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CESTAT Mumbai Allows Customs Duty Exemption on Dowtherm Heat Transfer Fluid Under SHIS Scheme

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

Date: 26.09.2026

CESTAT Mumbai Allows Customs Duty Exemption on Dowtherm Heat Transfer Fluid Under SHIS Scheme

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 Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Mumbai has held that Dowtherm RP Heat Transfer Fluid/Dowtherm A Heat Transfer Fluid, used for the initial charging and continuous operation of a Continuous Polycondensation (CP) Plant for manufacturing polyester products, falls within the definition of “capital goods” and is consequently eligible for Customs duty exemption under Notification No. 104/2009-Customs dated 14 September 2009.

Setting aside the Commissioner’s order, the Tribunal held that the thermic fluids fulfilled the statutory requirements of the Status Holders Incentive Scrip (SHIS) Scheme under the Foreign Trade Policy and that Customs was not justified in denying the exemption merely because the goods were chemicals falling under Chapter 29 or were described as inputs under SION.

Background of the Dispute

Wellknown Polyesters Limited was engaged in manufacturing Polyester Filament Yarn (PFY), Polyester Oriented Yarn (POY), Fully Drawn Yarn (FDY), Draw Textured Yarn (DTY) and polyester chips at its Daman manufacturing facility.
For its manufacturing operations, the company had imported a Continuous Polycondensation Plant from Oerlikon Barmag under an EPCG authorisation during April–July 2012. The plant was imported without thermic fluid.
Subsequently, the company imported 3,01,296 kg of Dowtherm RP Heat Transfer Fluid/Dowtherm A Heat Transfer Fluid, valued at approximately ₹9.86 crore, through Bills of Entry filed in October 2012. Customs duty involved was approximately ₹2.55 crore.
Instead of paying the duty in cash, Wellknown Polyesters utilised eight SHIS scrips issued by the DGFT under the Status Holders Incentive Scrip Scheme and claimed exemption under Notification No. 104/2009-Customs. The goods were initially cleared by Customs extending the exemption.

DRI Objects to SHIS Benefit

The Directorate of Revenue Intelligence (DRI), Ahmedabad Zonal Unit subsequently initiated an investigation on the ground that Notification No. 104/2009-Customs permitted duty-free import of capital goods, whereas Dowtherm heat-transfer fluid was, according to the Department, not capital goods.
DRI also relied upon the Standard Input Output Norms (SION), under which Dowtherm/Therminol and heat-transfer oil were identified as permitted inputs for manufacture of Polyester Partially Oriented Yarn and Polyester Filament Yarn. The Department therefore treated the material as an input rather than capital goods.
A Show Cause Notice dated 14 May 2013 consequently demanded approximately ₹2.55 crore Customs duty with interest under Section 28(1) of the Customs Act, 1962, besides proposing confiscation under Section 111(o) and penalty under Section 112(a).
The Commissioner confirmed the duty demand and interest but refrained from confiscating the goods because they were no longer physically available and did not impose the proposed penalty. Wellknown Polyesters challenged that order before CESTAT.

Appellant: Thermic Fluid Was Integral to Continuous Polycondensation Plant

The appellant argued that although the CP Plant and thermic fluid had been imported separately, both were required to operate together.
The thermic fluid was charged into the heaters, piping and vessels and thereafter continuously circulated in a closed loop between the heaters and reactors. The polyester polycondensation process required temperatures of approximately 270°C–300°C under high vacuum, making the thermic fluid critical for providing precise high-temperature heat while maintaining low system pressure.
The appellant relied upon the definition of “capital goods” under the Foreign Trade Policy and Notification No. 104/2009-Customs, arguing that it was broad enough to cover goods required directly or indirectly for manufacture, including items necessary for the initial setting up and functioning of plant and machinery.
It also relied upon CBEC’s earlier clarification concerning transformer oil, under which oil required for filling/topping up a transformer was considered part of the equipment because the transformer could not function without it.

Revenue: Chemical Falling Under Chapter 29 Cannot Be Capital Goods

The Department maintained that the imported thermic fluid was a chemical classifiable under Chapter 29 and therefore could not be regarded as plant, machinery, equipment or an accessory.
The Commissioner’s reasoning was that even though the chemical was indirectly used in manufacturing, its nature did not change into that of plant, machinery, equipment or accessories. The Department also relied upon the fact that SION treated Dowtherm as an input/raw material for polyester production.
CESTAT was therefore required to decide whether denial of the exemption under Notification No. 104/2009-Customs for the October 2012 imports was legally sustainable.

CESTAT Examines SHIS Scheme and Definition of ‘Capital Goods’

The Tribunal examined the Foreign Trade Policy 2009–2014 and observed that the objective of the SHIS Scheme was to promote investment in technology upgradation.
Paragraph 3.17.5 of the FTP permitted Duty Credit Scrips to be used for import of inputs or goods, including capital goods, subject to the stipulated conditions. More importantly, the FTP defined “capital goods” broadly as plant, machinery, equipment or accessories required directly or indirectly for manufacture or production, including specified items such as refractories for initial lining and catalysts for initial charge.
Notification No. 104/2009-Customs, issued under Section 25(1) of the Customs Act, 1962, similarly exempted capital goods and specified components/spares/parts imported against SHIS Duty Credit Scrips from Customs duties, subject to its conditions.
CESTAT found the definition of “capital goods” under the Customs notification and the FTP to be substantially identical.

Thermic Fluid Critical to Functioning of CP Plant

The Tribunal accepted the technical evidence concerning the role played by Dowtherm in the Continuous Polycondensation Plant.
It observed that the thermic fluid enabled the plant to provide precise high-temperature heat while maintaining low pressure, thereby permitting efficient continuous polycondensation and energy-efficient manufacture of high molecular weight polyester.
On that basis, CESTAT concluded that the imported goods fulfilled the statutory requirements of the SHIS Scheme.
A particularly important factual finding arose from the Chartered Engineer’s Certificate. Out of the total 3,01,296 kg of imported thermic fluid, 2,92,920 kg—approximately 97.2%—was used as a one-time/initial charge in the CP Plant’s Electric Thermal Oil Heater Boiler.
The fluid thereafter enabled continuous high-temperature operation at very low pressure for the polycondensation process.
The technical diagrams reproduced on pages 13–15 of the order further illustrate the closed-loop recirculation of Dowtherm between the thermic-fluid heater and CP Plant, the stages of polyester manufacture where heat transfer is required, and the Electric Thermal Oil Heater Boiler arrangement.

Capitalisation in Books Also Supported Appellant

CESTAT additionally noted that the imported thermic fluid had been capitalised in Wellknown Polyesters’ books of account, as certified by its Chartered Accountants on 29 May 2026.
The Tribunal regarded this financial treatment as further evidence supporting the appellant’s case that the imported goods were treated as capital goods.

Accordingly, the Bench held:

“the impugned goods are covered under the definition of ‘capital goods’”
and were therefore eligible for exemption under Notification No. 104/2009-Customs.

CESTAT Relies on Reliance Communications Infrastructure

The Tribunal found support in Reliance Communications Infrastructure v. Commissioner of Customs, 2009 (240) E.L.T. 461 (Tri.-Bang.).
In that case, a Gas Suppression System included HFC 227 EA gas. The Tribunal had held that Customs could not dissect an integrated system and treat the gas required for its functioning as a mere consumable when the EPCG licence covered the complete system.
CESTAT applied the same reasoning to the thermic fluid, observing that where a material is essential to the functioning of the plant, its character cannot be determined merely by isolating it from the system in which it operates.

Transformer Oil Analogy Applied to Dowtherm

CESTAT also referred to CBEC Circular No. 344/60/97-CX dated 22 October 1997, concerning transformer oil.
The circular recognised that a transformer cannot function without transformer oil and that the equipment cannot be regarded as complete without the oil filled into it.
Applying the same analogy, CESTAT held that if the Continuous Polycondensation Plant cannot function without thermic fluid, the fluid has to be treated as part of the plant, notwithstanding the absence of a specific Customs clarification concerning thermic fluid.

Cases Cited by Wellknown Polyesters

The appellant relied upon several judicial authorities in support of its interpretation of capital goods:

S. No.	Case	Citation
1	Reliance Communications Infrastructure v. Commissioner of Customs	2009 (240) E.L.T. 461 (Tri.-Bang.)
2	Commissioner of Central Excise, Coimbatore v. Jawahar Mills	2001 (132) E.L.T. 3 (S.C.)
3	Bharti Airtel Limited v. Commissioner of Central Excise, Pune	2025 (391) E.L.T. 3 (S.C.)
4	Chief Commissioner of Central Goods and Service Tax & Ors. v. Safari Retreats Private Limited & Ors.	2024 SCC OnLine SC 2691
5	Scientific Engineering House (P) Ltd. v. Commissioner of Income Tax, Andhra Pradesh	(1986) 1 SCC 11

These authorities are expressly recorded in the appellant’s submissions.
Of these, the final reasoning expressly discusses and applies Reliance Communications Infrastructure.

Final Decision: Wellknown Polyesters Wins Appeal

CESTAT concluded that the Commissioner’s order denying the benefit of Notification No. 104/2009-Customs dated 14 September 2009 by refusing to treat Dowtherm RP/Dowtherm A Heat Transfer Fluid as capital goods “does not stand the scrutiny of law.”

The Tribunal consequently set aside the Order-in-Original dated 7 October 2016 and allowed Wellknown Polyesters’ appeal in its favour.

The ruling is significant for the interpretation of capital goods under export-promotion schemes, particularly where a material may chemically resemble an input or consumable but is technically required as an initial charge and thereafter continuously circulates as an integral part of plant operation.

It also demonstrates that classification of an item as a chemical under Chapter 29, or its description as an “input” under SION for a different regulatory purpose, is not by itself determinative of whether it can qualify as capital goods under the specific language and objective of an exemption notification.

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: CESTAT Mumbai

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Ravi Shekhar Jha – Advocate, Bar Council of Delhi

September 26, 2026

Punjab & Haryana HC: Development Authority Is a ‘Promoter’ Under RERA and Liable for Delayed Possession
Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration

Date: 26.09.2026

Punjab & Haryana HC: Development Authority Is a ‘Promoter’ Under RERA and Liable for Delayed Possession

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

The Punjab and Haryana High Court has held that a Development Authority falls within the definition of “promoter” under the Real Estate (Regulation and Development) Act, 2016 (RERA) and cannot escape the statutory consequences of delayed possession merely because a commercial site was auctioned on an “as is where is” basis or because the allotment terms contained a deemed-possession clause.

Dismissing two appeals filed by the Bathinda Development Authority, Justice Harkesh Manuja upheld the order of the Real Estate Appellate Tribunal, Punjab granting interest under Section 18 of the RERA Act to allottee Leela Gupta for delayed possession of two SCO sites.

