doctor, in SAP India Private Limited v. Cox and Kings Limited, Commercial Arbitration Petition No. 865 of 2026, pronounced the judgment on September 10, 2026. The Court extended the time available to the arbitral tribunal to make its award by one year from the date on which the High Court’s order was uploaded.

    Dispute Between SAP India and Cox & Kings

    • The dispute arose from a contract between SAP India and Cox & Kings for the provision of business software and related implementation services. Clause 15.7 of the General Terms and Conditions provided for arbitration.
    • SAP claimed that certain amounts remained outstanding under the contractual arrangement and moved an application under Section 11 of the Arbitration and Conciliation Act, 1996.
    • By an order dated January 2, 2019, the Supreme Court constituted a three-member arbitral tribunal. The tribunal was presided over by former Supreme Court judge Justice Madan B. Lokur, and was referred to in the judgment as the β€œJustice Lokur Tribunal.” SAP was the claimant before this tribunal.
    • SAP filed its Statement of Claim on March 22, 2019, seeking approximately β‚Ή17.98 crore from Cox & Kings. Cox & Kings subsequently filed its Statement of Defence and Counter-claim on July 31, 2019, claiming approximately β‚Ή45.99 crore from SAP.

    CIRP Moratorium Brought Arbitration to a Halt

    • A major turn occurred on October 22, 2019, when the National Company Law Tribunal, Mumbai admitted Cox & Kings into the Corporate Insolvency Resolution Process (CIRP).
    • Consequently, the statutory moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 (IBC) came into operation, staying legal proceedings against the company.
    • Because of the moratorium, the Justice Lokur Tribunal informed the parties on November 5, 2019 that the arbitral proceedings stood adjourned sine die.
    • Cox & Kings was subsequently ordered into liquidation by the NCLT on December 16, 2021. SAP lodged its claim with the Liquidator in February 2022, and the Liquidator admitted it at a nominal value of Re. 1, recording that the liability could not be quantified because of the ongoing arbitration proceedings.

    Second Arbitration Added Another Layer to the Dispute

    • Meanwhile, Cox & Kings had issued a fresh arbitration notice against SAP India and its parent company, SAP SE.
    • On September 9, 2024, the Supreme Court appointed former Bombay High Court Chief Justice Justice Mohit Shah as sole arbitrator to adjudicate those disputes. The High Court referred to this as the β€œJustice Shah Tribunal.”
    • Cox & Kings initially claimed β‚Ή45.99 crore before the Justice Shah Tribunal and subsequently amended its claim to β‚Ή45,99,71,097.
    • SAP argued that this amount was virtually identical to the counter-claim Cox & Kings had already raised before the Justice Lokur Tribunal. SAP consequently challenged the jurisdiction of the Justice Shah Tribunal under Section 16 of the Arbitration Act, but its objections were rejected.
    • SAP pursued the jurisdictional issue before the Bombay High Court and then the Supreme Court. Its Special Leave Petition was ultimately dismissed on January 23, 2026.

    SAP Sought Revival of Original Arbitration

    • Soon after the Supreme Court proceedings ended, SAP approached the Justice Lokur Tribunal on February 2, 2026, seeking resumption and continuation of its original arbitration.
    • Cox & Kings opposed the request, contending that the Justice Lokur Tribunal had become functus officio and no longer possessed jurisdiction to revive the proceedings. It also pointed to the existence of the Justice Shah Tribunal and SAP’s claim in the liquidation process.
    • The Justice Lokur Tribunal ultimately directed SAP to approach the Bombay High Court for an extension of time. SAP accordingly filed the present petition under Section 29A of the Arbitration and Conciliation Act.

    SAP: Delay Was Caused by Circumstances Beyond Its Control

    • SAP argued that it had diligently pursued its claims and that the original arbitration could not proceed because of circumstances outside its control.
    • It relied on the commencement of CIRP, the statutory moratorium, the COVID-19 limitation exclusion period and Cox & Kings’ subsequent pursuit of another arbitration involving substantially the same subject matter.
    • SAP therefore argued that it had established β€œsufficient cause” under Section 29A(5) for extending the Justice Lokur Tribunal’s mandate.

    Cox & Kings Opposed Extension, Alleging Unexplained Delay

    • Cox & Kings argued that Section 29A(5) does not permit extension as a matter of course and that SAP had failed to explain a substantial intervening period.
    • It contended that SAP could have sought extension much earlier and characterised SAP’s conduct as β€œfence-sitting”, alleging that SAP attempted to revive the Justice Lokur arbitration only after its challenges to the Justice Shah Tribunal had failed.
    • Cox & Kings also argued that reviving the Justice Lokur Tribunal would serve little purpose because it was already in liquidation and SAP’s claim had been admitted in the liquidation process.
    • Another concern raised was the possibility of parallel arbitrations producing inconsistent or conflicting findings, because the claims before the two tribunals arose from the same contractual framework.

    Bombay High Court: Section 29A Extension Can Be Granted Even After Mandate Expires

    • The High Court rejected the proposition that the application must fail merely because the tribunal’s mandate had already expired.
    • Relying upon Rohan Builders (India) Pvt. Ltd. v. Berger Paints India Ltd., the Court reiterated that time for completing arbitral proceedings can be extended even after expiry of the initial 12-month period or the extended six-month period.
    • The real question was therefore not simply when the application was filed, but whether SAP had demonstrated sufficient cause under Section 29A(5).

