Company Law – Director’s Liability for Corporate Debt – Loan Given to Company – No Personal Guarantee – The appellant extended a loan to respondent no.1 (company) but sought recovery from its directors personally – Trial court decreed the claim only against the company and dismissed it against the directors – Held: A company is a separate legal entity, and its directors are not personally liable for corporate debts unless a personal guarantee or indemnity is given – No evidence of misrepresentation or inducement by the directors – No personal liability can be imposed on directors merely because they requested the loan [Paras 6-7].

Corporate Veil – No Grounds to Lift – No Fraud or Malfeasance Alleged – The appellant contended that the corporate veil should be lifted to hold the directors personally liable – Held: Lifting the corporate veil requires proof of fraud, misrepresentation, or misuse of corporate structure – No such allegations were made in the pleadings – Mere friendship with directors does not create personal liability – Appeal dismissed [Paras 8-9].

Doctrine of Agency – Directors Not Personally Liable – Application of Section 230 of the Contract Act – The appellant argued that since the directors controlled the company’s affairs, they should be liable – Held: Under Section 230 of the Indian Contract Act, 1872, an agent is not personally liable unless expressly agreeing to be bound – No personal guarantee or indemnity was executed – Loan was granted to the company, not the directors in their personal capacity – No case for agency liability made out [Paras 6-7].

Decision: Appeal dismissed – Trial court’s judgment upheld – Directors not personally liable for repayment – No personal guarantee or misrepresentation proven – No case for lifting the corporate veil – Company alone liable for repayment of the loan [Paras 10-11].
 

Commercial Law – Rejection of Plaint – Order VII, Rule 11, CPC – The petitioner filed an application under Order VII, Rule 11, CPC, contending that the suit was barred by territorial jurisdiction as per the agreement between the parties – The trial court rejected the application, holding that the plaint disclosed a cause of action and was not barred by any law – Held: The existence of a cause of action is a triable issue, and Order VII, Rule 11 cannot be invoked where controversial questions of fact are involved – No error in the trial court’s order [Paras 2.2, 5.2].

Commercial Courts Act – Maintainability of Civil Revision – Section 8 of the Commercial Courts Act – The respondent raised an objection regarding the maintainability of revision under Section 115, CPC, in light of Section 8 of the Commercial Courts Act, which bars civil revision petitions against interlocutory orders – Held: Since the suit pertains to a commercial dispute, revision under Section 115, CPC is barred – The appropriate remedy lies in appeal under Section 13 of the Commercial Courts Act, if applicable [Paras 6, 14.1].

Jurisdiction – Effect of Exclusive Jurisdiction Clause – The petitioner argued that the agreement between the parties specified that disputes should be resolved in Cuttack courts, and thus, the Bhubaneswar Commercial Court lacked territorial jurisdiction – Held: The existence of an exclusive jurisdiction clause does not automatically oust the jurisdiction of other competent courts – If the plaint discloses a cause of action within Bhubaneswar, the court can proceed with the trial – Application under Order VII, Rule 11 rightly rejected [Paras 5.3, 6.1].

Effect of Commercial Courts Act on Revisionary Jurisdiction – Section 115, CPC read with Sections 8 and 13 of the Commercial Courts Act – The Commercial Courts Act overrides the general provisions of the CPC in matters of commercial disputes – Held: The bar under Section 8 is absolute, and revision petitions under Section 115, CPC are not maintainable against interlocutory orders of Commercial Courts – Appeal under Section 13 is the only available remedy [Paras 14, 14.6].

Interlocutory Orders – Scope of Judicial Review – The petitioner argued that the rejection of his Order VII, Rule 11 application was an erroneous exercise of jurisdiction, warranting interference under Section 115, CPC – Held: The impugned order does not fall within the scope of revisional jurisdiction under Section 115, CPC – Any challenge to such interlocutory orders can only be raised in appeal against the final decree [Paras 10.1, 14.3].

Decision – Revision Petition Not Maintainable – The High Court dismissed the revision petition as barred under Section 8 of the Commercial Courts Act – Petitioners are not remediless but must pursue appropriate remedies under Section 13 of the Act – No costs awarded [Paras 16-17].
 