Background: SCO Sites Purchased Through Auction and Transfer
- The dispute concerned two SCO sites situated at Civil Lines, Power House Road, Bathinda.
- Leela Gupta purchased SCO Site No. 1 through an open auction conducted by the Bathinda Development Authority on 5 August 2015. An allotment letter was issued on 1 December 2015 after payment of 20% of the principal amount along with 2% cancer cess.
- Under the allotment letter, possession was required to be delivered within 90 days.
- SCO Site No. 2 was not originally allotted to Gupta. She subsequently acquired it by transfer from the original allottees on 4 August 2017. Her grievance was that despite payment according to schedule, possession of the sites was not handed over in time because the necessary development work had not been completed.
Earlier Proceedings Before PUDA and RERA
- Gupta initially sought relief from the Estate Officer, Bathinda, contending that interest should not be charged for the period during which the sites were not ready for possession.
- After her representation was rejected, she approached the High Court through CWP No. 24881 of 2018. The High Court permitted her to submit an appeal-cum-representation to the Chief Administrator, PUDA for a speaking decision.
- The Chief Administrator subsequently rejected her claim for waiver of interest on instalments but extended the moratorium period for construction, noting that development works in the commercial pocket had been completed on 16 June 2017.
- Gupta thereafter approached the Real Estate Regulatory Authority, Punjab seeking three reliefs: refund of interest charged on instalments, extension of the non-construction period, and interest under Section 18 of RERA.
- The Authority dismissed her complaints. On appeal, however, she restricted her claim only to interest for delayed possession under Section 18.
RERA Appellate Tribunal Awards Interest for Delayed Possession
- The Real Estate Appellate Tribunal, Punjab allowed Gupta’s appeals on 12 May 2022.
- For SCO Site No. 1, it awarded interest for delayed possession from 1 March 2016 to 19 October 2017.
- For SCO Site No. 2, it awarded interest from 4 August 2017 to 19 October 2017 on the amount deposited up to that date, applying Rule 16 of the Punjab State Real Estate (Regulation and Development) Rules, 2017.
- Bathinda Development Authority challenged those orders before the Punjab and Haryana High Court.
Development Authority Questions Maintainability of RERA Proceedings
- The Authority argued that the dispute arose from allotments governed by the Punjab Regional and Town Planning and Development Act, 1995 (PRTPD Act).
- According to it, after the Chief Administrator passed the order dated 27 May 2019 in exercise of appellate powers under Section 45 of the PRTPD Act, Gupta’s appropriate remedy was to file a revision before the State Government under Section 45(8) rather than initiating proceedings under RERA.
- The High Court rejected this contention.
- It noted that Gupta had relinquished her other claims and restricted the dispute before the RERA authorities to the statutory remedy of interest under Section 18 of RERA. Her claim was therefore independently founded on the RERA Act.
- The Court also noted that the maintainability objection had not been raised by the Development Authority before either the RERA Authority or the Appellate Tribunal and was being advanced for the first time at a belated stage.
Section 18 RERA Creates Statutory Right to Interest for Delay
- The High Court examined Section 18 of the RERA Act, which provides remedies where a promoter fails to complete or give possession of an apartment, plot or building according to the agreed terms.
- Where the allottee does not wish to withdraw from the project, the proviso to Section 18(1) requires the promoter to pay interest for every month of delay until possession is handed over, at the prescribed rate.
- The issue therefore turned on whether Bathinda Development Authority was a “promoter” and whether there had actually been delay in making the sites ready for possession.
Development Authority Expressly Covered by Definition of ‘Promoter’
- The High Court referred to Section 2(zk)(iii) of the RERA Act, which expressly includes a development authority or other public body within the definition of “promoter” in relation to specified buildings, apartments and plots.
- The Court therefore held that there was “no doubt” that Bathinda Development Authority was covered within the statutory definition of promoter.
- This finding is important because it confirms that a public development authority cannot seek exemption from RERA’s promoter obligations merely because it is a statutory or State authority rather than a private developer.
‘As Is Where Is’ Clause Does Not Excuse Delayed Development
- Bathinda Development Authority relied heavily on two provisions in the allotment letter.
- First, the plot had been offered on an “as is where is” basis. Second, the allotment letter stated that possession would be given within 90 days and, if the allottee did not take possession within that period, possession would be deemed to have been handed over on the due date.
- The High Court was not persuaded.
- It reasoned that if the “as is where is” clause completely absolved the Authority from carrying out development, there would have been no reason for the Authority itself to spend resources and time undertaking development work.
- The record showed that development of the site was, in fact, the Authority’s responsibility.
The Court importantly observed that:
- “Mere physical possession without any basic amenities would serve no purpose”
- because construction and commercial activity could not practically be carried out without the necessary basic infrastructure.
Electricity Is a Basic Amenity; Site Was Ready Only on 19 October 2017

The date on which the sites could genuinely be treated as ready for possession became a central issue.

An RTI response showed that:
- civil and public health works were completed on 16 June 2017;
- electrical works were completed on 28 April 2017;
- transformers were installed on 1 March 2017; and
- electricity supply became available only on 19 October 2017.
- The Chief Administrator had treated 16 June 2017 as the completion date, apparently without treating actual electricity supply as essential.
- The High Court disagreed.
- It held that electricity was a basic amenity necessary for construction activity, particularly because machinery used at a construction site requires power. It therefore affirmed the Appellate Tribunal’s conclusion that the sites were actually ready for possession only on 19 October 2017.
Extension of Construction Moratorium Was an Indirect Admission of Delay
- The Court also identified what it considered an inconsistency in the Authority’s stand.
- The Chief Administrator had extended the three-year moratorium period for construction on the ground that the commercial pocket became ready only after development work was completed.
- According to the High Court, if there had genuinely been no delay on the Authority’s part, there would have been no need to extend the construction moratorium.
- The extension was therefore treated as an indirect admission through the Authority’s own conduct that delay had occurred.
Allottee Cannot Face Penalty for Delay While Promoter Faces No Consequence
- The High Court also addressed the imbalance that would arise if the Authority’s interpretation were accepted.
- It observed that an allottee could be required to pay penalty charges for failing to complete construction within the stipulated period. It would therefore be anomalous if there were no corresponding consequences for the promoter’s delay in providing possession, especially when Section 18 of RERA expressly provides a statutory remedy for such delay.
Supreme Court’s Arifur Rahman Khan v. DLF Southern Homes Applied

The High Court relied on the Supreme Court’s judgment in:

Wg. Cdr. Arifur Rahman Khan and Aleya Sultana v. DLF Southern Homes Pvt. Ltd., (2020) 16 SCC 512.
- The Court referred to the Supreme Court’s recognition that agreements between developers and purchasers often do not operate on an equal footing: stringent obligations imposed on purchasers are frequently not mirrored by equivalent obligations on developers to meet timelines.
- Bathinda Development Authority argued that Gupta had participated in the auction with her “eyes wide open.”
- The High Court rejected this reasoning, observing that participation in an open auction could not mean that the allottee should have anticipated that the Authority itself would delay development work.
- The fact that the site had been allotted through an auction did not confer any right upon the Authority to delay development. Once delay occurred, the statutory consequences under RERA had to follow.
State Development Authority Cannot Claim Preferential Treatment Over Private Promoter
- The High Court made another significant observation concerning public development authorities.
- It held that no concession could be claimed by a State Development Authority merely because it was a public body rather than a private promoter.
- Indeed, the Court observed that the obligation upon the State was greater because it was itself a law-enforcement agency, particularly where it had maximised revenue by disposing of property through an open auction.
- The ruling therefore places public development authorities squarely within the accountability framework established by RERA where the statutory definition of promoter is attracted.
Earlier PUDA Order Did Not Bar Section 18 Claim
- The Authority further argued that the Chief Administrator’s order dated 27 May 2019 had never been challenged and continued to remain in force.
- The High Court rejected this objection because the earlier proceeding concerned a different relief.
- The Chief Administrator had rejected Gupta’s request that interest should not be charged on her instalments during the development period.
- The RERA proceedings, by contrast, concerned her affirmative statutory entitlement to receive interest from the promoter for delayed possession under Section 18.
- The two issues were therefore legally distinct.
Other Allottees Taking Possession Earlier Does Not Defeat Statutory Right
- The Authority also claimed that similarly situated allottees had taken possession earlier.
- The High Court noted that no material had been placed on record to substantiate this assertion. More importantly, even assuming it to be factually correct, the conduct of other allottees could not extinguish Gupta’s rights arising from the statutory provisions.
Final Decision: Bathinda Development Authority’s Appeals Dismissed
- The Punjab and Haryana High Court found no reason to interfere with the Real Estate Appellate Tribunal’s order.
- Both RERA Appeal No. 6 of 2023 and RERA Appeal No. 12 of 2023 filed by Bathinda Development Authority were dismissed.
Consequently, Leela Gupta succeeded, and the Appellate Tribunal’s award of delayed-possession interest remained intact:

SCO Site Period for Which Interest Was Awarded
SCO Site No. 1 1 March 2016 to 19 October 2017
SCO Site No. 2 4 August 2017 to 19 October 2017
- The interest was to operate on the deposited amount in accordance with the applicable RERA framework and Rule 16 of the Punjab State Real Estate (Regulation and Development) Rules, 2017.
Key Takeaway

The judgment establishes three important RERA principles. A Development Authority is expressly covered within the definition of “promoter” under Section 2(zk); an “as is where is” or deemed-possession clause cannot automatically defeat the statutory entitlement under Section 18 where the site was not practically ready for possession; and essential infrastructure such as actual electricity supply may be relevant in determining when a commercial site became genuinely ready for possession.

Most importantly, the High Court made clear that State development authorities cannot claim a more favourable standard than private promoters when RERA obligations apply.

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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September 26, 2026
Supreme Court: Contractual Bar on Interest Cannot Be Invoked Belatedly After Consenting to Arbitration
Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration

Date: 26.09.2026

Supreme Court: Contractual Bar on Interest Cannot Be Invoked Belatedly After Consenting to Arbitration

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

The Supreme Court has held that a party cannot ordinarily raise a contractual or legal plea at a later stage of arbitration proceedings when it had the opportunity to raise the plea before the Arbitral Tribunal but failed to do so. Such conduct can amount to waiver or abandonment of the plea, particularly where allowing it later would prejudice the opposite party.

In Union of India v. M/s Susaka Pvt. Ltd. & Ors., the Supreme Court dismissed the Union of India/Railways’ appeal challenging an arbitral award of interest, holding that the Railways could not rely for the first time before the Supreme Court upon a contractual clause prohibiting interest when it had failed to properly raise and pursue that objection before the Arbitral Tribunal and the courts below.

Dispute Arose From Railway Works Contract
- The dispute arose from a works contract awarded by the Union of India (Railways) to M/s Susaka Pvt. Ltd. on 19 December 1994 for repair work relating to 25 stators of TAO-659 Traction Motors of Electric Locomotives, Type WCAMI, at Electric Loco Shed, Valsad.
- Disputes subsequently arose during execution of the contract. Since Clause 56(1) of the General Conditions of Contract (GCC) contained an arbitration mechanism, Susaka invoked arbitration and approached the Bombay High Court under Section 11(5) of the Arbitration and Conciliation Act, 1996 for constitution of an Arbitral Tribunal.
- By an order dated 27 July 2001, the High Court, with the consent of the parties, referred the claims to a three-member Arbitral Tribunal consisting of Railway officials. Significantly, the reference expressly stated that the arbitrators would also be free to decide pre-reference interest, pendente lite interest, further interest and costs, considering the agreement.
Arbitral Tribunal Awards ₹27.62 Lakh
- The Arbitral Tribunal delivered a unanimous reasoned award dated 11 September 2002, partly allowing Susaka’s claims.
- The award covered, among other things, loss due to under-utilisation of equipment, material purchased but not utilised, loss of profit, overheads, payment under the price-variation clause and interest.
- The table reproduced on pages 5 and 6 of the Supreme Court judgment records a total award of ₹27,62,214, including ₹12,89,033 towards interest.
- The central issue that eventually reached the Supreme Court concerned the Tribunal’s power to award interest for different periods. The award provided for pre-reference interest at 15% per annum, pendente lite interest at 12% per annum and post-award interest at 18% per annum.
Railways Challenges Award Under Section 34
- Aggrieved by the award, the Union of India filed proceedings under Section 34 of the Arbitration and Conciliation Act, 1996 before a Single Judge of the Bombay High Court.
- The Single Judge partly interfered with the award by modifying the date from which interest would be payable in relation to two claims. However, the Railways’ objections concerning the remaining claims were rejected and the award was otherwise upheld.
- Susaka challenged the limited interference before the Division Bench. The Railways, however, did not file an appeal against the part of the Single Judge’s order rejecting its other objections. Consequently, that part of the award attained finality.
- The Division Bench subsequently allowed Susaka’s appeal, holding that no ground under Section 34 had been established for modifying the award in relation to interest. This effectively restored the arbitral award in its entirety.
- The Union of India then approached the Supreme Court.
Railways Relies on Clause 13(3) to Challenge Interest
- Before the Supreme Court, the Railways relied heavily upon Clause 13(3) of the GCC.
- According to the Railways, Clause 13(3) stipulated that no interest would be payable on earnest money, security deposit or amounts payable to the contractor under the contract, except Government securities.
- It therefore argued that the Arbitral Tribunal had acted contrary to the contract in awarding interest and that the award was liable to be set aside under Section 34.
- Susaka opposed the argument on a fundamental procedural ground: the Railways had not raised and pursued the Clause 13(3) objection before the Arbitral Tribunal or the courts below and therefore could not introduce it for the first time before the Supreme Court under Article 136 of the Constitution.
Supreme Court: Railways Had Consented to Arbitration of Interest Claim
- The Supreme Court accepted Susaka’s objection.
- The Court found that the Railways had not raised the plea based on Clause 13(3) in its reply before the Arbitral Tribunal. More importantly, during the Section 11(5) proceedings, the Railways had expressly consented to referring the question of interest to arbitration.
- The Court observed that if the Railways intended to rely on Clause 13(3), it could have raised the objection when the dispute was referred to arbitration or expressly reserved its right to raise the objection before the Tribunal.
- It did neither.
- The Railways thereafter participated in the arbitration and allowed the Tribunal to adjudicate the interest issue on merits without specifically pleading Clause 13(3).
Raising a Ground in Section 34 Petition Is Not Enough If It Is Not Pressed
- The Supreme Court also noticed an important procedural aspect.
- Although the Railways included the Clause 13(3) objection as a ground in its Section 34 proceedings before the Single Judge, the ground was not pressed during arguments. It was also not subsequently raised before the Division Bench.
The Supreme Court therefore described the case as one of:

“waiver or/and abandonment of a plea at the initial stage itself.”