    β€œSufficient Cause” Must Be Examined in Context of Purpose of Arbitration

    • The Court emphasised that Section 29A is intended to ensure expeditious arbitral proceedings, but the power of extension requires examination of the particular facts and circumstances.
    • Referring to C. Velusamy v. K. Indhera and Ajay Protech Pvt. Ltd. v. General Manager & Anr., the High Court observed that β€œsufficient cause” must be understood in the context of arbitration’s underlying purposeβ€”the resolution of disputes through the mechanism chosen by the parties.
    • The Court held, in substance, that where arbitration does not conclude within the prescribed timeline because of circumstances beyond the parties’ or tribunal’s control, and the delay is not caused by wilful default or a deliberate attempt to delay proceedings by the party seeking extension, it would be unjust to refuse condonation where sufficient cause is otherwise demonstrated.

    Length of Delay Alone Is Not Decisive

    • An important principle emerging from the judgment is that a long delay does not, by itself, automatically defeat a Section 29A petition.
    • The Court distinguished decisions relied upon by Cox & Kings where extensions had been refused because the intervening delay was not satisfactorily explained.
    • According to the High Court, the decisive consideration in those cases was the absence of sufficient cause, rather than merely the length of time that had passed.
    • This distinction is important for Section 29A applications because it requires courts to examine why the arbitration was delayed, rather than applying an inflexible rule based solely on the duration of the delay.

    SAP Was Justified in Pursuing Jurisdictional Challenge

    • The Court also rejected the contention that SAP had simply sat on its rights.
    • When the Supreme Court appointed the Justice Shah Tribunal in 2024, it had kept open SAP’s rights and contentions to raise its jurisdictional objections before that tribunal.
    • The Bombay High Court therefore found that SAP was justified in pursuing its challenge to the jurisdiction of the Justice Shah Tribunal.
    • After the Supreme Court dismissed SAP’s SLP on January 23, 2026, SAP approached the Justice Lokur Tribunal on February 2, 2026β€”within a short periodβ€”to seek resumption of its original arbitration.
    • The High Court considered this conduct inconsistent with any suggestion that SAP had abandoned the Justice Lokur proceedings.

    β€œFence-Sitter” Argument Rejected

    • The Court consequently rejected Cox & Kings’ characterisation of SAP as a β€œfence sitter”.
    • It noted that the original proceedings had stopped after Cox & Kings entered CIRP and the Section 14 IBC moratorium became operative. Cox & Kings subsequently initiated another arbitration involving a claim virtually identical to the counter-claim it had raised before the Justice Lokur Tribunal.
    • Against this factual background, SAP’s pursuit of jurisdictional remedies before the Justice Shah Tribunal and higher courts could not be treated simply as abandonment or negligent inactivity.

    Liquidation Does Not By Itself Defeat Section 29A Extension

    • Cox & Kings had also argued that extending the tribunal’s mandate would be futile because the company was already in liquidation.
    • The Court did not accept this as a reason to refuse the Section 29A extension.
    • It noted, among other things, SAP’s reliance on Regulation 29 of the IBBI (Liquidation Process) Regulations, 2016, concerning mutual credits and set-off. The Court clarified that questions relating to the effect of liquidation and objections concerning SAP’s claim could be raised before the arbitral tribunal and did not have to be finally determined while deciding the Section 29A application.

    Court Finds β€œSufficient Cause” for Extension

    • After considering the unusual procedural history, the Bombay High Court concluded that SAP had established sufficient cause for extension of the Justice Lokur Tribunal’s mandate.
    • Crucially, the Court found that the delay in completion of the arbitration could not, in the circumstances, be attributed to any deliberate, wilful or negligent default on the part of SAP, much less to the tribunal.
    • The Court reasoned that allowing the mandate to lapse without giving SAP an opportunity to have its pending claim adjudicated would defeat rather than advance the underlying object of the arbitral process.

    Justice Lokur Tribunal Gets One-Year Extension

    • Accordingly, the Bombay High Court allowed SAP India’s petition and extended the time available to the Justice Lokur Tribunal to make its award by one year.
    • The one-year extended period will run from the date on which a copy of the High Court’s order was uploaded.
    • The Court made no order as to costs.
    • Thus, SAP India succeeded in obtaining the Section 29A extension. Importantly, however, the ruling does not decide the merits of SAP’s underlying β‚Ή17.98 crore contractual claim against Cox & Kings; it permits that pending claim to proceed before the arbitral tribunal.

    Key Legal Takeaway

    The judgment reinforces that Section 29A is not an inflexible limitation mechanism under which expiry of an arbitral tribunal’s mandate automatically forecloses an extension.

    A post-expiry application can be entertained, but the applicant must establish β€œsufficient cause”. In assessing that requirement, courts may consider the entire procedural history, whether circumstances outside the applicant’s control interrupted the arbitration, whether the applicant acted diligently once those impediments ended, and whether the delay resulted from wilful or negligent conduct.

    The ruling also demonstrates that the mere passage of a substantial period is not necessarily determinative. The central enquiry remains whether the delay has been satisfactorily explained in the factual circumstances of the particular arbitration.