Service Law – Compassionate Appointment – Legality of Adoption – Rejection of Adoption Based on Registration Date Held Invalid – The respondent sought compassionate appointment on the demise of her adoptive father, a Railway employee – The Railways rejected her claim, arguing that the adoption deed was registered on 02.06.2017 when she was above 20 years old – Held: As per Section 16 of the Hindu Adoptions and Maintenance Act, once an adoption deed is registered, a presumption of valid adoption arises – The adoption was performed through customary methods in 2010, and delay in registration does not invalidate it – Rejection of the claim was arbitrary and against settled legal principles – Tribunal's order upheld [Paras 6-7].

Adoption Law – Validity of Adoption – Presumption Under Section 16 of HAMA – Adoption Relates Back to the Date of Ceremony – The Railways contended that the adoption deed was not valid as it was executed after the respondent turned 20 years old – Held: Adoption under HAMA does not require registration, and once a deed is registered, it raises a presumption of validity – Adoption ceremonies were performed in 2010, and the registration in 2017 only formalized the earlier act – Adoption was legally valid, and the rejection of compassionate appointment was unjustified [Paras 6-8].

Compassionate Appointment – Documentary Evidence – School Certificate Not Decisive for Determining Adoption – The Railways argued that the respondent’s school records did not mention her adoptive father’s name, proving that adoption was not recognized – Held: School records typically reflect biological parents, and non-mention of the adoptive father does not invalidate a legally recognized adoption – Compassionate appointment cannot be denied solely on this ground [Para 7].

Judicial Precedents – Supreme Court Ruling on Adoption Relating Back to Ceremony Date – Adoption Cannot Be Invalidated Due to Delay in Registration – The High Court relied on a recent Supreme Court ruling in Prema Gopal v. Central Adoption Resource Authority & Others (SLP No. 14886 of 2024, decided on 29.01.2025), which held that an adoption deed, even if registered later, relates back to the date of adoption ceremonies – Following this principle, the rejection of respondent’s adoption was erroneous, and she was entitled to be considered for compassionate appointment [Paras 9-10].

Decision: The High Court dismissed the writ petition, upholding the CAT’s order directing the Railways to consider the respondent’s case for compassionate appointment within three months. The rejection of her claim based on a delayed adoption deed was found to be erroneous and arbitrary.
 

Criminal Law - Contempt of Court – Alleged Non-Compliance with Court Orders – Evaluation of Demolished Structures – Petitioners sought contempt action for non-implementation of a High Court order directing engagement of a private structural engineer to assess compensation for demolished houses – Single Judge held that the failure to pay compensation constituted willful disobedience and sentenced the appellants to six months simple imprisonment with a fine of Rs. 2000/- each – Held: Non-compliance must be deliberate and willful to attract contempt – Since structures no longer existed and records were unavailable, the inability to conduct evaluation did not amount to willful disobedience – Conviction set aside [Paras 14-17].

Burden of Proof in Contempt Proceedings – Strict Standard Required – Contempt jurisdiction is quasi-criminal in nature, requiring clear evidence of willful disobedience – Held: The burden of proof lies on the petitioner to establish that the appellants had deliberately refused to comply despite having the means to do so – Absence of evidence proving intentional defiance warranted setting aside contempt conviction [Paras 13-15].

Administrative Challenges – Non-Availability of Records – Whether a Valid Excuse – The appellants argued that evaluation could not be conducted as structures were already demolished, and records were missing from the Revenue Divisional Officer’s office – Private consultant’s report confirmed that assessment was impossible due to lack of physical evidence – Held: Inability to comply due to missing records and demolition is a valid defense – Authorities cannot be punished for failing to perform an impossible task [Paras 16-17].

Decision: Contempt appeals allowed – Order of Single Judge dated 21.04.2022 in C.C. No. 633 of 2020 set aside – Conviction for contempt quashed – No costs imposed – Authorities directed to document and improve record-keeping to prevent future disputes [Paras 17-18].
 