Pleas Must Be Raised at the Appropriate Stage
- The judgment lays down an important litigation and arbitration principle: where a plea—whether based on fact or law—is available to a party, it must be raised at the appropriate stage in accordance with law.
- If a party fails to raise the plea, or gives it up by consent, it may subsequently be precluded from resurrecting it on the principle of waiver, particularly where doing so would prejudice the opposite party.
- The Court referred to the maxim “Cuilibet licet renuntiare juri pro se introducto”, explaining that a person may waive the advantage of a law made solely for his or her individual benefit and protection, provided no public right or public policy is infringed. Susaka Pvt. Ltd. & Ors.
Failure to Appeal Against Rejection of Other Claims Also Proved Fatal
- There was another reason why the Railways’ challenge failed.
- The Single Judge had substantially rejected the Railways’ Section 34 challenge except in relation to two interest claims. Yet the Railways did not appeal against the portion of the order rejecting its objections.
- The Supreme Court held that this part of the Single Judge’s decision had therefore attained finality.
- Had the Railways wished to keep those issues alive, it was required to challenge that portion before the Division Bench. Only thereafter could an adverse determination potentially have been pursued before the Supreme Court under Article 136.
Arbitral Tribunal Has Power to Award Interest
- The Supreme Court also made important observations concerning an arbitrator’s power to award interest.
- It held that an award of interest on arbitrable claims is not inherently illegal, contrary to public policy, per se bad in law or beyond the powers of an Arbitral Tribunal.
- The Court specifically referred to Section 31(7)(a) and (b) of the Arbitration and Conciliation Act, 1996, observing that these provisions empower an Arbitral Tribunal to award interest on the awarded sum, although that power remains subject to the agreement between the parties.
- This qualification is important: the Supreme Court did not hold that an arbitrator can disregard an express contractual prohibition on interest. Rather, the decision turned substantially on the Railways’ failure to timely raise and preserve its contractual objection.
Courts Should Not Lightly Interfere With Arbitral Awards
- The Supreme Court further reiterated the limited nature of judicial interference with arbitral awards.
- Once parties have chosen their arbitrators and authorised them to adjudicate specified disputes, their decision should ordinarily be respected. Courts should interfere only where the award falls within one of the grounds prescribed under Section 34 of the Arbitration and Conciliation Act, 1996.
- This part of the judgment reinforces the principle that Section 34 proceedings are not intended to provide parties with an unrestricted opportunity to reargue matters already submitted to arbitration.
Supreme Court Refers to Firm Kaluram Sitaram v. Dominion of India

The judgment expressly refers to the Bombay High Court decision in:

Firm Kaluram Sitaram v. The Dominion of India, AIR 1954 Bombay 50.
- The Supreme Court recalled former Chief Justice M.C. Chagla’s observations concerning the State’s reliance on technical defences against citizens.
- Applying that principle, the Supreme Court criticised the Railways for pursuing a technical legal argument up to the Supreme Court even though the plea had not been properly raised at the relevant stages of the proceedings.
Final Decision: Union of India’s Appeal Dismissed
- The Supreme Court ultimately found no merit in the Union of India’s appeal and dismissed it.
- Accordingly, M/s Susaka Pvt. Ltd. succeeded before the Supreme Court, and the Railways’ attempt to challenge the award of interest by relying upon Clause 13(3) of the GCC failed.
- The judgment is particularly significant for arbitration proceedings because it demonstrates that a potentially available contractual defence can be lost if it is not specifically pleaded, pressed and preserved at the appropriate stage.
- It also makes an important distinction between the substantive contractual limitation on an arbitrator’s power to award interest and the procedural question of whether a party has preserved its right to invoke that limitation.
Key Takeaway

A party cannot participate in arbitration without raising an available contractual objection, allow the Tribunal to decide the issue on merits, fail to press the objection in Section 34 proceedings, and then seek to revive it for the first time before the Supreme Court.

The decision in Susaka therefore stands as an important authority on waiver and abandonment of pleas in arbitration proceedings, while also recognising that Section 31(7) empowers arbitrators to award interest subject to the parties’ agreement.

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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September 26, 2026
Bombay High Court: Railway Board Circular Cannot Override 2013 Land Acquisition Act
Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration

Date: 26.09.2026

Bombay High Court: Railway Board Circular Cannot Override 2013 Land Acquisition Act

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

The Bombay High Court has held that tenants whose structures are acquired for a public project fall within the definition of “affected family” under the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, and are entitled to statutory rehabilitation and resettlement benefits.

The Division Bench rejected an attempt by the Dedicated Freight Corridor Corporation of India Limited (DFCCIL) to rely upon a Railway Board-approved Entitlement Matrix to restrict the tenants’ entitlement to merely three months’ notice and ₹10,000 as shifting allowance.

The Court categorically held that administrative instructions issued by the Ministry of Railways cannot override the statutory provisions of the 2013 Land Acquisition Act. It directed payment of ₹14.17 lakh to each petitioner, together with statutory interest under Section 80—9% per annum for the first year from taking possession and 15% per annum from the second year onwards.

Dispute Arose From Dedicated Freight Corridor Project in Raigad
- The petitioners were tenants occupying structures acquired by DFCCIL for the Dedicated Freight Corridor passing through Alibag, District Raigad.
- Their grievance was that although competent authorities had already confirmed their eligibility and quantified the monetary compensation payable to them, DFCCIL subsequently prevented the amounts from being disbursed.
- The petitioners had approached the Appellate Authority for Rehabilitation in 2021 as members of affected families/project-affected persons. Possession of their structures was admittedly taken during 2021–2022.
Appellate Authority Had Already Declared Tenants Eligible for Compensation
- On 16 June 2022, the Deputy Commissioner (Rehabilitation), Konkan Division, acting as the Appellate Authority, allowed the petitioners’ appeals and held that they were eligible to receive compensation.
- Those orders referred to the Maharashtra Government Resolution dated 22 May 2018, which provided the mechanism for payment of compensation to affected persons.
- DFCCIL filed review applications challenging the petitioners’ eligibility, but the review applications were rejected. Consequently, the orders confirming their eligibility remained undisturbed.
₹14.17 Lakh Compensation Determined for Each Petitioner
- Following the determination of eligibility, the District Rehabilitation Officer submitted a proposal to the State Government seeking approval for payment.
- Eventually, on 6 November 2025, the Deputy Collector (Rehabilitation), acting as Administrator for Rehabilitation for the project, passed a reasoned order determining compensation of:
₹14,17,000 for each petitioner
- DFCCIL and the rehabilitation authority thereafter informed the concerned bank regarding payment. In fact, instructions were issued on 6 November 2025 for transferring a substantial portion—₹10 lakh to each petitioner through RTGS.
- The dispute took a different turn shortly thereafter.
DFCCIL Suddenly Halts Compensation
- On 24 November 2025, the Project Manager of DFCCIL wrote to the District Rehabilitation Officer taking a position contrary to the steps already undertaken for payment.
DFCCIL asserted that because the petitioners were merely tenants, they were entitled only to:
- three months’ written notice; and
- ₹10,000 towards shifting allowance.
For this position, DFCCIL relied upon an Entitlement Matrix based on its September 2012 Relief and Rehabilitation Plan.

The District Rehabilitation Officer responded on 8 December 2025, pointing out that the State Government had already approved the petitioners’ eligibility and their entitlement to the compensation.

Despite this, DFCCIL did not release the amounts. The petitioners issued a legal notice on 5 March 2026 and thereafter approached the Bombay High Court in April 2026.

DFCCIL Relies on Railway Board’s 2015 Entitlement Matrix
- Before the High Court, DFCCIL relied principally on a letter dated 23 May 2015 issued by the Director Planning (Special), Ministry of Railways, Railway Board, to the Managing Director of DFCCIL.
- The communication approved an Entitlement Matrix for Dedicated Freight Corridor projects based on DFCCIL’s September 2012 Rehabilitation and Resettlement Plan.
- DFCCIL argued that the Matrix governed compensation payable to lessees and tenants.
- It also contended that compensation had already been paid to the owners of the structures occupied by the petitioners and, therefore, the tenants could not separately claim the ₹14.17 lakh quantified by the rehabilitation authority.
- Another argument was based on the Maharashtra Government Resolution dated 22 May 2018. DFCCIL claimed that since the structures stood on Gaothan land, the second schedule to the Government Resolution applied and only owners were entitled to compensation.
Tenants Expressly Included in Definition of ‘Affected Family’
- The High Court examined Section 3(c) of the 2013 Act, particularly Section 3(c)(ii).
- The provision includes within “affected family” a family that does not own land but whose member or members may be:
- “agricultural labourers, tenants including any form of tenancy…”
- subject to the statutory requirements concerning the impact of acquisition on livelihood.
- The Court found that it was undisputed that the petitioners were tenants in the structures acquired by DFCCIL.
- It consequently held that the petitioners were covered by the statutory definition and were entitled to compensation under the 2013 Act by applying Schedule II.
Section 31 Requires Rehabilitation and Resettlement Award for Affected Families
- The Division Bench also examined Section 31 of the 2013 Act, which requires the Collector to pass a Rehabilitation and Resettlement Award for each affected family in accordance with the entitlements under the Second Schedule.
- Such an award may contain rehabilitation and resettlement amounts, bank account details, house sites, land allotments, subsistence and transportation allowances, amounts for cattle sheds and petty shops, benefits for artisans and small traders, employment-related entitlements, annuity and other statutory benefits.
- Reading Section 31 together with Section 3(c) and Schedule II, the Court concluded that the petitioners’ status as tenants did not exclude them from the statutory rehabilitation framework.
Railway Board’s Administrative Instructions Cannot Override Statute
- The most significant legal finding concerns the relationship between the Railway Board’s administrative instructions and the 2013 Act.
- The High Court rejected DFCCIL’s reliance on the Railway Board letter dated 23 May 2015 and the corresponding Entitlement Matrix.
The Bench held:
- “Such instructions cannot prevail upon the statutory provisions”
- and found that the Railway Board communication could not override the statutory provisions of the 2013 Act.
- Thus, an administrative compensation policy or departmental entitlement matrix cannot be invoked to reduce or take away a benefit that the governing legislation confers upon an eligible affected family.
DFCCIL’s Objection Was Raised at a Belated Stage
- The High Court also found DFCCIL’s conduct significant.
- The petitioners’ eligibility had already been determined by the Appellate Authority in June 2022. DFCCIL’s review applications had failed. The competent authority subsequently quantified compensation at ₹14.17 lakh each.
- More importantly, the Chief General Manager of DFCCIL had itself joined the competent authority in directing the bank to transfer ₹10 lakh to each petitioner.
- Only thereafter did the Project Manager issue the communication dated 24 November 2025 objecting to payment and invoking the 2015 Entitlement Matrix.
- The Court characterised this objection as belated.
Government Resolution Also Could Not Reduce Statutory Benefits
- DFCCIL’s reliance on the Maharashtra Government Resolution dated 22 May 2018 also failed.
- The High Court noted that paragraph 6 of the Government Resolution itself recognised that where the compensation or relief available under the 2013 Act was higher, the higher statutory benefit would prevail.
- The Bench connected this principle with Section 108 of the 2013 Act, which gives affected families the option to avail themselves of better compensation and rehabilitation and resettlement benefits.
- Consequently, DFCCIL could not rely upon the second schedule to the Government Resolution to reduce the petitioners’ statutory entitlement.
Bombay HC Orders ₹14.17 Lakh Compensation to Each Tenant
- The Court rejected the grounds advanced by DFCCIL and allowed all the connected writ petitions.
- It held that each petitioner was entitled to:
- ₹14,17,000 as compensation, along with statutory interest
- The principal amount had already been deposited by DFCCIL. The Court therefore ordered that ₹14.17 lakh be disbursed to each petitioner within two weeks.
9% Interest for First Year and 15% Thereafter
- The petitioners had sought interest at 18% per annum.
- The High Court did not grant the claimed 18% rate. Instead, it applied the statutory interest mechanism contained in Section 80 of the 2013 Act.
- According to the judgment, delayed payment attracts:
- 9% per annum for the first year from the date possession was taken, and 15% per annum from the second year onwards.
- The Court considered statutory interest appropriate because DFCCIL had taken an “unreasonable stand belatedly” and had deprived the petitioners of their rightful dues without justification.
- It particularly noted that DFCCIL had initially directed substantial payment of ₹10 lakh each through RTGS and then suddenly reversed its position and objected to the disbursement.
Time-Bound Directions for Payment of Interest
- The High Court laid down a specific schedule for implementation.
- The competent authority was directed to calculate the interest payable to each petitioner within four weeks.
- It must thereafter communicate the calculation to the Chief General Manager and Project Manager of DFCCIL within one week.
- DFCCIL must then deposit the interest amount with the competent authority within two weeks, following which the authority must disburse it to the petitioners within one further week.
Final Decision
- The Bombay High Court made the rule absolute and allowed all seven connected writ petitions.
The petitioners were:
- Sanjay Baban Girhe, Heena Suhas Niromkar, Vijaykumar Subedar Mourya, Rajendra Muktaji Shinde, Vandana Ulhas Girhe, Mahesh Mahillappa Kallure and Sambhaji Shivhar Mule.
- Each petitioner is to receive ₹14.17 lakh plus statutory interest under Section 80 of the 2013 Act.
Key Takeaway

The judgment establishes an important principle for land acquisition and infrastructure projects: tenancy does not by itself exclude a person from rehabilitation and resettlement benefits under the 2013 Land Acquisition Act.