    Connected Matter

    Supreme Court: Section 29A Application Can Be Filed Even After Arbitrator’s Mandate Expires

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    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 Pulls Up Financier for Forcibly Repossessing Borrower’s Truck at Night; Awards β‚Ή10 Lakh Compensation and Orders Refund of Sale Price

    Supreme Court Pulls Up Financier for Forcibly Repossessing Borrower’s Truck at Night; Awards β‚Ή10 Lakh Compensation and Orders Refund of Sale Price

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

    Date: 18.09.2026

    Supreme Court Pulls Up Financier for Forcibly Repossessing Borrower’s Truck at Night; Awards β‚Ή10 Lakh Compensation and Orders Refund of Sale Price

    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 a significant judgment concerning vehicle loan recovery and repossession practices by banks and Non-Banking Financial Companies (NBFCs), the Supreme Court has held that a financier’s contractual right to repossess a secured vehicle cannot become an unrestricted licence to seize a borrower’s property by force, stealth or without following due process.

    Allowing the appeal of Hari Dutta Sharma, the Supreme Court found that the repossession and subsequent sale of his truck by the finance company were unauthorised and arbitrary, and that the manner in which he was deprived of the vehicle violated Articles 14 and 21 of the Constitution. The Court ordered closure of his loan accounts, refund of the β‚Ή4.50 lakh sale price with 6% interest, payment of β‚Ή10 lakh compensation, and β‚Ή50,000 costs.

    Commercial Vehicle Loan Led to Repossession Dispute

    • The dispute arose after Sharma obtained a commercial vehicle loan from Cholamandalam Investment and Finance Company Limited on March 25, 2019 for a Tata SFC 407 truck bearing registration No. UP-16-GT-0449.
    • Of the sanctioned amount of approximately β‚Ή10.40 lakh, β‚Ή9.36 lakh was disbursed. The loan was repayable in 75 monthly instalments and was secured by hypothecation of the vehicle. A supplementary loan of approximately β‚Ή1.04 lakh was subsequently extended in June 2021.
    • Sharma defaulted on repayment. The financier issued a recall-cum-demand notice in January 2022 and initially repossessed the vehicle. After Sharma paid β‚Ή86,726 and assured regularisation of the account, the truck was released to him.

    Borrower Alleged Truck Was Taken Away at 1 AM

    • The controversy arose after further defaults.
    • According to Sharma, on April 9, 2023, the truck was parked at a consignor’s godown in Ayodhya when four unidentified persons allegedly broke its steering lock at around 1:00 a.m. and drove it away. He claimed that no notice of repossession had been given to him.
    • Believing that the truck had been stolen, he lodged a lost-article report and an e-FIR on the same day and subsequently complained to the Superintendent of Police.
    • It was only later, through a legal notice dated September 30, 2023, that the financier disclosed that it had taken possession of the vehicle and had sold it on August 31, 2023 for β‚Ή4.50 lakh.
    • The company further claimed that β‚Ή5,71,914 remained payable as of the date of sale and, after adjusting the sale proceeds, demanded another β‚Ή1,25,571 from Sharma.

    Allahabad High Court Dismissed Borrower’s Writ Petition

    • Sharma first pursued criminal proceedings and later approached the Allahabad High Court.
    • The High Court dismissed his writ petition on April 4, 2025, noting that the vehicle had already been sold in August 2023, that Sharma had approached the Court belatedly and that he had defaulted on repayment of the loan instalments.
    • The matter then reached the Supreme Court.

    Default Does Not Give Financier an Unrestricted Right to Seize Property

    • The Supreme Court accepted that a financier may possess a contractual right to take possession of a financed vehicle where the agreement permits it.
    • Referring to Orix Auto Finance (India) Ltd. v. Jagmander Singh, (2006) 2 SCC 598 and Sundaram Finance Ltd. v. T. Thankam, (2015) 14 SCC 444, the Court observed that there is ordinarily no legal impediment to exercising such a contractual right unless the agreement is unconscionable or opposed to public policy.
    • However, the Court drew an important distinction between the existence of a right of repossession and the manner in which that right is exercised.
    • Because self-help repossession operates outside immediate court or tribunal supervision, the Court said it must be construed with great circumspection. Otherwise, it could effectively become an unrestricted licence to seize property by stealth or force.

    RBI Fair Practices Code Has to Be Followed

    • The Supreme Court examined the regulatory framework developed by the Reserve Bank of India (RBI) governing loan recovery.
    • It noted that RBI had issued its Fair Practices Code for Lenders in 2003 to protect borrowers dealing with banks and NBFCs and to curb arbitrary recovery practices. Those guidelines prohibit undue harassment, including persistently disturbing borrowers at odd hours and using muscle power for recovery.
    • The Court also referred to subsequent RBI guidelines and circulars regulating recovery agents, repossession clauses, customer privacy, debt collection, grievance redressal and the procedure for taking possession of secured assets.

    Supreme Court Lays Down Key Safeguards for Vehicle Repossession

    • After examining the RBI framework, the Court summarised a series of safeguards that banks and financial institutions must observe.
    • Among other things, lenders must not use harassment or muscle power; vehicle seizure must occur only through lawful means; recovery agents must undergo proper due diligence and comply with RBI requirements; repossession clauses must conform to the Indian Contract Act, 1872; and contracts should specify the notice period, circumstances for waiver, repossession procedure, final opportunity to repay, restoration procedure and process for sale or auction.
    • These observations make the ruling particularly important for banks, NBFCs, vehicle-finance companies and recovery agencies.