Bail – Anticipatory Bail in Forest Offenses – Applicability of Bharatiya Nagarik Suraksha Sanhita, 2023 – The petitioner, accused of involvement in illegal felling of sandalwood trees, sought anticipatory bail – The prosecution argued that custodial interrogation was essential for recovery and further investigation – Held: Bail is the rule, and jail is the exception unless specific grounds necessitate pre-trial custody – No prima facie evidence of active involvement beyond a confession statement of a co-accused – Bail granted with conditions [Paras 6-8].

Custodial Interrogation – Necessity and Alternative Measures – The investigating officer contended that custodial interrogation was necessary for recovery of stolen wood – Petitioner countered that he had already appeared for questioning three times and was being pressured for a confession – Held: Custodial interrogation is not a precondition for effective investigation—Police may conduct recoveries while the accused is on bail, as per the ruling in Sushila Aggarwal v. State (NCT of Delhi) [Paras 7-9].

Principle of Bail as the Rule – Constitutional Mandate – The court reaffirmed the principle that bail should be granted unless there is a likelihood of absconding or tampering with evidence – Cited P. Chidambaram v. Directorate of Enforcement and Siddharth v. State of U.P., emphasizing that arrest should not be mechanical and should serve a valid investigative purpose – Petitioner directed to cooperate with investigation and appear before the police when required [Paras 10-11].

Decision: Bail application allowed – Petitioner directed to appear before the Investigating Officer within two weeks – If arrest is recorded, he shall be released on bail upon executing a bond of Rs. 50,000 with two solvent sureties – Conditions imposed, including restrictions on travel, non-interference with witnesses, and mandatory cooperation with the investigation – Failure to comply will result in cancellation of bail [Paras 12-14].
 

Civil Writ - Service Law - Payment of Gratuity – Interest on Delayed Payment – Section 7(3-A) of Gratuity Act – Gratuity was withheld due to pending audit objections and disciplinary proceedings against the deceased employee – The amount was later disbursed, but the petitioners (legal heirs) sought interest for the delay – Held: Interest is not payable if the delay is caused by the employee's fault and employer has obtained necessary approval – As audit objections justified withholding gratuity, no interest can be claimed – Writ petition dismissed [Paras 3-5].

Audit Objections and Withholding of Gratuity – Whether Justified – Employer contended that the deceased employee had outstanding dues of Rs. 25,54,329, and gratuity was withheld until reconciliation – Held: Employer acted within its rights in adjusting outstanding dues before releasing gratuity – However, disputed amounts beyond the settled dues must be adjudicated separately – No violation of Gratuity Act found [Paras 4-5].

Jurisdiction of Writ Court – Disputed Questions of Fact – The employer asserted that Rs. 77,977 was still due from the deceased employee – Petitioners contested the claim – Held: Writ jurisdiction cannot decide disputed facts related to financial liabilities – Petitioners must seek remedy through a competent forum – Writ petition not maintainable for such claims [Para 5].

Decision: Writ petition dismissed – No entitlement to interest under Section 7(3-A) of the Payment of Gratuity Act – Delay in payment justified due to pending audit objections – Petitioners may seek remedies for disputed dues in an appropriate forum – No costs imposed [Paras 6-7].

Civil Law - Partition Suit – Classification of Land as Tank – Whether Partible – Plot No. 388 was originally recorded as a Jalasaya (waterbody) in revenue records—Appellant argued that tanks are not partible under law unless converted into general land—Trial court rejected this claim, holding that the plot lost its waterbody character and could be partitioned – Held: If a tank has been filled up and used for commercial or residential purposes, it ceases to be a waterbody and becomes partible – Revenue records do not override factual evidence of land use – Appeal dismissed [Paras 5-7].

Doctrine of Appropriation and Reprobation – Cannot Change Stand Midway – Appellant had earlier claimed ownership of the plot by stating that her husband developed it into commercial and residential units—Later, she contended that the land remains a Jalasaya and is therefore not partible—Held: A party cannot approbate and reprobate by taking contradictory stands in the same proceedings—Once she asserted ownership based on development, she is estopped from denying partition [Paras 6-8].