Where a tenant satisfies the statutory definition of an “affected family” under Section 3(c), the entitlement must be determined under the Act, including Section 31 and Schedule II. An internal policy, project-specific Entitlement Matrix, Railway Board instruction or State Government resolution cannot be used to dilute a superior statutory entitlement.

The ruling is particularly significant for infrastructure projects undertaken by government corporations because the Court made clear that administrative instructions must yield to the governing legislation, while Section 108 protects an affected family’s entitlement to opt for better compensation and rehabilitation benefits.

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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September 26, 2026

SCO Site	Period for Which Interest Was Awarded
SCO Site No. 1	1 March 2016 to 19 October 2017
SCO Site No. 2	4 August 2017 to 19 October 2017

Karnataka High Court: Civil Suit Cannot Be a Ground to Discharge Accused When Criminal Acts Are Alleged

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

Date: 26.09.2026

Karnataka High Court: Civil Suit Cannot Be a Ground to Discharge Accused When Criminal Acts Are Alleged

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 held that the mere existence of an earlier civil suit arising from the dispute cannot be a ground to discharge an accused where the complaint and charge-sheet materials disclose prima facie allegations of independent criminal acts such as creation of documents, forgery and use of allegedly fabricated documents.

Allowing a petition filed by M/s Varsha Cables Private Ltd. and its Chairman and Managing Director Puttaraju P. Gowda, Justice H.P. Sandesh set aside an order of the Revisional Court which had discharged the accused and restored the Trial Court’s order rejecting the discharge application under Section 239 of the Code of Criminal Procedure, 1973.

The High Court emphasised that disputed defences cannot be adjudicated at the discharge stage and that questions surrounding allegedly created documents must be tested during trial.

Background of the Dispute

The proceedings originated from a private complaint filed by the complainants alleging criminal acts against the second respondent, B. Kumar, proprietor of M/s Varsha Industries.
The private complaint was referred for investigation under Section 156(3) CrPC, following which the Vijayanagara Police registered an FIR, investigated the allegations and filed a charge sheet. An additional charge sheet was also filed invoking offences relating to forgery and use of forged documents. VARSHA CABLESL PRIVATE LTD. KHC
The dispute had its background in the relationship between the parties concerning Varsha Cables Private Ltd. According to the complaint, the accused had previously been a Director of the company and later started carrying on business through Varsha Industries.
The complainants alleged that Varsha Industries began manufacturing and dealing in products including PVC insulated copper conductors and PVC/rubber insulated and non-insulated products, replicating the business being carried on by Varsha Cables.

Allegation of Misrepresentation to Customers

The complaint alleged that the accused represented to customers of Varsha Cables that the company had been restructured as M/s Varsha Industries and that its management had also been restructured.
Customers were allegedly requested to amend their vendor-registration records and direct fresh enquiries to Varsha Industries.
The complaint specifically referred to communications dated 24 October 2009 sent to customers including Cipla Limited, Goa and Jubilant Organosys Ltd., Mysore. According to the complainants, these representations resulted in prominent customers of Varsha Cables being diverted to Varsha Industries.
These remained allegations requiring adjudication at trial; the High Court did not make a final finding that the alleged acts had been proved.

Alleged Fabrication of Board Meeting Minutes and Use of Company Letterhead

A significant aspect of the case concerned documents allegedly created after an agreement dated 9 October 2009 between the parties.
The additional charge sheet alleged that Varsha Cables’ letterhead was used in a communication dated 21 October 2009 for changing a Bureau of Indian Standards (BIS) licence and that minutes of a purported Board meeting were created despite the allegation that no such meeting had taken place.
According to the additional charge sheet, the accused allegedly used the company’s letterhead after ceasing to be its Director with an intention to divert clients. The additional charge sheet consequently invoked Sections 468 and 471 IPC.
The High Court also recorded that letters dated 21 October and 4 November 2009 addressed to the Bureau of Indian Standards and minutes dated 12 October 2009 were among the documents relied upon by the complainants.

Trial Court Refuses to Discharge Accused

The accused sought discharge under Section 239 CrPC.
The Trial Court rejected the application on 23 December 2017 after taking note of allegations contained in the original as well as additional charge sheets.
Among other things, it considered the allegation that Board resolutions had been created and used for changing BIS licences standing in the name of Varsha Cables. It also noted allegations concerning duplicate letterheads and changes relating to the company’s telephone number.
The accused thereafter approached the Revisional Court.

Revisional Court Discharges Accused

The VII Additional Sessions Judge, Mysuru allowed Criminal Revision Petition No. 313 of 2018 on 21 March 2019 and discharged the accused.
The Revisional Court substantially treated the controversy as a civil dispute between the parties, taking into consideration the agreement and related civil proceedings.
Varsha Cables and its CMD then approached the Karnataka High Court under Section 482 CrPC, seeking restoration of the Trial Court’s refusal to discharge the accused.

Accused Argues Criminal Complaint Was Replica of Civil Suit

Before the High Court, the accused argued that a civil suit had already been instituted and that the allegations in the private criminal complaint substantially replicated those made in the civil proceedings.
It was submitted that the civil suit had been dismissed and that first appeals were pending. The accused therefore maintained that the controversy was essentially civil in character and that criminal prosecution should not be used to pursue the same dispute.
The complainants, on the other hand, argued that specific allegations of forgery, cheating, criminal breach of trust, fabrication and use of documents had been investigated and formed part of the charge-sheet materials. They contended that the Revisional Court had effectively evaluated the defence at a stage when only a prima facie assessment was permissible.

Karnataka HC: Revisional Court Went Beyond Scope of Discharge Proceedings

The High Court found fault with the manner in which the Revisional Court approached the case.
Justice Sandesh observed that the Revisional Court had extensively considered the terms of the agreement between the parties but had failed adequately to examine the allegations in the complaint, charge sheet and particularly the additional charge sheet concerning alleged creation and use of documents.
According to the High Court, the Revisional Court had effectively considered the accused’s defence while deciding whether discharge was justified.
That approach exceeded the permissible scope of the proceedings.

Evidentiary Value Cannot Be Decided at Discharge Stage

The High Court relied on the Supreme Court’s decision in State by Karnataka Lokayukta Police Station, Bengaluru v. M.R. Hiremath, (2019) 7 SCC 515, noting that entering into questions concerning the evidentiary value of prosecution material at the stage of deciding a discharge application is impermissible.
It also relied upon Srilekha Sentilkumar v. Deputy Superintendent of Police, CBI, ACB, Chennai, (2019) 7 SCC 82, where the Supreme Court recognised that disputed factual issues may be more appropriately adjudicated at trial after evidence is led by the parties.
In the present case, the High Court found sufficient charge-sheet material to permit the prosecution to proceed, particularly in relation to the accusations concerning creation of documents and alleged forgery.

Civil Proceedings Do Not Automatically Wipe Out Criminal Allegations

One of the most important findings of the judgment concerns the overlap between civil and criminal proceedings.
The High Court acknowledged that the civil suit had been filed before the criminal complaint and that the contents of the civil plaint and complaint were alleged to overlap.
However, it noted that the criminal complaint contained allegations concerning conduct after the agreement dated 9 October 2009, including alleged creation of documents, purported Board meeting minutes and transfer of records. These matters had also been considered during police investigation and in the additional charge sheet.

The Court therefore held that:

“the very contention that civil suit was filed earlier and subsequently, criminal complaint was filed cannot be a ground to discharge”
where the record contains allegations of criminal acts that require adjudication.
Importantly, this does not amount to a finding that the accused committed forgery. The High Court held only that the allegations and materials were sufficient to require adjudication at trial.

Defence Cannot Be Adjudicated Under Section 239 CrPC

The High Court reiterated that, while considering an application under Section 239 CrPC, the court must determine whether there is material to frame charges or whether the accusations are groundless.
The Revisional Court had, in the High Court’s view, gone beyond this exercise by evaluating the defence based on the parties’ agreement while failing adequately to account for the accusations regarding creation of documents.
The Court therefore concluded that the Revisional Court had exercised its revisional powers beyond their permissible limit.

Complainant Has Right to Be Heard When Discharge May Terminate Criminal Proceedings

Another significant issue concerned the locus of the de facto complainant.
The accused relied upon M/s Kerala Transport Co. v. D.S. Soma Shekar & Others, arguing that after investigation and filing of the charge sheet, prosecution was primarily the responsibility of the State and the private complainant could not independently use criminal proceedings to pursue private vengeance.
The Karnataka High Court rejected the objection in the circumstances of this case.
It relied upon Sundeep Kumar Bafna v. State of Maharashtra & Another, (2014) 16 SCC 623, observing that while a complainant or informant does not have a vested right to directly conduct the prosecution, the complainant’s interest cannot simply be ignored when proceedings are likely to be terminated.
The Court also relied on J.K. International v. State (Govt. of NCT of Delhi), (2001) 3 SCC 462, which recognised the complainant’s right to be heard when criminal proceedings initiated on the complaint are sought to be quashed.
The High Court reasoned that allowing a revision seeking discharge could effectively terminate the proceedings initiated by the first informant, making an opportunity of hearing material to the complainant’s interests.

Supreme Court Precedents Considered

The judgment discusses several authorities concerning discharge, revision and participation of a complainant, including:

Case	Citation / Reference	Principle Discussed
Madhu Limaye v. State of Maharashtra	(1977) 4 SCC 551	Nature of orders concerning charge/discharge and revisional jurisdiction
Union of India v. Prafulla Kumar Samal	(1979) 3 SCC 4	Scope of judicial scrutiny at charge/discharge stage
Pranab Kumar Mitra v. State of West Bengal	AIR 1959 SC 144	Revisional jurisdiction
Thakur Ram v. State of Bihar	AIR 1966 SC 911	Role of State and private parties in criminal prosecution
Sundeep Kumar Bafna v. State of Maharashtra & Anr.	(2014) 16 SCC 623	Role and hearing of complainant/private party
State by Karnataka Lokayukta v. M.R. Hiremath	(2019) 7 SCC 515	Evidentiary value cannot be assessed at discharge stage
Srilekha Sentilkumar v. Deputy Superintendent of Police, CBI	(2019) 7 SCC 82	Disputed facts appropriately determined at trial
J.K. International v. State (Govt. of NCT of Delhi)	(2001) 3 SCC 462	Complainant’s opportunity of hearing where criminal proceedings are sought to be terminated
Sanjay Kumar Rai	Criminal Appeal No. 472/2021, decided 07.05.2021	Scope of revision against charge/discharge orders

These authorities were considered in determining the permissible scope of discharge/revisional proceedings and the complainant’s participation.