    Loan Agreement’s Repossession Clause Failed Legal Standards

    • The Court closely examined Article 11 of the loan agreement, which governed repossession, termination and the financier’s other rights.
    • The agreement contemplated a seven-day notice in case of default but also contained provisions permitting the financier, in certain circumstances, to waive notice at its discretion. It also authorised repossession and subsequent sale of the asset.
    • The Supreme Court found significant problems with the clause.
    • It held that allowing the borrower’s rights over the asset to terminate β€œipso facto without any notice” conflicted with the requirement of a notice period. The authority given to recovery agents to enter places searching for the asset was also found inconsistent with RBI guidelines.
    • Further, the clause did not prescribe an adequate procedure for taking possession or conducting the sale or auction and instead left these matters substantially to the company’s discretion.
    • The Court therefore concluded that, to that extent, Article 11 did not satisfy the legal standard required of a valid repossession clause.

    No Seven-Day Notice Before Repossession

    • On the facts, the Supreme Court found that the financier had not issued the contractual seven-day notice before repossessing the truck.
    • Accordingly, the Court held that the contractual right of repossessionβ€”being conditional upon such noticeβ€”never accrued to the company in the first place.
    • The Court also took serious note of Sharma’s unrebutted assertion that recovery agents took the vehicle at about 1 a.m. after breaking its steering lock. The possession memorandum did not bear Sharma’s signature.
    • The Bench characterised this method of taking possession as far removed from a peaceful repossession and linked it to the coercive recovery practices previously condemned by the Supreme Court and RBI.

    Supreme Court Reiterates: Banks Cannot Use β€œGoondas” for Recovery

    • The Court relied significantly on ICICI Bank Ltd. v. Prakash Kaur & Ors., (2007) 2 SCC 711.
    • In that case, the Supreme Court had emphasised that India is governed by the rule of law and that banks and financial institutions cannot employ β€œgoondas” to forcibly seize financed vehicles.
    • The present Bench reiterated the principle that legitimate debt recovery must remain within the bounds of law, even where the borrower has admittedly defaulted.
    • This is an important aspect of the judgment: the Supreme Court did not excuse Sharma’s repayment defaults. Instead, it held that the existence of the debt did not legitimise an unlawful method of recovery.

    High Court Wrong to Dismiss Case Merely on Delay

    • The Supreme Court also disagreed with the Allahabad High Court’s conclusion that Sharma had approached the Court belatedly.
    • It noted that he had lodged an FIR on the very day the vehicle disappeared, believing that it had been stolen, and subsequently pursued proceedings under Section 156(3) CrPC.
    • Remarkably, he also continued to receive traffic challans in January 2024, November 2024 and February 2025 even though the financier claimed to have sold the vehicle in August 2023.
    • The Supreme Court held that these circumstances required examination and that the writ petition should not have been rejected merely on the ground of delay without considering the merits and without any demonstrated prejudice to the financier.

    Financier β€œForfeits Protection” When It Steps Outside Lawful Recovery Framework

    • The Court delivered a strong statement on the limits of self-help repossession.
    • It observed that financial institutions operating under RBI regulation hold repossession powers subject to procedural safeguards, including notice, an opportunity to cure the default, a fair method of taking possession and a transparent method of sale.
    • Where a financier steps outside that framework and takes possession without notice or due process, it exposes itself to the legal consequences of an unauthorised and arbitrary seizure.

    Articles 14 and 21 Violated; Borrower Entitled to Compensation

    • The Supreme Court ultimately set aside the Allahabad High Court’s April 4, 2025 order.
    • Since the vehicle had already been sold, the Court declined to undo the sale at that stage. However, it expressly disapproved of the financier’s unauthorised repossession and sale.
    • The Court noted that Sharma was a man of modest means who depended solely upon the truck for his livelihood through his transportation business.
    • It held that he had been deprived of his livelihood in an arbitrary and unfair manner, resulting in violation of Articles 14 and 21 of the Constitution. Compensation was therefore warranted.

    Supreme Court Orders β‚Ή10 Lakh Compensation, β‚Ή4.50 Lakh Refund and Closure of Loans

    • The Supreme Court issued three major substantive directions.
    • First, the finance company was ordered to close both of Sharma’s loan accounts.
    • Second, it was directed to refund the β‚Ή4.50 lakh sale price realised from the vehicle, together with 6% annual interest from the date of sale until payment.
    • Third, Sharma was awarded β‚Ή10 lakh as compensation for mental agony and loss of livelihood for a considerable period.
    • The appeal was allowed with an additional β‚Ή50,000 in costs.

    Supreme Court Directs RBI to Ensure Genuine Compliance

    • The ruling also goes beyond the individual dispute.
    • The Supreme Court observed that RBI’s guidelines, master circulars and clarifications governing recovery practices had existed but had not been effectively implemented.
    • It therefore directed the RBI to take effective steps to secure genuine compliance by NBFCs and Scheduled Commercial Banks with its recovery-related guidelines and instructions.
    • The Supreme Court Registry was directed to forward a copy of the judgment to RBI.

    Key Takeaway

    The judgment establishes a clear distinction between a financier’s legal right to recover a debt and the methods that may lawfully be employed to enforce that right.

    A borrower’s default does not authorise banks, NBFCs or their recovery agents to bypass contractual notice requirements, RBI safeguards or lawful repossession procedures. Self-help repossession may be contractually permissible, but it must remain peaceful, fair and within the bounds of law.

