Arbitration – Section 37 of the Arbitration and Conciliation Act, 1996 – Appeal against Interim Injunction – Non-compete Clause – Post-Termination Restraint - appellant challenged an interim injunction granted by the Single Judge under Section 9 of the Arbitration and Conciliation Act, 1996, which restrained the appellant from sourcing products from a third-party Indian supplier (RKFL) pursuant to the non-compete clause in a Master Supply Agreement (MSA) with the respondent – Held: The non-compete clause in the MSA cannot operate post-termination as it results in a restraint of trade prohibited by Section 27 of the Indian Contract Act, 1872 – The court observed that such a clause may be valid during the term of the agreement but not after its termination, as it would unlawfully restrict the appellant's right to trade – The injunction was set aside [Paras 10-14].

Contract Law – Section 27 of the Indian Contract Act, 1872 – Restraint of Trade – Validity of Non-compete Clauses - non-compete clause in the MSA restricted the appellant from sourcing products from other Indian suppliers even after the MSA was terminated – Held: Post-termination restraint on trade by way of a non-compete clause is void under Section 27 of the Indian Contract Act, 1872 – The court reaffirmed that such clauses can only operate during the term of the contract, not beyond it [Paras 11-14].

New Legal Plea in Appeal – Pure Question of Law – Admissibility - appellant raised the plea of invalidity of the non-compete clause based on Section 27 of the Indian Contract Act, 1872, for the first time in the appeal – Held: Since this was a pure question of law that required no factual adjudication, it could be raised in appeal even though it had not been argued before the Single Judge – The court accepted the new plea as it was based on the interpretation of the MSA and well-established legal principles [Paras 8-9].

Decision: The Commercial Appeal is allowed. The impugned judgment dated 08/08/2023, passed by the Single Judge, is set aside. The Arbitration Petition filed under Section 9 of the Arbitration and Conciliation Act, 1996, stands dismissed. No order as to costs. The judgment will take effect after four weeks from the date of the decision.

Stamp Duty – Sale by Public Tender – Market Value Discrepancy – Matter Remanded – The petitioner challenged the deficiency in stamp duty assessed on the sale of a mortgaged property by public tender under SARFAESI Act. The Court examined whether the sale was exempt from scrutiny under Section 47-A of the Indian Stamp Act due to its nature as a public sale. The Court held that despite being a sale by tender, the instrument did not disclose full details of the property, including the building constructed over 4000 square meters, affecting the chargeability of stamp duty. The Collector's assumption of industrial rates was unsupported by evidence – Held: Orders determining deficiency in stamp duty were quashed, and the matter was remanded for a fresh determination of market value [Paras 56-105].

Sale by Tender vs. Public Auction – Applicability of Stamp Duty – The petitioner argued that the sale by tender is equivalent to a public auction, warranting the stamp duty to be calculated on the sale consideration. However, the Court rejected this argument, distinguishing between public auctions and sales by tender. It held that Article 18 of Schedule 1-B, which applies to sales by public auction, does not cover sales by tender, and thus, the Collector was right to invoke Section 47-A(3) of the Indian Stamp Act to scrutinize the instrument [Paras 64-71].

Constitution of Committee to Determine Market Value – Validity – The Court upheld the Collector's power to constitute a committee to determine the market value of the property under Section 47-A of the Stamp Act but found that the application of industrial rates was unjustified without proper reasoning. The matter was remanded to the Collector with directions to constitute a new committee to determine the correct market value based on applicable rates, with proper consideration of the petitioner's objections [Paras 103-107].

Decision: The writ petition was disposed of. The orders dated 17.08.2022 and 02.08.2017 were quashed. The matter was remanded to the Collector for a fresh determination of the market value and stamp duty payable, after considering the petitioner’s objections and receiving a report from a newly constituted committee [Paras 106-108].

Criminal Law – Acquittal – Appeal by State – Murder and Hurt – Judgment of Acquittal Upheld – The State challenged the acquittal of the accused, charged with murdering the deceased by striking him on the head with a wooden log and causing hurt to the deceased's wife – The Trial Court acquitted the accused due to doubts surrounding the presence of key witnesses and inconsistencies in the prosecution's case, including delays in medical treatment and FIR registration – Held: The High Court upheld the acquittal, finding that the Trial Court’s doubts were reasonable, particularly concerning the absence of accident records and discrepancies in witness testimony, including the injured eyewitness – The presumption of innocence reinforced upon acquittal, and no compelling reason was found to interfere with the Trial Court's plausible findings [Paras 10-13].

Delay in FIR and Treatment – Doubts on Prosecution's Version – The delay in registering the FIR and providing treatment to the injured eyewitness created reasonable doubt regarding the sequence of events – The Court found that the non-production of medical records from the initial treatment at Uthiramerur Hospital further weakened the prosecution's case [Paras 8, 12].