Final Decision: Varsha Cables’ Petition Allowed

The Karnataka High Court ultimately allowed the criminal petition.
It set aside the order dated 21 March 2019 passed by the VII Additional Sessions Judge, Mysuru in Criminal Revision Petition No. 313/2018 and restored the Trial Court’s order dated 23 December 2017 in C.C. No. 126/2014 rejecting the accused’s discharge application under Section 239 CrPC.
Accordingly, the accused was not discharged and the criminal proceedings are to continue.
The High Court expressly clarified that the observations made while deciding the petition shall not influence the Trial Court when considering the matter on merits. Therefore, the ruling does not determine the guilt or innocence of the accused; those issues remain for trial.

Key Takeaway

The ruling reinforces that the existence of a civil dispute or even an earlier civil suit does not automatically justify discharge from criminal proceedings where the complaint and investigation disclose separate prima facie allegations of criminal conduct.

At the Section 239 CrPC stage, courts are not expected to conduct a full trial, adjudicate disputed defences or finally determine the evidentiary worth of competing documents.

Where allegations concerning forgery, fabrication or use of allegedly created documents require evidence, those questions should ordinarily be determined during trial rather than through a discharge application.

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Source: Karnataka High Court

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September 26, 2026

Delhi High Court: Trademark Refusal Must Be Based on Reasoned Analysis, Not Mere Similarity of Marks
Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration

Date: 25.09.2026

Delhi High Court: Trademark Refusal Must Be Based on Reasoned Analysis, Not Mere Similarity of Marks

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

The Delhi High Court has set aside the refusal of Lucy Group Ltd.’s application for registration of the trademark “GEMINI” in Class 09, holding that the Registrar of Trademarks failed to consider crucial factual and legal submissions placed before it.

Justice Jyoti Singh held that the Registrar’s order was “unreasoned, non-speaking and reflects non-application of mind”, observing that a quasi-judicial authority is legally required to consider all relevant contentions and issues raised by the parties before arriving at its decision.

The High Court, however, did not decide whether GEMINI was ultimately entitled to registration. Instead, it remanded the trademark application to the Registrar for fresh consideration and directed a decision within 10 weeks after hearing Lucy Group.

Background: Lucy Group’s ‘GEMINI’ Trademark Application
- Lucy Group Ltd. filed the appeal under Section 91 of the Trade Marks Act, 1999, challenging the Registrar’s order dated 17 April 2025, which had refused registration of its trademark under Application No. 5247072 dated 14 December 2021 in Class 09.
- According to the company, it first used the GEMINI mark in India at the Elecrama trade event in Bengaluru on 13 February 2016, where it promoted and displayed products to potential customers and business associates.
- Lucy Group subsequently filed a convention trademark application in Great Britain on 16 June 2021 and, on 14 December 2021, applied to register GEMINI in India as a convention application.
Trademark Registry Cites Four Earlier ‘GEMINI’ Marks
- On 4 January 2022, the Registry issued an Examination Report raising an objection under Section 11(1) of the Trade Marks Act.
- Four earlier marks were cited on the ground that Lucy Group’s proposed GEMINI mark was identical or similar to marks already appearing on the Register in respect of identical or similar goods.
- Following hearings and written submissions, the Registrar refused registration on 17 April 2025. Lucy Group thereafter filed Form TM-M on 15 May 2025 seeking detailed grounds for refusal, but according to the appeal, those grounds were never supplied.
Lucy Group: Registrar Failed to Compare the Actual Goods
- Lucy Group’s principal grievance was that the Registrar had merely noted the existence of four earlier registrations and concluded that there was a likelihood of confusion because of the allegedly similar goods.
- The company argued that the Registrar had failed to undertake a meaningful comparative analysis of the nature and function of the goods, their trade channels and the relevant consumers.
- It also challenged the Registrar’s finding that adoption of GEMINI was not bona fide, arguing that this was not a ground of refusal under Section 11(1).
Lucy Group’s GEMINI Products Are Industrial SCADA and RTU Systems
- A central aspect of Lucy Group’s case was the highly specialised nature of the products for which registration was sought.
- The application covered industrial-grade products including SCADA (Supervisory Control and Data Acquisition) systems and GEMINI RTUs (Remote Terminal Units).
- The RTUs were described as multipurpose units intended for advanced feeder automation and for controlling and monitoring pole- and ground-mounted medium-voltage switchgear.
- Lucy Group relied on product catalogues, technical specifications and its corporate profile to show that it operated in the specialised field of power automation, grid monitoring and infrastructure control systems.
- The company also claimed continuous and extensive use of GEMINI in India since February 2016 and argued that the specialised nature, application and trade channels of its goods distinguished them from the products covered by the cited registrations.
Cited Mark 1: ‘Wires and Cables’
- The first cited GEMINI registration, No. 728627 in Class 09, covered “wires and cables.”
- Lucy Group argued that wires and cables were basic electrical transmission components, whereas its SCADA systems, RTUs and industrial switchgear were advanced control systems integrated with software and supplied as part of specialised engineering projects.
- It further claimed that the two marks had co-existed in the Indian market since 2016 without reported confusion and that GEMINI had acquired secondary distinctiveness among its customers.
Cited Mark 2: Television Broadcasting and Entertainment Products
- The second cited registration, No. 953168, was also for GEMINI in Class 09 and belonged to Sun TV Network Limited.
- Lucy Group argued that the goods associated with this registration related to the television broadcasting and entertainment sector, whereas its own products concerned industrial power-distribution and control solutions.
- According to Lucy Group, the nature, purpose and consumer base of the respective goods were entirely different. It also informed the Court that it had filed a rectification petition on the ground of non-use against the second cited mark on 30 July 2022, which remained pending.
Third Mark Abandoned; Fourth Filed on ‘Proposed to Be Used’ Basis
- Lucy Group also raised specific objections regarding the remaining two cited marks.
- It submitted that Registration No. 3164101 for GEMINI in Class 09 had been abandoned before the date of the impugned order.
- As regards the fourth mark, Application No. 3939124, Lucy Group pointed out that it had been filed on a “proposed to be used” basis and that its filing was later than Lucy Group’s claimed first use of GEMINI.
- The detailed comparison reproduced on pages 5–9 of the High Court order further contrasted Lucy Group’s specialised industrial products with the goods associated with each cited mark, including wires and cables, broadcasting/electronic goods, consumer electronics and portable spectroscopic instruments.
Same Trademark Class Does Not Automatically Mean Goods Are Similar: Lucy Group’s Argument
- Lucy Group argued that goods cannot be treated as similar merely because they fall within the same Nice Classification class.
- According to the company, the correct enquiry was whether the respective goods were commercially and functionally similar, rather than whether there was a theoretical or broad overlap in their classification.
- It also emphasised that Section 11 requires consideration of likelihood of confusion “on the part of the public”, yet the Registrar had not identified the relevant public or adequately examined the consumers involved.
Registrar Defends Refusal Under Section 11
- The Registrar defended the order, arguing that the GEMINI application was barred by earlier identical marks appearing on the Trade Marks Register.
- It contended that Lucy Group’s mark was phonetically, visually and structurally identical to the cited marks and that the relevant goods were similar or identical, creating a likelihood of confusion under Section 11(1).
- In particular, the Registrar argued that electrical goods such as wires, cables and switchgear may travel through the same trade channels and reach common classes of consumers such as electricians, contractors and engineers.
- According to the Registrar, treating specialised industrial products as wholly different from cables created an artificial distinction because cables and switchgear could be closely connected in the modern electrical industry.
Delhi High Court Finds Crucial Submissions Were Ignored
- After examining the Examination Report, Lucy Group’s reply and its detailed written submissions, the High Court found a fundamental defect in the Registrar’s decision-making process.
- Justice Jyoti Singh observed that none of the crucial submissions had been considered.
- The registration had essentially been refused because the applied-for mark was considered phonetically and visually similar to the cited marks and the goods were treated as similar.
- However, the Registrar had not examined the distinctions Lucy Group sought to establish regarding the nature and function of the competing goods.
Registrar Failed to Consider Abandoned and Later-Filed Marks

The Court specifically noted that the Registrar had also failed to consider Lucy Group’s submissions that:
- the third cited mark had been abandoned; and
- the fourth cited mark was filed on a “proposed to be used” basis much after Lucy Group’s claimed first use.
The High Court observed that these crucial facts and legal issues were not even referred to in the impugned order.

Significantly, the Court stated that had these matters been considered and adjudicated, the decision might have been different.

Quasi-Judicial Authorities Must Deal With Relevant Contentions
- The Court then reiterated an important principle governing administrative and quasi-judicial decision-making.
- It held that even a quasi-judicial authority is under a legal obligation to consider all contentions and issues raised by the parties, insofar as they are relevant, before taking a decision.
Viewed against that requirement, the Registrar’s order was held to be:
- “clearly unreasoned, non-speaking and reflects non-application of mind.”
- This became the decisive basis for judicial interference.
High Court Does Not Decide Trademark Registration on Merits
- Importantly, the Delhi High Court expressly stated that it was not entering into the merits of Lucy Group’s claim for registration.
- The Court therefore did not finally rule that the cited GEMINI marks were dissimilar, that there was no likelihood of confusion, or that Lucy Group was necessarily entitled to registration.
- Instead, it remanded the matter to the Registrar for a fresh decision.
- This distinction is significant because Lucy Group secured a procedural appellate victory, while the substantive question of whether GEMINI should ultimately be registered remains for reconsideration by the Trademark Registry.
Fresh Decision Within 10 Weeks

The High Court directed the Registrar to freshly consider Application No. 5247072 after hearing Lucy Group and taking into account all the points raised in response to the Examination Report.

The Registrar was specifically directed to consider documents already on record, including the:
- priority documents;
- user affidavit;
- written submissions dated 6 August 2024;
- written submissions dated 17 February 2025; and
- written submissions dated 15 March 2025.
The fresh decision must be taken within 10 weeks from 27 March 2026. The Court also directed that no new documents would be permitted before the Registrar during the reconsideration.

The appeal was accordingly allowed and disposed of.

Why the Judgment Matters for Trademark Examination
- The ruling highlights an important procedural safeguard in trademark registration proceedings. The existence of an identical or similar earlier mark may trigger scrutiny under Section 11, but a refusal order must still demonstrate that the Registrar has considered the material factual and legal submissions placed by the applicant.
- Where an applicant specifically distinguishes the competing goods by their function, market, consumer base and trade channels—or raises issues concerning abandonment, priority and claimed prior use—those contentions cannot simply be ignored.
- At the same time, the judgment should not be understood as establishing a general rule that goods within the same class are necessarily dissimilar merely because their applications differ. The High Court deliberately left the merits open for the Registrar’s fresh determination.
Key Takeaway

The Delhi High Court’s decision reinforces that trademark refusal orders must be reasoned, speaking orders reflecting consideration of relevant evidence and contentions.

A mechanical conclusion based on similarity of marks and broadly stated similarity of goods, without addressing material objections raised by the applicant, may not withstand appellate scrutiny.

For Lucy Group, the judgment reopens the path to registration of GEMINI in Class 09, but does not itself grant the trademark registration. The Registrar must now reconsider the application on its merits within the timeline fixed by the Court.

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

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

Source: Delhi High Court

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September 25, 2026
Calcutta High Court Grants Bail in NDPS Case Over Prolonged Detention; Says Section 37 Rigours Do Not Bar Bail for Trial Delay
Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration

Date: 25.09.2026

Calcutta High Court Grants Bail in NDPS Case Over Prolonged Detention; Says Section 37 Rigours Do Not Bar Bail for Trial Delay

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

The Calcutta High Court granted bail to an accused facing prosecution under the Narcotic Drugs and Psychotropic Substances Act, 1985, holding that prolonged incarceration coupled with little possibility of commencement of trial justified release on bail.

Significantly, the Division Bench observed that a bail plea founded on delay in trial is not fettered by the restrictions contained in Section 37 of the NDPS Act, relying upon the Supreme Court’s decision in Rabi Prakash v. State of Odisha, (2023) SCC OnLine SC 1109.