    The decision is therefore significant not only for vehicle-finance borrowers but also for banks, NBFCs and recovery agencies, which may face substantial monetary consequences where repossession is undertaken arbitrarily or through coercive means.

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    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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  • Gujarat HC Quashes Copyright FIR Over Alleged Counterfeit Apple Accessories; Says Trademark Dispute Cannot Be Camouflaged as Copyright Offence to Bypass Statutory Safeguards

    Gujarat HC Quashes Copyright FIR Over Alleged Counterfeit Apple Accessories; Says Trademark Dispute Cannot Be Camouflaged as Copyright Offence to Bypass Statutory Safeguards

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

    Date: 18.09.2026

    Gujarat HC Quashes Copyright FIR Over Alleged Counterfeit Apple Accessories; Says Trademark Dispute Cannot Be Camouflaged as Copyright Offence to Bypass Statutory Safeguards

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

    In an important ruling concerning the overlap between copyright and trademark enforcement in counterfeit-goods cases, the Gujarat High Court has quashed an FIR registered against a shopkeeper following the seizure of alleged counterfeit Apple-branded electronic accessories worth approximately β‚Ή15.11 lakh.

    Justice P. M. Raval held that commercial hardware such as AirPods, cables, power adapters and smartwatches does not, merely by being counterfeit or bearing a registered brand, constitute a literary or artistic work for the purpose of attracting criminal liability under Section 63 of the Copyright Act.

    The Court further held that the authorities could not subsequently sustain the case under the Trade Marks Act because the raid itself had been conducted without complying with the mandatory safeguards under Section 115(4)β€”including obtaining the prior opinion of the Registrar of Trade Marks and having the search and seizure conducted by an officer of the statutorily prescribed rank.

    FIR Registered Under Copyright Act Following Raid on Ahmedabad Shop

    • The petitioner, Jitendrabhai Mohanbhai Kriplani, approached the High Court under Section 482 CrPC seeking quashing of FIR C.R. No. 11191026220492 of 2022, registered on October 19, 2022 at Kalupur Police Station, Ahmedabad City.
    • The FIR invoked Sections 51, 63 and 64 of the Copyright Act, 1957.
    • The complainant was a manager of Griffin Intellectual Property Service Pvt. Ltd., which, according to the FIR, had been authorised by Apple Inc. to take legal action against persons allegedly infringing Apple’s rights or selling counterfeit iPhones, iPads, MacBooks, mobile phones and accessories.
    • Acting on information concerning alleged counterfeit Apple products being sold in shops in the Kalupur area, the complainant approached the police. A raid was subsequently conducted at β€œRaj Cover House”, where the petitioner was present.

    β‚Ή15.11 Lakh Worth of Alleged Counterfeit Apple Products Seized

    • According to the FIR, the authorities recovered several categories of allegedly counterfeit Apple-branded products, including AirPods, USB cables, power adapters, a smartwatch and different kinds of Apple-branded stickers and barcode/MRP labels.
    • The FIR placed the aggregate value of the seized items at β‚Ή15,11,193.
    • The key question before the High Court was whether allegations concerning the possession or sale of such duplicate commercial products could legally sustain criminal proceedings for copyright infringement.

    Petitioner: Counterfeit Hardware Is Not a Copyrightable β€œWork”

    • The petitioner argued that the seized goods did not fall within the categories of works protected under Section 13 of the Copyright Act.
    • His case was that AirPods, cables, adapters, smartwatches and similar electronic products were commercial articles rather than literary, dramatic, musical or artistic works.
    • Accordingly, the ingredients necessary for invoking Sections 63 and 64 of the Copyright Act were absent.
    • The petitioner further argued that if the allegation was actually one of misuse of Apple’s trademark on counterfeit goods, the case would fall under the Trade Marks Act, 1999, rather than being converted into a copyright prosecution.

    Gujarat HC: Commercial Hardware Is Not Literary or Artistic Work

    • The High Court accepted the central distinction advanced by the petitioner.
    • It held that copyright protection under Section 13 read with Section 2(c) is confined to protected categories of works, whereas hardware components, cables, power adapters and electronic devices are commercial industrial products.
    • The Court observed that misuse of a brand name or manufacture of duplicate hardware bearing a trademark would ordinarily constitute trademark falsification punishable under Sections 103 and 104 of the Trade Marks Act, rather than an offence under the Copyright Act.
    • It consequently held that mere possession or sale of counterfeit commercial goods or accessories bearing brand labels does not, by itself, satisfy the requirements of Sections 13 and 63 of the Copyright Act.

    FIR Failed to Identify Any Specific Copyrighted Literary or Artistic Work

    • The Court then examined whether the stickers, seals, packaging labels and other material allegedly recovered could independently support the copyright prosecution.
    • It noted that the FIR merely described the seized articles as goods infringing Apple’s copyright and bearing Apple’s trademark.
    • Crucially, however, the FIR did not identify any specific copyrighted literary workβ€”such as an instruction sheet or user manualβ€”or any specific artistic work such as an original graphical layout or packaging design whose copyright had allegedly been infringed.
    • The Court stressed that copyright is a statutory right, and an FIR invoking Section 63 must set out how the material allegedly infringed satisfies the statutory definition of a protected work under Sections 2 and 13.