Remand of Final Decree – Justification Under Order XLIII Rule 1(u) CPC – The appellate court remanded the final decree proceedings to depute a Salaried Amin Commissioner for fresh partition considering updated revenue maps—Appellant challenged the remand, arguing that the preliminary decree was already affirmed in second appeal—Held: Once a preliminary decree is confirmed, it cannot be reopened at the final decree stage—However, the court can remand for procedural corrections without altering the substantive rights – No interference warranted [Paras 9-10].

Decision: Second appeal dismissed – Final decree remanded for technical re-evaluation by the Salaried Amin Commissioner—Partition of Plot No. 388 upheld—Appellant estopped from claiming it remains a waterbody—No costs imposed [Paras 11-12].
 

NDPS Act – Bail Application – Prima Facie Violation of Section 50 Found – Bail Granted – The trial court found a prima facie violation of Section 50 of the NDPS Act and reasonable grounds to believe that the accused was not guilty – However, bail was denied on the ground of past involvement in another NDPS case – The High Court held that mere antecedents cannot be the sole ground for rejection of bail, especially when procedural lapses exist – Held: Bail granted with conditions [Paras 7-8].

Prolonged Incarceration – Right to Speedy Trial – Bail Allowed – The accused had been in custody for over 1 year and 3 months – The Sessions Court report indicated that trial completion was unlikely in the near future – Relying on Supreme Court judgments emphasizing the right to speedy trial, the High Court held that prolonged detention without trial violates Article 21 of the Constitution – Held: Bail cannot be denied indefinitely on mere allegations [Paras 9-10].

NDPS Act – Section 37 – Rigour Relaxed in Certain Cases – Bail Not to be Withheld as Punishment – The court referred to precedents where rigour under Section 37 of the NDPS Act was relaxed in cases of prolonged detention – Held: Bail is the rule and jail is the exception, subject to fulfillment of reasonable conditions [Paras 10-11].

Decision – Bail Granted with Stringent Conditions – The High Court allowed bail on the execution of a bond with sureties and imposed restrictions on travel, communication with witnesses, and reoffending – Held: Any violation of these conditions will result in cancellation of bail [Paras 12-16].

Civil Law - Partition Suit – Rejection of Plaint Under Order VII Rule 11 CPC – Grounds Must Be Apparent from the Plaint Itself – The defendants sought rejection of the plaint, arguing that the suit was barred by limitation and lacked a cause of action – The High Court held that under Order VII Rule 11 CPC, rejection of the plaint is permissible only if the defect is apparent from the plaint itself – Held: Where issues require examination of evidence, the plaint cannot be rejected summarily [Paras 6-10].

Mutation Entries – Do Not Confer Ownership – Cannot Be Sole Basis for Dismissing Suit – The defendants argued that the suit properties had already been partitioned and transferred through mutation entries, negating the plaintiffs’ claim – The High Court ruled that mutation entries are only for fiscal purposes and do not create or extinguish ownership rights – Held: The question of ownership and partition requires trial and evidence, and mutation entries alone cannot bar a suit for partition [Paras 12-15].

Limitation in Partition Suits – Article 110 of the Limitation Act – Knowledge of Exclusion is Key – The defendants contended that the suit was barred by limitation, as the alleged partition occurred in 1976 and subsequent mutations were recorded in 2003 and 2008 – The Court clarified that under Article 110 of the Limitation Act, 1963, the period of 12 years begins from the date the plaintiff becomes aware of the exclusion from joint family property – Held: Mere existence of old mutation entries does not establish knowledge of exclusion, and this issue must be decided at trial [Paras 15-16].

Cause of Action – Cannot Be Considered Illusory Without Evidence – Plaint Must Be Examined in Entirety – The Court rejected the argument that the cause of action was fictitious or illusory, holding that cause of action is a bundle of facts requiring evaluation of surrounding circumstances – Held: A suit cannot be dismissed at the threshold unless it is manifestly vexatious, meritless, or an abuse of process [Paras 17-18].

Decision – Civil Revision Applications Rejected – Suit to Proceed to Trial – The High Court upheld the Trial Court’s decision and dismissed both civil revision applications – Held: The partition suit must proceed to trial, as issues of limitation, title, and cause of action require factual determination [Paras 18-19].