Background of the Case
- The bail application was filed under Section 439 of the Code of Criminal Procedure in connection with Kaliachak Police Station Case No. 875 of 2022 dated 12 August 2022.
- The petitioner, Alok Kumar Mandal @ Alok Mandal, was facing proceedings for alleged offences under Sections 21(c), 27A and 29 of the NDPS Act.
- Section 21(c) concerns contraventions involving a commercial quantity of manufactured drugs or preparations, while Section 27A deals with financing illicit traffic and harbouring offenders. Section 29 relates to abetment and criminal conspiracy.
Accused in Custody for One Year and Eight Months
- Counsel for the petitioner submitted that Mandal had already remained in custody for approximately one year and eight months.
- More importantly, despite this period of incarceration, charges had still not been framed. The petitioner therefore sought bail primarily on the ground of delay in the criminal proceedings.
Investigation Was Still Continuing
- The State placed a report before the High Court.
- The report showed that further investigation was still underway and forensic analysis of the mobile phone belonging to co-accused Devendra Ahuja was awaited.
- The status of the investigation became particularly relevant because it indicated that commencement of the trial was not imminent.
High Court Finds Little Possibility of Trial Commencing Soon
- After considering the material on record, the Division Bench noted that there was “little possibility of commencement of trial.”
- The Court also took into account the petitioner’s prolonged detention and concluded that he had made out a case for bail on the ground of delay in trial.
- The case therefore turned substantially on the effect of prolonged pre-trial incarceration in an NDPS prosecution where the trial itself had yet to effectively commence.
Section 37 NDPS Act Does Not Fetter Bail Based on Trial Delay: High Court
- The most significant observation in the order concerns the stringent bail restrictions contained in Section 37 of the NDPS Act.
- Ordinarily, Section 37 imposes additional conditions for granting bail in cases involving specified serious NDPS offences and commercial quantity.
However, the High Court held:
- “Bail prayer on the ground of delay in trial is not fettered by restrictions under Section 37 of the NDPS Act…”
- The Court relied upon the Supreme Court judgment in Rabi Prakash v. State of Odisha, (2023) SCC OnLine SC 1109 for this proposition.
- The ruling therefore distinguishes a bail claim based upon the merits of the prosecution from one arising because continued pre-trial incarceration has become prolonged while the trial remains unlikely to commence within a reasonable period.
Reliance on Supreme Court’s Rabi Prakash Decision

The only judicial precedent expressly cited in the short order is:

Rabi Prakash v. State of Odisha, (2023) SCC OnLine SC 1109.
- By relying on Rabi Prakash, the High Court treated prolonged detention and delay in trial as grounds capable of being considered notwithstanding the statutory restrictions governing ordinary bail under Section 37.
Bail Granted on ₹10,000 Bond
- Having found sufficient grounds for release, the High Court directed that Alok Kumar Mandal be released on bail upon furnishing a bond of ₹10,000 with two sureties of the like amount, one of whom must be a local surety.
- The bond was required to be furnished to the satisfaction of the Judge, Special Court under the NDPS Act-cum-Additional District Judge, 4th Court, Malda.
Conditions Imposed by the High Court
- The grant of bail was subject to conditions intended to protect the trial process.
- The petitioner was directed to appear before the Trial Court on every date of hearing until further orders. He was also prohibited from intimidating witnesses or tampering with evidence in any manner.
- The High Court further clarified that if the petitioner failed to appear before the Trial Court without justifiable cause, the Trial Court would be at liberty to cancel the bail in accordance with law without further reference to the High Court.
- The bail application was accordingly allowed.
Why the Decision Is Significant
- The order is important for NDPS bail jurisprudence because it reiterates that the stringent conditions prescribed by Section 37 cannot be considered in isolation from prolonged pre-trial detention and delay in commencement of trial.
- The decision does not hold that Section 37 ceases to apply generally in NDPS prosecutions. Rather, the Court specifically dealt with a situation where the accused had remained incarcerated for one year and eight months, charges had not been framed, further investigation remained pending, and there was little prospect of the trial commencing soon.
- The distinction is important: the relief was based on delay in trial and prolonged detention, not on a final determination concerning the merits of the NDPS allegations.
Key Takeaway

The Calcutta High Court has reaffirmed that prolonged incarceration and substantial delay in commencement of an NDPS trial can constitute an independent basis for bail, and a bail plea founded on such delay is not fettered by the rigours of Section 37 of the NDPS Act.

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

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

Source: Calcutta High Court

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September 25, 2026
CESTAT Chennai: Vitamin Feed Premixes Classifiable as Animal Feed Preparations Under CTH 2309
Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration

Date: 25.09.2026

CESTAT Chennai: Vitamin Feed Premixes Classifiable as Animal Feed Preparations Under CTH 2309

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 a significant ruling concerning the customs classification of feed-grade vitamins and animal nutrition preparations, the CESTAT Chennai has set aside a Customs order seeking to classify imported Vitamin E 50% Feed Grade, Vitamin B2 80% Feed Grade and Vitamin C 35% Feed Grade under CTH 2936 instead of CTH 2309.

The Tribunal held that, in the absence of a chemical examiner’s report establishing that the imported products were pure chemicals or separate chemically defined organic compounds falling under Chapter 29, the Department had failed to discharge the burden necessary to sustain its proposed classification. Consequently, the benefit of classification was required to go to the importer, Provimi Animal Nutrition India Pvt. Ltd.

The Classification Dispute: CTH 2309 vs CTH 2936

Provimi imported goods described as:
- Vitamin E 50% Feed Grade
- Vitamin B2 80% Feed Grade
- Vitamin C 35% Feed Grade
- The importer classified these products under CTH 2309, covering “preparations of a kind used in animal feeding.”
- Customs disagreed. The Department considered CTH 2309 to be general in nature and took the view that CTH 2936, covering provitamins, vitamins and their derivatives, was the more specific heading under Rule 3(a) of the General Rules for Interpretation (GRI).
- According to Revenue, CTH 2309 applies to products presented in a form suitable for use as animal food supplements, whereas the imported vitamins were essentially inputs or raw materials requiring further processing before being incorporated into aquatic, poultry or cattle feed.
- The Department therefore proposed classification under CTH 2936, attracting 7.5% Basic Customs Duty under Sl. No. 185 of Notification No. 50/2017-Customs and 18% IGST under Sl. No. 40 of Schedule III of Notification No. 1/2017-IGST.
Customs Raises ₹58.83 Lakh Differential Duty Demand
- A Show Cause Notice dated 8 March 2024 proposed rejection of Provimi’s classification, reclassification under CTH 2936, denial of the relevant notification benefits and recovery of ₹58,83,019 as short-levied duty, along with confiscation and penalties.
- The Commissioner of Customs (Audit), Chennai subsequently confirmed the proposals through Order-in-Original No. 108625/2024 dated 16 August 2024, leading Provimi to approach CESTAT.
Provimi: Products Are Specifically Formulated for Animal Feed
- Provimi argued that the imported goods were essentially animal-feed preparations and appropriately fell under Chapter Heading 2309.
- The company relied upon the WCO’s HSN Explanatory Notes to Heading 23.09, particularly the category covering preparations used in making complete feeds or supplementary feeds.
- It also argued that the goods were designed exclusively for animal use, contained specifically tailored additives, were labelled accordingly and were supplied only to businesses engaged in animal feed and animal husbandry.
- The importer further contended that Chapter 29 primarily covers separate chemically defined compounds, whereas its imported products were not pure vitamins and contained additives intended to make them suitable specifically for animal nutrition.
Department: High-Concentration Vitamins Are Raw Materials, Not Animal Feed
- Revenue countered that the imported products contained vitamins in concentrations ranging from 35% to 80% and could not themselves be directly consumed by animals.
- The Department argued that they were merely inputs/raw materials for manufacturing animal feed, rather than animal feed or feed supplements themselves.
- It relied particularly on Commissioner of Customs CGO v. Sonam International Shop No. 9, 2020 (10) TMI 120 – Allahabad High Court, where the High Court considered high-concentration vitamins in the context of classification under Heading 2309.
- Revenue also referred to the Constitution Bench decision in Commissioner of Customs (Import) v. Dilip Kumar and Company & Ors., AIR 2018 SC 3606 in support of its position concerning the interpretation of exemption/classification jurisprudence and earlier reliance on Sun Export Corporation.
CESTAT Applies Supreme Court’s 2026 Welkin Foods Ruling
- A major feature of the Tribunal’s analysis was the Supreme Court’s recent judgment in Commissioner of Customs (Import) v. Welkin Foods, 2026 INSC 19.
- CESTAT noted that Welkin Foods comprehensively examined customs classification principles, including the role of:
- GRI 1, tariff headings and statutory notes, HSN Explanatory Notes, the common/trade parlance test, and the relevance of end use.
- The Supreme Court had emphasised that GRI 1 is the fundamental starting point for customs classification. Classification must first be determined according to the terms of the headings and the relevant Section and Chapter Notes.
- Only where goods cannot be classified through GRI 1 and the applicable legal notes should the subsequent rules be considered sequentially.
Common Parlance Test Cannot Override Technical Tariff Provisions
- Provimi had argued that, in common and trade parlance, the products were understood as animal-feed supplements.
- CESTAT, applying Welkin Foods, held that the common or trade parlance test has to be applied restrictively in the modern HSN-based classification system.
- The Tribunal observed that the terminology employed in Chapters 23 and 29 is scientific and technical. Consequently, the tariff provisions must primarily be interpreted technically rather than simply according to the manner in which the goods are marketed or commercially described.
- It further observed that an importer relying on a trade-parlance meaning must produce satisfactory evidence supporting that meaning.
End Use, However, Was Relevant
- While limiting the common-parlance argument, CESTAT found that end use could legitimately be considered in the present classification dispute.
- Heading 2309 itself refers to preparations “of a kind used in animal feeding,” while Heading 2936 deals with vitamins and their derivatives used primarily as vitamins.
- The language of the competing headings therefore permitted consideration of use or adaptation as part of the classification exercise.
Chapter 23 Does Not Exclude Products Merely Because They Are of Chemical Origin
- Revenue also argued that Heading 2309 covered products obtained from the processing of vegetable or animal materials, whereas Provimi’s products were chemicals.
- CESTAT rejected a blanket exclusion on that basis.
- The Tribunal held that the relevant Chapter Note is inclusive and does not exclude products of chemical origin if they otherwise satisfy the description compatible with Chapter 23.
- This finding is important because it prevents the mere chemical origin of a product from automatically determining classification under Chapter 29.
Crucial Evidentiary Gap: No Chemical Examiner’s Report

The decisive weakness in Revenue’s case was the absence of technical evidence.

CESTAT observed that it did not have the benefit of an expert chemical test report prepared at the time of import to establish whether the products were:

separate chemically defined organic compounds, capable of classification under Chapter 29; or

preparations of a kind used in animal feeding, falling under Chapter 23.
- The Certificates of Analysis submitted by Provimi also did not contain the considered opinion of a technical expert capable of conclusively resolving this question.
- Provimi maintained that the imported vitamins were not pure vitamins but were formulated with various additives specifically for animal-feed applications, altering their suitability and making them intended for animal nutrition.
HSN Notes Recognise Premixes Under Heading 2309

CESTAT then examined the HSN Explanatory Notes because it found the HSN and Customs Tariff entries under Chapter 23 to be sufficiently aligned.