    No User Manuals or Instruction Manuals Were Actually Seized

    • The complainant argued that product literature, packaging, labels and instruction manuals constituted original literary or artistic works belonging to Apple.
    • The High Court, however, examined the investigation papers and found that no instruction manual or user leaflet had actually been recovered or seized from the petitioner’s shop.
    • The Court said a new factual foundation could not be introduced during oral arguments when it was absent from the police recovery memo.
    • The recovery panchnama was also silent regarding any user or instruction manual. Photographs produced later through an affidavit-in-reply, which were not part of the investigation papers, could not be relied upon to cure that deficiency.

    MRP Tags and Barcodes Are Functional Data, Not Automatically Literary Works

    • The Court also addressed the argument that stickers, MRP labels and barcodes constituted literary works.
    • It held that an inclusive definition of β€œliterary work” cannot be stretched so far as to convert every commercial label or container into a literary work.
    • An MRP price tag, standard barcode or technical model sticker contains essentially functional and factual information, the Court observed, and cannot automatically be treated as an original literary work of authorship.
    • This distinction was central to the Court’s conclusion that the alleged counterfeit hardware and functional labels could not sustain the criminal copyright case as framed in the FIR.

    β€œCannot Camouflage a Trademark Dispute as a Copyright Offence”

    • One of the most significant observations in the judgment concerns attempts to invoke copyright law where the substance of the allegation is trademark counterfeiting.
    • The Court found that the primary allegation was the sale of counterfeit Apple hardware and accessories, a subject that fell within Sections 103 and 104 of the Trade Marks Act.
    • It held that the complainant could not camouflage a trademark dispute as a copyright offence in a manner that bypassed the procedural safeguards prescribed for trademark searches and seizures under Section 115 of the Trade Marks Act.

    Could the Case Continue Under the Trade Marks Act?

    • Having found Section 63 of the Copyright Act unsustainable, the High Court considered the respondents’ alternative submission.
    • The complainant and State argued that even if the Copyright Act provisions were incorrectly invoked, the allegations nevertheless disclosed offences under Sections 103 and 104 of the Trade Marks Act, 1999.
    • In other words, it was argued that incorrect labelling of the statutory provision in the FIR should not prevent the investigation from proceeding under the appropriate law.
    • The High Court rejected this argument because the Trade Marks Act contains its own mandatory safeguards governing search and seizure.

    Prior Opinion of Registrar Under Section 115(4) Is a Statutory Condition Precedent

    • Section 115(4) of the Trade Marks Act requires the police officer, before conducting search and seizure, to obtain the opinion of the Registrar on the facts involved in the offence relating to the trademark and abide by that opinion.
    • The High Court found from the FIR and police record that no prior written opinion had been sought or obtained from the Registrar of Trade Marks before the raid on Raj Cover House.
    • Justice Raval described this requirement as a β€œstatutory condition precedent” rather than a technical formality.
    • The Court viewed the safeguard as designed to prevent arbitrary police raids on commercial establishments at the instance of private corporate entities.
    • The Court consequently held that a search and seizure conducted in total defiance of Section 115(4) was vitiated.

    Raid Conducted by Officers Below Statutorily Required Rank

    • There was another fundamental procedural defect.
    • The Court noted that Section 115(4) provides that no police officer below the rank of Deputy Superintendent of Police or equivalent shall search and seize without warrant in such cases.
    • Although the initial application had been forwarded by the DCP Zone-03 to Kalupur Police Station, the actual raid, search and seizure were carried out under a Police Inspector along with head constables and police constables.
    • The High Court found these officers to be below the statutorily prescribed rank of DSP/ACP and consequently held that they lacked the requisite authority to conduct the search and seizure under the Trade Marks Act.

    Court Finds β€œColourable Exercise of Power”

    • The High Court went further and described the record as demonstrating a β€œclear pattern of colourable exercise of power.”
    • According to the Court, the complainant-company was aware that proceeding under the Trade Marks Act required the Registrar’s prior opinion and execution of the raid by an appropriately ranked police officer.
    • The Court found that what was essentially a trademark dispute had instead been presented as copyright infringement, thereby enabling an immediate raid through local police officers without satisfying those statutory safeguards.
    • The Court held that permitting the prosecution subsequently to fall back upon trademark charges would effectively sanction an evasion of the statutory mandate.
    • It reiterated that the FIR and seizure memo did not disclose recovery of original literary works or user manuals and that the controversy essentially concerned alleged falsification of a registered trademark on commercial accessories.

    Complainant’s Authority to Lodge FIR Was Upheld

    • Importantly, the High Court did not accept every contention raised by the petitioner.
    • The petitioner had challenged the complainant’s locus and authority to institute the proceedings.
    • On examining the authorisation documents, however, the Court found that authority had been given to the agency and, in turn, to its authorised person to lodge the FIR.
    • The petitioner’s objection regarding the complainant’s lack of locus was therefore rejected.
    • Thus, the FIR was not quashed because the complainant lacked authority. It was quashed because the Copyright Act provisions were found inapplicable to the allegations as framed and the statutory requirements necessary for a Trade Marks Act prosecution had not been followed.