Inconsistent Witness Testimony – Impact on Credibility – The conflicting accounts of PW1 (son of the deceased) and PW2 (injured wife of the deceased) regarding the mode of transportation to the hospital and their actions following the incident raised significant doubts about their presence during the occurrence – The Trial Court’s finding that the witnesses' conduct was unnatural was upheld [Paras 9, 11].

Decision: Criminal Appeal dismissed – Acquittal confirmed – The Trial Court's findings were based on plausible reasoning, and no interference was warranted [Paras 13, 14].
 

Negotiable Instruments Act - Validity of Single Complaint for Multiple Cheques – The petitioners challenged the validity of a single complaint for the dishonor of 36 cheques, arguing that this violates Section 219 Cr.P.C., which restricts trial for multiple offences to a maximum of three instances of the same kind within a 12-month period. The Court held that, given that all cheques were issued as part of a single transaction, presented together, and returned with a single notice, the complaint fell within the “same transaction” provision under Section 220 Cr.P.C. This ruling aligned with principles established in Manjula v. Colgate Palmolive (India) Ltd., supporting the validity of filing a single complaint when the transaction forms a unified series of acts [Paras 24, 28, 37].

Section 138 NI Act - Dishonor Due to “Account Blocked” Status – Addressing whether account blockage by the Income Tax Department and Enforcement Directorate precludes prosecution under Section 138, the Court applied the Supreme Court's rationale in Laxmi Dyechem v. State of Gujarat, which treats “account blocked” as analogous to “insufficient funds,” thus allowing the complaint to proceed. This interpretation follows the genus-species framework, where “account blocked” serves as a species within the general genus of dishonor scenarios under Section 138 [Paras 31, 32, 38].

Sufficiency of Funds - Rejection of Defense Based on Claimed Account Balance – The petitioners asserted that their account had sufficient funds which were merely blocked by regulatory orders. The Court dismissed this defense, establishing that the account showed a debit status, and no funds were available to honor the cheques, satisfying Section 138’s conditions for dishonor. The decision aligns with the principles set out in NEPC Micon Ltd. v. Magma Leasing Ltd. and Laxmi Dyechem regarding adequacy of funds as central under Section 138 [Paras 34, 38].

Decision – Petition Dismissed – The Court ruled that the single complaint for all dishonored cheques was legally sustainable, and the account blockage did not exempt the petitioners from liability under Section 138. Consequently, the criminal original petition and connected miscellaneous petitions were dismissed as devoid of merit [Paras 37, 39].
 

Writ - Land Dispute – Mutation and Title – The petitioner claimed possession of land through Oral Hiba from the Nawab of Obedulla, and the land was recorded in his name after eviction suits and a compromise decree in a civil suit – The Collector, Bhopal, initiated suo motu revision proceedings to cancel the mutation and Nazul No-Objection Certificate (NOC) granted to the petitioner – Held: The suo motu power exercised under Section 50 of MPLR Code was valid, and the compromise decree was unauthorized as it was entered without proper authority from the State – The petitioner's objection to the revision was dismissed [Paras 28, 53-54].

Revenue Authority's Role – Fraudulent Compromise – The Naib Tahsildar, Bajrang Bahadur Singh, entered into a compromise on behalf of the State without authority, leading to the illegal mutation of government land in the petitioner's favor – Held: Bajrang Bahadur Singh acted in bad faith and was liable for mesne profits for allowing unauthorized possession of government land – Departmental action against erring officials was directed [Paras 30-39, 58].

Judicial Review – Time Limit for Suo Motu Powers – The petitioner's argument that the revision proceedings were barred by time was rejected – The revision was initiated within the permissible period following receipt of information about the illegalities [Paras 54-55].

Decision: Petition dismissed with costs of Rs. 50,000 to be paid by the petitioner – The interim order dated 24/10/2011 was vacated – Departmental actions were ordered against several officials for their involvement in the unauthorized compromise and land mutation [Paras 62-63].
 

Contract Law – Price Escalation – Clause 32A – Entitlement Confirmed – The plaintiff/respondent, an 'A' class contractor, was awarded contracts under the Kallada Irrigation Project. Due to delays caused by the defendants, extensions were granted without penalties. Held: The plaintiff is entitled to price escalation under Clause 32A of the principal agreement as the delay was not attributable to the plaintiff [Paras 27-31].

Limitation – Suit Not Time-Barred – The appellants/defendants raised a plea of limitation, contending that the claim was time-barred. The Court found that the last payment was made to the plaintiff on 27.01.2006, and the suit was filed on 22.01.2009, within the limitation period. Held: The suit is within the limitation period, and the plea of limitation is rejected [Paras 18-23].

Interest Rate – 6% Interest Upheld – The respondent sought 12% interest on the awarded amount, citing an earlier judgment (Exhibit A44). However, the court found that the 12% interest applied only to admitted bills, not to disputed claims in this case. Held: The trial court’s award of 6% interest on the adjudicated amount is justified [Paras 36-37].

Counter-Claim by Defendants – Rejected – The defendants’ counter-claim for excess payment and unreturned materials was dismissed as the supplementary agreements and materials were properly accounted for. Held: The defendants failed to prove any excess payment or unauthorized use of materials [Paras 39-41].