The HSN Notes divide the relevant Heading 23.09 preparations into three broad categories:

HSN category Description
A Complete feed
B Preparations supplementing/balancing farm-produced feeds
C Preparations used in making complete or supplementary feeds
- The Tribunal observed that the disputed goods were not complete feed or feed supplements falling within categories A or B. However, category C specifically concerns “preparations” used in making such feeds, commonly known in trade as premixes.
- This was significant because a product need not necessarily be directly fed to an animal in order to fall within the broader scope of Heading 2309.
Government Circular Identified Products as “Vitamin Premixes (Feed Grade)”
- Provimi also relied upon a circular dated 21 December 2022 issued by the Department of Animal Husbandry and Dairying, Ministry of Fisheries, Animal Husbandry and Dairying.
- The Tribunal recorded that the very products involved in the dispute—Vitamin E 50% Feed Grade, Vitamin B2 80% Feed Grade and Vitamin C 35% Monophosphate Feed Grade—were expressly mentioned as “Vitamin Premixes (Feed Grade)” in that document.
CESTAT Also Examines Meaning of “Premix”
- The Tribunal referred to the Customs Advance Ruling in In Re: BASF India Ltd., (2024) 24 Centax 401 (A.A.R.-Cus.-Mum.).
- That ruling discussed premixes as complex mixtures of vitamins, minerals, trace elements and other feed additives incorporated into compound feed, and explained that such premixtures are not themselves intended for direct feeding to animals.
- This was relevant to Revenue’s argument that the products could not fall under Heading 2309 merely because they were not capable of being directly consumed by animals.
Burden to Establish Reclassification Lies on Customs
- CESTAT ultimately treated the burden of proof as decisive.
- Referring to Union of India v. Garware Nylons Ltd., 1996 (87) E.L.T. 12 (S.C.) and HPL Chemicals Ltd. v. Commissioner of Central Excise, Chandigarh, 2006 (197) E.L.T. 324 (S.C.), the Tribunal reiterated that when Revenue seeks a particular classification, it must establish that the goods are taxable under the classification proposed by it.
- Because there was no Chemical Examiner’s certificate establishing whether the goods were pure chemicals, mixture concentrates or premixes, Revenue had failed to discharge that burden.
- CESTAT therefore held that the benefit of classification must go to the appellant.
B.V. Bio Corp Decision Supports Classification Under CTH 23099090
- The Tribunal also relied on its coordinate-bench ruling in B.V. Bio Corp Private Limited v. Commissioner of Customs (NS-I), 2024 (4) TMI 1173 – CESTAT Mumbai.
- That case concerned imported products containing vitamins and provitamins in concentrations ranging from 2.7% to 100%.
- The Mumbai Bench had concluded that the goods were classifiable under Tariff Item 23099090 and that classification under Heading 2936 was not legally sustainable.
- The judgment further records that the B.V. Bio Corp position was affirmed, with the goods being treated as animal-feed preparations appropriately classified under Tariff Item 23099090, having regard to Circular No. 188/22/96-CX dated 26 March 1996.
Duty, Interest, Confiscation and Penalty Fall with Classification Demand
- Once Revenue failed to sustain the proposed classification under CTH 2936, CESTAT held that the consequential duty demand, interest, fine and penalty could not survive.
- Provimi had separately challenged confiscation and penalty under Sections 111, 125 and 114A of the Customs Act, 1962, arguing inter alia that a bona fide classification claim did not amount to misdeclaration.
Final Decision: Provimi’s Appeal Allowed
- CESTAT set aside the impugned Order-in-Original and allowed Provimi’s appeal to the limited extent decided in the classification proceedings, with consequential relief as available under law.
- The Tribunal, however, made an important qualification regarding Provimi’s separate refund claim. Issues such as refund that were not part of the original proceedings were not adjudicated in this appeal and would have to be pursued separately in accordance with law.
- Thus, while Provimi succeeded in overturning the Department’s reclassification and consequential demand, the order should not be read as having independently sanctioned the refund claimed by the company.
Key Takeaway

The ruling reinforces an important principle in customs classification disputes: Customs cannot sustain reclassification merely by asserting that an alternative tariff heading is more specific. When the proposed classification depends upon the chemical composition and technical character of imported goods, Revenue must produce adequate technical evidence to discharge its burden of proof.

For feed-grade vitamins and premixes, the decision also recognises that Heading 2309 is not confined to products directly consumed by animals.

Preparations used in making complete or supplementary feeds can fall within its scope, subject to their objective characteristics, composition, HSN guidance and supporting technical evidence.

Connected Matter

CESTAT Chennai: Customs Cannot Reclassify 226 Auto Parts Without Product-Wise Evidence

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: CESTAT Chennai

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September 25, 2026
Bombay High Court Condones 143-Day Delay in Homebuyers’ RERA Appeal; Says Tribunal Adopted Rigid Approach
Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration

Date: 25.09.2026

Bombay High Court Condones 143-Day Delay in Homebuyers’ RERA Appeal; Says Tribunal Adopted Rigid Approach

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 an important ruling concerning condonation of delay in appeals under the Real Estate (Regulation and Development) Act, 2016 (RERA), the Bombay High Court has set aside an order of the Maharashtra Real Estate Appellate Tribunal which had refused to condone a 143-day delay by two homebuyers in filing their appeal.

Justice N.J. Jamadar held that the Appellate Tribunal had adopted a “slightly rigid approach” and failed to apply the justice-oriented principles governing the expression “sufficient cause”. The Court emphasised that the requirement of explaining each day’s delay cannot be stretched to demand “mathematical precision and exactitude”.

The High Court accordingly condoned the 143-day delay, subject to payment of ₹20,000 as costs, and directed the Appellate Tribunal to decide the homebuyers’ substantive appeal in accordance with law.

Homebuyers Purchased Two Flats in ‘Sodah Sadan’ Project
- The appellants, Atul Hiralal Shah and another, had entered into two registered agreements on 4 October 2016 for purchase of two flats in a project known as “Sodah Sadan”, promoted by the respondents.
- Under the agreements, possession was to be delivered by 31 December 2018. According to the appellants, despite repeated extensions, the promoters failed to perform their obligations.
- The homebuyers consequently approached the Maharashtra Real Estate Regulatory Authority seeking possession, interest, compensation and other reliefs.
MahaRERA Grants Delayed-Possession Interest but Rejects Possession Claim
- By an order dated 30 June 2025, MahaRERA partly allowed the complaint.
- Although the Authority rejected the claim for possession, it directed the promoters to pay interest for delayed delivery of the flats from 1 January 2019 until the date of offer of possession with Occupancy Certificate (OC).
- The interest was directed to be calculated on the actual amount paid by the homebuyers towards the flat consideration at the rate of SBI’s Marginal Cost Lending Rate (MCLR) plus 2%, as prescribed under Section 18 of RERA and the applicable Rules.
- However, the Authority further directed that the interest amount would become payable after the promoters obtained the full Occupancy Certificate. The promoters were also permitted to adjust the interest against outstanding consideration and interest thereon, if any.
- This condition ultimately became important in the High Court’s consideration of why the homebuyers had delayed filing their appeal.
Homebuyers Waited for Promoter to Obtain Occupancy Certificate
- The appellants explained that after the MahaRERA order they genuinely believed that the promoters would obtain the full OC and comply with the direction for payment of delayed-possession interest.
- They therefore continued pursuing the promoters for the Occupancy Certificate.
- According to them, it eventually became apparent that there was no meaningful progress at the project site and no immediate possibility of obtaining the OC. They then decided to challenge the MahaRERA order before the Appellate Tribunal.
- This resulted in a delay of 143 days, for which they sought condonation through Miscellaneous Application No. 117 of 2026.
Appellate Tribunal Refuses to Condon 143-Day Delay
- On 6 April 2026, the Maharashtra Real Estate Appellate Tribunal rejected the delay-condonation application.
- The Tribunal acknowledged that a liberal and justice-oriented approach is ordinarily adopted in such matters, but held that this principle could not defeat the substantive law of limitation contained in Section 3 of the Limitation Act, 1963.
- It concluded that the reasons advanced by the homebuyers did not amount to “sufficient cause”. It further held that the appellants had failed to account for each and every day’s delay and appeared negligent in not pursuing their appellate remedy within the prescribed time.
- The homebuyers consequently approached the Bombay High Court in Second Appeal.
Substantial Question of Law Before Bombay High Court
- The High Court formulated the following substantial question of law:
- “Whether the Appellate Tribunal did not apply correct principles in deciding the application for condonation of delay in preferring the appeal, and, thereby misdirected itself in rejecting the application for condonation of delay?”
- Considering the nature of the controversy, the Court proceeded to finally decide the Second Appeal with the consent of the parties.
Homebuyers: Tribunal Adopted an Unduly Rigid Approach
- Senior Advocate Naushad Engineer, appearing for the appellants, argued that MahaRERA had placed the homebuyers in a peculiar position.
- Although the Authority granted them delayed-possession interest, actual payment of that interest was deferred until the promoter obtained the Occupancy Certificate.
- The homebuyers therefore had a legitimate reason to pursue the promoter for obtaining the OC so that the relief granted by MahaRERA could become enforceable.
- It was further argued that 143 days was not an inordinate delay and that the Tribunal had adopted an excessively rigid standard instead of examining the explanation in the context of the object of RERA and the circumstances faced by the allottees.
Promoter: Non-Compliance With an Order Cannot Justify Delayed Appeal
- The promoters opposed the appeal.
- They argued that non-compliance with the MahaRERA order might possibly explain delay in seeking its enforcement, but could not constitute sufficient cause for delaying an appeal against that very order.
- According to the promoters, unless a satisfactory cause was shown for not approaching the appellate forum within limitation, neither the Tribunal nor the Court could exercise the power of condonation.
- They also objected to documents which the homebuyers sought to rely upon before the High Court on the ground that those documents had not been produced before the Appellate Tribunal.
High Court: Explanation Must Be Assessed in Context of Real-Life Circumstances
- Justice Jamadar acknowledged that, viewed in a very strict sense, non-compliance with the MahaRERA order might not by itself constitute a satisfactory explanation for delay in appealing.
- But the Court held that the explanation could not be assessed in isolation.
- It had to be considered “in the light of the attendant facts of the case and the situation in life of the parties.”
- This contextual approach became central to the High Court’s reasoning.
‘Sufficient Cause’ Is Elastic and Cannot Be Put in a Straitjacket
- The Court examined the principles underlying limitation law and noted that limitation statutes are sometimes described as “statutes of peace” because public policy requires finality in litigation.
- At the same time, the expression “sufficient cause” governing condonation of delay has traditionally received a liberal construction where doing so advances substantial justice and the party is not guilty of negligence, inaction or lack of bona fides.
- The High Court observed that “sufficient cause” cannot be confined in a straitjacket and that no universal formula can determine whether a particular explanation is sufficient.
Supreme Court Principles on Condonation of Delay Considered
- The High Court relied upon Pundlik Jalan Patil v. Executive Engineer, Jalgaon Medium Project, (2008) 17 SCC 448, concerning the public-policy rationale underlying limitation statutes.
- It also extensively referred to the Supreme Court’s decision in Shivamma (Dead) by LRs. v. Karnataka Housing Board & Ors., 2025 SCC OnLine SC 1969, which in turn considered Pathapati Subba Reddy (Died) by LRs. v. Special Deputy Collector (LA), 2024 SCC OnLine SC 513.
- The principles extracted by the Court recognise that while Section 3 of the Limitation Act must be applied strictly, Section 5 requires a more liberal construction. At the same time, a justice-oriented approach cannot be used to condone inordinate delay accompanied by negligence, lack of diligence or want of bona fides.
- The Court emphasised that the inquiry must ultimately consider whether the explanation is real, bona fide and free from negligence, viewed contextually and having regard to the totality of circumstances.
Appellate Tribunal Adopted a ‘Slightly Rigid Approach’
- Applying those principles, the High Court found that the Appellate Tribunal had been too rigid.
The sufficiency of the explanation ought to have been examined on the touchstones of:

reasonableness, bona fides and diligence, coupled with the necessary degree of justice-oriented flexibility.

The High Court clarified that delay should not be condoned where there is gross negligence, deliberate inaction or blatant indifference to statutory timelines. But it expressly found:

“That is not the case at hand.”

Waiting for Occupancy Certificate Was Not Wholly Unreasonable
- A particularly important aspect of the judgment concerns the practical predicament faced by the allottees.
- Possession had originally been promised by 31 December 2018, yet even when the matter reached the High Court, the promoters had neither offered possession nor obtained the full Occupancy Certificate.
- The Court held that the allottees’ expectation that the promoter would comply with its statutory and contractual obligations and the MahaRERA order could not be described as wholly unreasonable.
MahaRERA Order Made Interest Dependent on an Event Beyond Allottees’ Control
- The High Court found the structure of the MahaRERA order itself significant.
- Although delayed-possession interest had been granted, payment was deferred until the promoter obtained the Occupancy Certificate.
- Thus, enforcement of the monetary relief granted to the allottees had effectively been made contingent upon an event which was outside their control and dependent upon the acts of the promoter.
- In these circumstances, the allottees’ decision to pursue the promoter in the bona fide expectation that the OC would shortly be obtained could not properly be treated as negligence.
‘Every Day’s Delay’ Rule Cannot Be Applied With Mathematical Precision

The Bombay High Court then made an important observation concerning the frequently invoked requirement that a litigant explain “each and every day’s delay”.

The Court held that:
- The principle that a party seeking condonation must account for each and every day’s delay cannot be stretched to the point of mathematical precision and exactitude.
- It also found that a delay of 143 days was neither huge nor inordinate in the circumstances of the case.
- This observation is likely to be particularly relevant in future delay-condonation disputes where tribunals adopt an overly mechanical day-by-day approach despite a coherent overall explanation.
Occupancy Certificate Still Not Obtained
- During the hearing, counsel for the promoters fairly informed the High Court that, according to his instructions, the Occupancy Certificate had still not been obtained.
- The Court observed that if the allottees attempted to enforce the MahaRERA order in that situation, such proceedings could be termed premature because the liability to pay interest had itself been deferred until the uncertain future event of obtaining the OC.
- Whether such a condition in the MahaRERA order was legally justified would therefore need to be examined by the Appellate Tribunal once the appeal was restored.
Bombay High Court Allows Appeal and Condones Delay

The High Court answered the substantial question of law in favour of the appellants and allowed the Second Appeal.