    Gujarat HC Quashes FIR and All Consequential Proceedings

    • Summarising its conclusions, the Gujarat High Court held that the allegations did not satisfy the statutory ingredients of Sections 13 and 63 of the Copyright Act, since the commercial hardware in question did not constitute literary or artistic works for the purposes of the prosecution as framed.
    • It further held that Sections 103 and 104 of the Trade Marks Act could not simply be substituted to save the proceedings because the search, raid and seizure had been conducted in breach of Section 115(4)β€”both because the Registrar’s prior opinion had not been obtained and because the operation was carried out by officers below the prescribed rank.
    • Continuation of the proceedings, the Court concluded, would amount to an abuse of the process of Court and cause grave miscarriage of justice.
    • Accordingly, the High Court allowed Jitendrabhai Kriplani’s petition and quashed FIR C.R. No. 11191026220492 of 2022 dated October 19, 2022 and all consequential proceedings insofar as the petitioner was concerned.

    Why This Judgment Matters

    • The ruling draws an important boundary between copyright enforcement and trademark counterfeiting.
    • The judgment does not hold that counterfeit branded electronic goods are lawful. Rather, it holds that allegations of counterfeiting must be prosecuted under the correct statutory framework, and the procedural safeguards attached to that legislation cannot be avoided by characterising a trademark dispute as copyright infringement.
    • The decision is especially significant for intellectual-property enforcement agencies, brand-protection companies, police authorities, retailers and businesses because it stresses that the choice of statute directly affects the legality of search, seizure and prosecution.
    • Where the substance of an allegation concerns falsification of trademarks on commercial products, authorities cannot use the Copyright Act merely to circumvent the safeguards specifically prescribed by Section 115(4) of the Trade Marks Act.

    Key Takeaway

    Counterfeit commercial hardware bearing a registered brand does not automatically constitute copyright infringement. Where the allegations essentially concern trademark falsification, the Trade Marks Act must be followedβ€”including its mandatory search-and-seizure safeguards. A trademark dispute cannot be dressed up as a copyright case merely to bypass those statutory requirements.

    Connected Matter

    Punjab & Haryana HC: Trade Mark Search & Seizure Cannot Be Conducted by Officer Below DSP Rank

    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: Gujarat High Court

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  • Karnataka HC Quashes Section 420 Case; Says Commercial Payment Dispute Cannot Be Given Criminal Colour

    Karnataka HC Quashes Section 420 Case; Says Commercial Payment Dispute Cannot Be Given Criminal Colour

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

    Date: 18.09.2026

    Karnataka HC Quashes Section 420 Case; Says Commercial Payment Dispute Cannot Be Given Criminal Colour

    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 ruling on the misuse of criminal proceedings in commercial disputes, the Karnataka High Court has quashed a cheating case under Section 420 of the Indian Penal Code, 1860 against Deepak Raheja, holding that a dispute predominantly arising from non-payment for work executed in the course of a commercial transaction cannot be converted into a criminal prosecution merely to exert pressure for recovery of money.

    Justice Ravi V. Hosmani held that continuation of the criminal proceedings against the petitioner would amount to an abuse of the process of law, and consequently quashed the proceedings pending before the VIII Additional Chief Metropolitan Magistrate, Bengaluru, insofar as Deepak Raheja was concerned.

    Background of the Dispute

    • The case arose from a complaint lodged on December 29, 2014 with the Sanjaynagar Police in Bengaluru by Tanveer Ahmed Haidary, proprietor of M/s TAH & Company.
    • According to the complaint, Haidary was engaged in the business of civil and interior contracting and supply work in Mumbai, Bengaluru, Delhi and other parts of India.
    • Deepak Raheja was stated to be the Managing Director of Pebble Bay Developers Pvt. Ltd. The complainant alleged that he had been assigned interior work relating to the Pebble Bay apartment complex at Dollars Colony, Sanjaynagar, Bengaluru.

    Contractor Alleged Non-Payment Despite Completion of Work

    • The complainant alleged that although he had carried out the entrusted work, the payments received were not commensurate with the bills raised.
    • It was further alleged that despite demands for payment, Raheja assured the complainant that the outstanding amount would be cleared within two months but subsequently failed to do so.
    • The complainant alleged that Raheja had dishonestly induced him to complete the work and thereafter misappropriated the amounts for personal gain. There was also an allegation that TDS had been deducted up to 2013 despite the alleged non-payment.
    • On the basis of the complaint, Crime No. 292/2014 was registered by Sanjaynagar Police.
    • Following investigation, the police filed a charge-sheet, and on July 15, 2016, the VIII Additional Chief Metropolitan Magistrate, Bengaluru took cognizance of the alleged offence punishable under Section 420 IPC in C.C. No. 16189/2016.

    Deepak Raheja Approaches High Court Under Section 482 CrPC

    • Raheja approached the Karnataka High Court under Section 482 of the Code of Criminal Procedure, 1973, seeking quashing of the Magistrate’s cognizance order, the charge-sheet and all consequential criminal proceedings.
    • His principal argument was that the complaint itself demonstrated that the controversy concerned unpaid dues arising out of commercial transactions.
    • Accordingly, it was argued that resorting to criminal proceedings for such a dispute was unjustified and amounted to an abuse of the criminal justice process.

    Petitioner: Essential Ingredients of Section 420 IPC Were Missing

    • Raheja also contended that the essential ingredients required to constitute an offence of cheating under Section 420 IPC were not disclosed.
    • His counsel relied upon the Supreme Court’s ruling in A.M. Mohan v. State, (2024) 12 SCC 181, in support of the argument that the criminal proceedings deserved to be quashed where the ingredients of Section 420 were absent.
    • It was additionally argued that the order taking cognizance was cryptic and failed to demonstrate application of mind by the Magistrate. For this proposition, reliance was placed on the Delhi High Court’s ruling in Sanjit Bakshi v. State (NCT of Delhi), 2022 SCC OnLine Del 3614.