Decision:
The appeal is dismissed, and the cross-objection is partly allowed. The respondent is entitled to realize Rs. 28,87,190/- with 6% interest per annum from the date of the suit until realization. The respondent is also entitled to proportionate costs. The counter-claim of the appellants/defendants is dismissed [Paras 44-45].
 

Criminal Law – Application Under Section 91 CrPC – Timing of Application – Respondents sought production of request letters sent by CBI to the Ministry of Home Affairs for call interception before charges were framed – Held: The accused cannot invoke Section 91 CrPC at the pre-charge stage for production of documents – The Supreme Court has held that Section 91 can be invoked by the accused only after the stage of framing of charges and when necessary for defense – Petition allowed, orders directing production of documents set aside [Paras 1, 25-30].

Interception of Phone Calls – Privilege and Confidentiality – Sections 123 and 124 of the Indian Evidence Act – CBI asserted that its request letters for interception of calls were privileged communications under Sections 123 and 124 of the Indian Evidence Act – Held: The CBI’s communications seeking permission for interception were confidential and privileged, and cannot be disclosed at the pre-charge stage – The respondents may apply for such documents at a later stage, subject to court review – Petition allowed [Paras 25-30].

Right to Privacy – Interception of Phone Calls – Section 5(2) of the Indian Telegraph Act – The respondents’ argument of privacy violation was rejected – Held: The interception orders were issued as per Section 5(2) of the Indian Telegraph Act, and reviewed by the competent authority without adverse findings – The right to privacy is not absolute and is subject to lawful restrictions – No violation of privacy found [Paras 25-30].

Decision:

The petition is allowed – The impugned orders dated 20.12.2022 and 16.01.2023 are set aside – Respondents are at liberty to file an application under Section 91 CrPC at the appropriate stage – The CBI is directed to preserve the request letters/communications sent to MHA – No order as to costs [Paras 25-30].

Family Law – Appealability of Interim Custody and Visitation Orders – Section 19(1) of the Family Courts Act – The appellant challenged an order passed by the Family Court granting the respondent temporary custody and visitation rights over the minor child, arguing that the order was not interlocutory and therefore appealable under Section 19(1) of the Family Courts Act – Held: Orders regarding interim custody and visitation rights under Section 12 of the Guardians and Wards Act, 1890 significantly impact the welfare of the minor child and cannot be treated as mere procedural or interlocutory orders – Such orders have a direct bearing on the rights of the parties and are appealable under Section 19(1) of the Family Courts Act – The decision in Colonel Ramesh Pal Singh v. Sugandhi Aggarwal, holding that no appeal lies against interim custody orders, was held incorrect [Paras 9-35].

Nature of Orders Under Section 12 of the Guardians and Wards Act – Orders passed under Section 12 of the Guardians and Wards Act, 1890 grant temporary custody and can affect the child’s welfare and parents' rights – These are adjudicatory in nature and cannot be termed as interlocutory for the purposes of appeal under Section 19(1) of the Family Courts Act, which provides an overriding appellate remedy for family matters – Appeal allowed to proceed [Paras 26-30].

Principles of Finality in Interlocutory Orders – Distinction Between Procedural and Substantive Orders – The court emphasized that interlocutory orders for procedural matters are different from substantive orders affecting valuable rights – Orders impacting child custody and visitation fall within the category of substantive decisions that should be appealable, despite being interim in nature – Shah Babulal Khimji v. Jayaben D. Kania principles applied [Paras 29-34].

Decision: The reference to the Full Bench is answered in favor of the appellant – Orders under Section 12 of the Guardians and Wards Act, 1890 regarding interim custody and visitation are appealable under Section 19(1) of the Family Courts Act, 1984 – The appeal is restored for consideration by the appropriate Bench [Paras 35-37].

Criminal Law – Bail – Presumption of Innocence – The petitioner sought regular bail, contending that he had been falsely implicated based on the disclosure of a co-accused and had already been in custody for over 2 years and 7 months – Held: The court recognized the fundamental principle of criminal jurisprudence that the accused is presumed innocent until proven guilty, and lengthy pre-trial detention infringes upon the right to a speedy trial under Article 21 of the Constitution – The petitioner was granted bail as the trial was likely to take considerable time, with only 3 of 16 prosecution witnesses examined so far, and no substantial progress made [Paras 4-5].

Judicial Discretion – Grant of Bail – While opposing the bail, the State highlighted the petitioner’s involvement in other criminal cases – The court held that though criminal antecedents must be considered, bail should not be denied solely on this ground – Instead, each case should be evaluated on its own merits, and the pendency of other cases cannot preclude the petitioner’s right to bail in the present case [Paras 5-6].

Decision: Petition allowed – The petitioner was directed to be released on bail upon furnishing bonds to the satisfaction of the trial court – The court clarified that the observations made herein are not to be construed as an expression of opinion on the merits of the case [Para 5].