It consequently:
- quashed and set aside the Appellate Tribunal’s order dated 6 April 2026;
- allowed the application seeking condonation of delay;
- condoned the 143-day delay in filing the RERA appeal;
- imposed ₹20,000 costs, payable by the appellants to the respondents within four weeks from uploading of the order; and
- requested the Maharashtra Real Estate Appellate Tribunal to decide the substantive appeal in accordance with law.
Important: High Court Did Not Finally Decide the Homebuyers’ RERA Claims
- The judgment must be understood within its procedural limits.
- The Bombay High Court did not finally decide whether the homebuyers are entitled to possession, whether the manner in which MahaRERA deferred payment of interest until receipt of the OC is legally valid, or what substantive relief should ultimately be granted.
- The Court’s ruling concerns the rejection of the delay-condonation application. Those substantive RERA issues will now be examined by the Maharashtra Real Estate Appellate Tribunal after restoration of the appeal.
Why the Judgment Is Significant
- The ruling reinforces that limitation law must strike a balance between finality of proceedings and substantial justice. Courts and tribunals cannot disregard statutory limitation periods, but neither should the concept of “sufficient cause” be applied through an excessively mechanical formula.
- In RERA disputes particularly, the surrounding circumstances faced by homebuyers—including dependence upon the promoter for completion, possession and Occupancy Certificates—may be relevant while assessing whether their conduct reflects negligence or a bona fide attempt to secure compliance.
- The judgment also sends a clear message that the requirement to explain delay does not necessarily mean that a litigant must produce a mathematically precise explanation for every individual day where the overall conduct demonstrates reasonable diligence and bona fides.
Key Takeaway

A 143-day delay in filing a RERA appeal cannot be rejected through an excessively rigid application of limitation principles where the allottees acted bona fide and their explanation is consistent with the surrounding circumstances.

The requirement to explain “each and every day’s delay” cannot be stretched to mathematical precision.

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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September 25, 2026
Supreme Court: Arbitrator Cannot Award Pre-Reference Interest When Contract Expressly Bars It
Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration

Date: 25.09.2026

Supreme Court: Arbitrator Cannot Award Pre-Reference Interest When Contract Expressly Bars It

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 .

In an important ruling concerning interest in arbitration arising from public works contracts, the Supreme Court has held that where the parties have expressly agreed to a contractual clause barring interest on delayed payments, an Arbitral Tribunal cannot award pre-reference interest contrary to that bargain.

Allowing the appeal filed by North Eastern Electric Power Corporation Limited (NEEPCO) against Astra Construction Private Limited, the Supreme Court set aside the Meghalaya High Court judgment to the extent that it had restored pre-reference interest awarded by the Arbitral Tribunal.

The Court held that Clause 54 of the General Conditions of Contract (GCC) constituted an express contractual prohibition against such interest and therefore restricted the Tribunal’s power under Section 31(7)(a) of the Arbitration and Conciliation Act, 1996.

Background of the Dispute
- NEEPCO had invited tenders on 12 June 1995 for civil works relating to the main plant and auxiliary building of a Gas Turbine Power Project at Ram Chandra Nagar, Tripura. Astra Construction’s tender was accepted and the parties executed a formal agreement on 23 May 1996.
- The estimated contract value was approximately ₹17.09 crore, and the work was stipulated to be completed by 26 March 1997.
- Disputes subsequently arose and were referred to arbitration. By an award dated 5 June 2015, the Arbitral Tribunal found that the delay in execution of the project was attributable to NEEPCO.
Four claims raised by Astra Construction were allowed and a principal amount of ₹3.30 crore was awarded. In addition, the Tribunal granted:

Component Interest awarded
Pre-reference interest 12% per annum
Pendente lite interest 9% per annum
Future interest 9% per annum

The pre-reference interest at 12% was awarded on each of the claims allowed by the Tribunal.

Commercial Court Interferes with Interest Component
- NEEPCO challenged the award under Section 34 of the Arbitration and Conciliation Act, 1996.
- The Commercial Court, by its judgment dated 15 February 2024, relied upon the Supreme Court’s decision in Sayeed Ahmed & Company v. State of U.P. and concluded that Clause 54 barred the grant of interest.
- Accordingly, the Commercial Court set aside the grant of pre-suit and pendente lite interest on Claim Nos. 2, 3, 4 and 5, while otherwise upholding the award.
Meghalaya High Court Restores Arbitral Award
- Astra Construction challenged the Commercial Court’s decision under Section 37 of the 1996 Act.
- The Meghalaya High Court relied upon the Supreme Court’s earlier judgment in State of U.P. v. Harish Chandra & Co., (1999) 1 SCC 63.
- It held that the contractual bar under Clause 54 was confined to interest claimed on money or balances withheld because of a dispute and did not extend to every other head of claim.
- On that reasoning, the High Court restored the Arbitral Tribunal’s award in its entirety.
- NEEPCO consequently approached the Supreme Court.
NEEPCO Confines Supreme Court Challenge to Pre-Reference Interest
- Before the Supreme Court, NEEPCO confined its challenge to the High Court’s restoration of pre-reference interest.
- NEEPCO argued that the High Court had wrongly relied upon Harish Chandra, which arose under the Arbitration Act, 1940, without properly appreciating the later jurisprudence under the Arbitration and Conciliation Act, 1996.
- NEEPCO relied particularly upon Sayeed Ahmed, Jai Prakash Associates Ltd. v. Tehri Hydro Development Corporation Ltd., Ferro Concrete Construction (India) Pvt. Ltd. v. State of Rajasthan and ONGC v. G & T Beckfield Drilling Services Pvt. Ltd.
- Astra Construction, on the other hand, argued that NEEPCO had not raised the Clause 54 objection before the Arbitral Tribunal and had therefore waived its right to raise the issue. It relied upon Union of India v. Susaka Pvt. Ltd. & Ors., (2018) 2 SCC 182.
Supreme Court Explains Major Difference Between 1940 and 1996 Arbitration Laws
- A significant part of the judgment explains the evolution of the law governing an arbitrator’s power to award interest.
- Under the Arbitration Act, 1940, there was no express statutory provision empowering an arbitrator to award interest. The Supreme Court’s Constitution Bench in Secretary, Irrigation Department, Government of Orissa v. G.C. Roy, (1992) 1 SCC 508 developed the principle that where an agreement did not prohibit interest and the claim was referred to arbitration, interest could be treated as an implied term of the agreement.
- The position changed materially under the 1996 Act.
- Section 31(7)(a) expressly begins with the words “Unless otherwise agreed by the parties”. The Supreme Court held that these words give primacy to party autonomy: the statutory power of an arbitrator to award interest is subject to what the contracting parties have agreed.
Contract Can Restrict Arbitrator’s Power to Award Interest
- Referring to Pam Developments Private Limited v. State of West Bengal, (2024) 10 SCC 715, the Court explained that under the 1996 Act an express contractual bar can restrict the arbitrator’s power to award pre-reference and pendente lite interest.
- Unlike the position under the 1940 Act, it is not necessary that the contractual provision specifically state that the “arbitrator” has no power to award interest. If the agreement itself bars payment of interest, Section 31(7)(a) respects that contractual arrangement.
- The Court reiterated that Section 31(7)(a) reflects a deliberate legislative shift toward party autonomy.
Pre-Reference and Pendente Lite Interest Are Legally Distinct

The judgment also draws an important distinction between pre-reference interest and pendente lite interest.

The Court reaffirmed that pendente lite interest is a matter of procedural law governed by Section 31(7)(a), whereas pre-reference interest is governed by substantive law.

Consequently, entitlement to pre-reference interest cannot be derived solely from Section 31(7)(a). It must have a basis in:
- an express or implied agreement between the parties;
- a statutory provision such as Section 3 of the Interest Act, 1978; or
- established mercantile usage.
Clause 54 Was the Decisive Contractual Provision
- Clause 54 of the NEEPCO contract was titled “No Claim for Delayed Payment due to Dispute Etc.”
- It provided that no claim for interest or damages would be entertained in respect of money or balances lying with NEEPCO because of a dispute, difference or misunderstanding, or in respect of delay by the Engineer-in-Charge in making periodical or final payments, or in any other respect whatsoever.
- The central question was whether this clause resembled the provision interpreted in Harish Chandra or the broader contractual bars considered in Sayeed Ahmed and the later THDC decisions.
Supreme Court’s Important Comparison of Contract Clauses
- The Supreme Court itself provided a comparative table on page 13 of the judgment, placing Clause 54 alongside the clauses considered in Harish Chandra, Sayeed Ahmed and THDC-II.
- The Court found an important drafting difference.
- In Harish Chandra, the contractual restriction essentially dealt with money withheld because of a dispute. It did not create a separate and independent prohibition concerning money simply paid late where no underlying dispute existed.
- That was why the Harish Chandra Bench had concluded that the provision did not generally prevent an arbitrator from awarding interest for delayed payment.
Clause 54 Goes Further Than Harish Chandra Clause

Clause 54 in the NEEPCO contract was materially different.

The Supreme Court found that it covered two independent situations:
1. money or balances lying with the Corporation because of a dispute, difference or misunderstanding; and
2. delay by the Engineer-in-Charge in making periodical or final payments.
The second limb was decisive.
- By separately and expressly covering delayed payment, Clause 54 prohibited an interest claim arising from delay even where there was no dispute about the underlying payment.
- The Court therefore concluded that the High Court had erred in treating Clause 54 as equivalent to the clause considered in Harish Chandra.
Sayeed Ahmed and THDC Line of Cases Applies
- The Supreme Court instead found Clause 54 materially similar to the clauses considered in Sayeed Ahmed and THDC-II.
- In those cases, separate language dealing with delayed payment was treated as a complete contractual restriction on the arbitrator’s authority to grant interest for the relevant periods.
- The Supreme Court expressly agreed with that reasoning and held that the Sayeed Ahmed line of decisions—not Harish Chandra—governed the NEEPCO dispute.
NEEPCO Had Not Waived the Contractual Objection
- The Supreme Court also rejected Astra Construction’s contention that NEEPCO had waived its right to rely upon Clause 54 because the objection had allegedly not been taken before the Arbitral Tribunal.
- The record showed that NEEPCO had specifically raised the plea in its Statement of Defence dated 23 August 2012 before the Tribunal. The waiver argument therefore failed on facts.
Supreme Court’s Final Decision
- The Supreme Court ultimately held that Clause 54 barred the grant of pre-reference interest.
- It further held that the Arbitral Tribunal, by granting such interest despite the contractual prohibition, exceeded the bounds of its jurisdiction under Section 31(7)(a).
- Accordingly, the Meghalaya High Court judgment was set aside to the extent it had restored pre-reference interest, and NEEPCO’s appeal was allowed without any order as to costs.
- Importantly, NEEPCO had confined its Supreme Court challenge to the restoration of pre-reference interest. The judgment should therefore not be read as the Supreme Court setting aside the entire arbitral award or the ₹3.30 crore principal amount.
Why This Judgment Is Important for Government and Infrastructure Contracts
- The judgment has considerable significance for EPC contracts, construction contracts, power projects, infrastructure agreements and government/public-sector works contracts containing “no-interest” clauses.
- Its central message is that Section 31(7)(a) does not give an arbitrator an unrestricted power to award interest. The statutory power operates subject to the parties’ agreement.
- The precise drafting of the contractual clause becomes critical. A clause limited merely to amounts withheld because of a dispute may have a different legal effect from a clause that independently and expressly prohibits interest for delayed periodical or final payments.
- The decision therefore reinforces both party autonomy and the importance of carefully construing the actual words of the contract before determining whether pre-reference interest is legally recoverable.
Key Takeaway

Where a contract governed by the Arbitration and Conciliation Act, 1996 expressly bars interest on delayed payments, an Arbitral Tribunal cannot override that bargain and award pre-reference interest under Section 31(7)(a). The wording of the contractual bar is decisive.

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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September 25, 2026

HSN category	Description
A	Complete feed
B	Preparations supplementing/balancing farm-produced feeds
C	Preparations used in making complete or supplementary feeds

Component	Interest awarded
Pre-reference interest	12% per annum
Pendente lite interest	9% per annum
Future interest	9% per annum

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Supreme Court: Arbitrator Cannot Award Pre-Reference Interest When Contract Expressly Bars It

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