    Company Not Made an Accused

    • Another argument raised by Raheja was that he was a director of a company and that the company itself had not been arrayed as an accused.
    • Reliance in this regard was placed on the Supreme Court’s judgment in Sanjay Dutt & Ors. v. State of Haryana & Anr., 2025 INSC 34.
    • The Karnataka High Court, however, did not accept non-arraignment of the company as independently fatal in the facts of the case.
    • The Court observed that the complaint did not indicate that the interior-decoration work had been assigned to the complainant by the company. Therefore, prima facie, failure to array the company itself as an accused was not necessarily fatal to the prosecution.
    • This distinction is important because the ultimate quashing was based primarily on the predominantly civil nature of the underlying transaction and absence of the necessary criminal element, rather than simply on non-joinder of the company.

    State Opposed Quashing of Charge-Sheet

    • The State opposed the petition and argued that the police had conducted an investigation and filed the charge-sheet after finding sufficient material to put the accused on trial.
    • The complainant did not have representation at the hearing, although objections had been filed on his behalf.

    High Court: Dispute Predominantly Arises From a Civil Transaction

    • After examining the complaint and charge-sheet, the High Court found that the alleged offence arose predominantly from a civil transaction involving failure to make payment for work already executed.
    • The Court identified the principal grounds urged for quashing as the absence of the essential ingredients of Section 420 IPC, the civil nature of the dispute, failure to array the company as an accused and the allegedly cryptic cognizance order.
    • The nature of the underlying transaction ultimately became decisive.

    Civil Dispute Cannot Be Criminalised to Pressure Accused for Payment

    • The High Court relied on a settled line of Supreme Court authority holding that criminal law cannot be deployed as a mechanism to recover money arising from a civil or commercial dispute.
    • The Court referred to Commissioner of Police & Ors. v. Devender Anand & Ors., Criminal Appeal No. 834 of 2017, decided on August 8, 2019; Sachin Garg v. State of Uttar Pradesh & Anr., (2024) 11 SCC 687; and Vesa Holdings (P) Ltd. v. State of Kerala, (2015) 8 SCC 293.
    • The Court noted that these decisions establish that a civil dispute cannot be permitted to be converted into a criminal case to exert pressure upon an accused for recovery of money.

    Allegation of Criminal Breach of Trust Could Not Save Section 420 Proceedings

    • In the objections before the High Court, the complainant sought to project the dispute as involving criminal breach of trust.
    • However, the Court noted that the charge-sheet filed by the police and the Magistrate’s cognizance order concerned Section 420 IPC alone.
    • The attempt to characterise the dispute differently in objections therefore did not overcome the fundamental problem identified by the High Courtβ€”that the controversy was predominantly civil and lacked the criminal element necessary to justify continuation of the Section 420 proceedings.

    Continuation of Criminal Case Would Amount to Abuse of Process

    • Having examined the allegations and the authorities cited, Justice Hosmani concluded that continuation of the proceedings against Deepak Raheja would constitute an abuse of the process of law.
    • The High Court accordingly allowed the petition and ordered that the proceedings in C.C. No. 16189/2016, pending before the VIII Additional Chief Metropolitan Magistrate, Bengaluru, be quashed insofar as Deepak Raheja was concerned.
    • Thus, Deepak Raheja succeeded before the Karnataka High Court, with the criminal proceedings against him being quashed.

    Cases Referred to in the Judgment

    The judgment refers to several authorities concerning the distinction between civil disputes and criminal offences and the High Court’s inherent jurisdiction to prevent abuse of process:

    1. Commissioner of Police & Ors. v. Devender Anand & Ors. β€” Criminal Appeal No. 834/2017, decided on August 8, 2019.
    2. Rohit Jawa v. State of Karnataka & Anr. β€” Criminal Petition No. 8536/2023, decided on July 3, 2025; 2025:KHC:23989.
    3. Sanjay Dutt & Ors. v. State of Haryana & Anr. β€” 2025 INSC 34.
    4. A.M. Mohan v. State β€” (2024) 12 SCC 181.
    5. Sanjit Bakshi v. State (NCT of Delhi) β€” 2022 SCC OnLine Del 3614.
    6. Sachin Garg v. State of Uttar Pradesh & Anr. β€” (2024) 11 SCC 687.
    7. Vesa Holdings (P) Ltd. v. State of Kerala β€” (2015) 8 SCC 293.

    Why the Judgment Matters

    The decision reiterates an important boundary between civil liability and criminal culpability in commercial dealings.

    Mere failure to pay an amount allegedly due under a commercial transaction does not, without the necessary criminal ingredients, automatically transform the dispute into cheating under Section 420 IPC. Criminal proceedings cannot be used simply as additional leverage to compel payment of disputed commercial dues.

    At the same time, the judgment should not be read as laying down that every contractual or payment dispute is immune from criminal prosecution.

    Where the complaint independently establishes the necessary ingredients of a criminal offenceβ€”such as dishonest intention or deception satisfying the statutory requirementsβ€”a criminal case may stand on a different footing. In the present case, however, the Karnataka High Court found that the complaint and charge-sheet disclosed a dispute predominantly involving non-payment for work executed, making continuation of the Section 420 prosecution an abuse of 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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