Partnership Law – Dissolution of Partnership – Rights of Outgoing Partner – Suit for Settlement of Accounts – Original plaintiff filed Suit No. 286 of 1978 seeking dissolution and settlement of accounts of a partnership firm, Crystal Transport Service, alleging improper conduct by other partners in diverting firm assets – Trial court's preliminary decree dissolved the firm and acknowledged the plaintiff's one-fourth share, directing a Commissioner to take accounts – First appellate court further reinforced that the assets taken over by the appellant company (defendant no. 4) must be accounted for in determining the plaintiff’s share – Held: Plaintiff entitled to seek accounts and share in profits generated post-dissolution by appellant company from firm assets till final settlement [Paras 2-8, 19-21].

Accounting Post-Dissolution – Section 37 of the Indian Partnership Act, 1932 – Entitlement to Profits – Section 37 mandates that, absent an alternative contract, an outgoing partner retains a right to profits derived from their share in firm assets or to interest at 6% per annum until accounts are settled – In this case, appellant company continued the business with firm assets, necessitating accounting of profits derived from these assets in favor of the plaintiff – Court upheld that extent of appellant's use of firm assets would be determined through evidence during final decree proceedings [Paras 20-22].

Remand Order – Opportunity to Lead Evidence – Cross-Examination of Receiver – High Court’s order remanded the matter to trial court to allow parties to present additional evidence and cross-examine the Receiver and authors of financial documents to substantiate their respective accounts – Trial court directed to reassess and ascertain amount payable to the plaintiff in light of this additional evidence – Held: No interference with remand order warranted as it provides necessary procedural safeguards for a fair determination of parties’ rights [Paras 11, 14, 16, 23].

Decision: Appeal Dismissed – Remand Confirmed – Supreme Court confirmed the High Court’s remand order, directing that trial court should proceed to take evidence and cross-examination as required – No opinion expressed on merits of the claim, reserving final assessment for trial court based on evidence led – Parties to bear their own costs [Paras 23-25].

Arbitration Agreement – Assignability and Privity of Contract – The petitioner, a U.S.-incorporated entity, invoked the arbitration clause in the agreements initially made by Cryobank International, Inc. with the respondent companies, claiming an assignment of rights due to a public asset purchase. The respondent contested, arguing a lack of privity with the petitioner and that the agreements were non-assignable without consent. The Court cited Khardah Company Ltd. v. Raymon & Co (India) Pvt. Ltd., emphasizing that obligations are generally non-assignable without the promisee’s consent, while rights may be assigned unless restricted by law or contract [Paras 7-9].

Scope of Section 11(6A) – Limited Judicial Examination – The Court, aligning with DLF Power Ltd. v. Mangalore Refinery & Petrochemicals Ltd., held that the judiciary's role under Section 11(6A) of the Act is confined to ascertaining the existence of an arbitration agreement, not determining the validity of assignments or deeper contractual issues. The Court therefore referred the matter to arbitration without delving into privity or assignment issues, leaving these for arbitral resolution [Paras 10-11].

Referral to Arbitration – Delhi International Arbitration Centre – Recognizing the existence of arbitration clauses in the agreements, the Court referred the matter to the Delhi International Arbitration Centre to appoint a sole arbitrator, emphasizing that all contentions, including the arbitrability of claims, remain open for determination before the arbitral tribunal [Paras 12-13].

Decision: Petition Allowed – The Court referred the dispute to the Delhi International Arbitration Centre for the appointment of a sole arbitrator to resolve the matter. It clarified that this referral does not imply any judgment on the merits of the case, including issues of privity or assignment validity. All pending applications were disposed of.

Right to Accessibility – Mandatory Compliance – Reaffirmation of Accessibility Rights for Persons with Disabilities (PWDs) – Failure of Existing Legal Framework – The petition, filed in 2005, sought directions to ensure accessibility of public spaces for PWDs, as mandated by the Rights of Persons with Disabilities (RPWD) Act, 2016 – A comprehensive report by NALSAR-CDS highlighted inconsistencies in the accessibility measures implemented across states and documented severe deficiencies – Held: Rule 15 of the RPWD Rules is ultra vires to the RPWD Act due to its non-binding guidelines, lacking enforceability as mandatory standards – Union Government is directed to formulate non-negotiable accessibility rules within three months to ensure mandatory compliance across sectors [Paras 1-77].

International Accessibility Standards – Influence of CRPD – Accessibility as a Human Right – Accessibility framed as an essential component of human rights under the United Nations Convention on the Rights of Persons with Disabilities (CRPD) – The Court referenced Article 9 of CRPD, emphasizing that accessibility encompasses both physical and digital environments and obligates states to eliminate barriers for PWDs to live independently and participate in society – Recognized that the absence of accessibility perpetuates economic and social exclusion of PWDs, underscoring the right to accessibility as foundational for equal participation [Paras 12-19].

Social Model of Disability – Reaffirmation by Court – Universal Design Approach – The Court recognized the Social Model of Disability, which attributes disability to external barriers rather than individual impairment, and endorsed a two-pronged approach to accessibility – Emphasis on "Universal Design" for environments and services to cater to all users from the outset, avoiding the need for specialized adaptations – Such universal accessibility principles are mandated under the RPWD Act [Paras 28-32].

Sectoral Findings on Accessibility – NALSAR-CDS Report - Courts and Prisons – Lack of Accessibility Infrastructure – Accessibility surveys conducted in 30 High Court benches showed insufficient facilities for visually and hearing-impaired individuals – Many High Courts lacked tactile guiding strips and interpreters – In prisons, accessibility provisions are limited to central facilities, with district jails being grossly underserved and an acute shortage of mental health professionals noted [Paras 44-48].

Educational Institutions – Exclusion from Basic Services – Survey of parents of children with disabilities revealed low access to higher education and significant barriers in accessing toilets, assemblies, and mid-day meals – Only 17% of students received accessible learning materials, highlighting systemic gaps in inclusive education [Paras 48(c)].

Employment – Persistent Barriers for PWDs – Lack of accessible job portals, inaccessible physical infrastructure, and limited support for persons with visual, hearing, and neurodevelopmental disabilities were found to hinder employment – Enable India’s report underscored that attitudinal and logistical barriers persist across hiring processes [Paras 48(d)].

Transport and Public Buildings – Fundamental Right to Freedom of Movement Compromised – Limited accessible buses and inadequate infrastructure, such as uneven footpaths, restrict mobility and safety for PWDs – A study on Mumbai’s infrastructure revealed mixed results, with newer facilities like Andheri Metro meeting accessibility standards, while older buildings lacked basic accommodations [Paras 48(e)].

Legal Framework Analysis – RPWD Act vs. RPWD Rules – Rule 15 Ultra Vires – The RPWD Act mandates binding accessibility standards to ensure that PWDs can access public infrastructure – Rule 15 of the RPWD Rules, however, relegates these standards to non-binding guidelines, thereby contravening the intent of the RPWD Act – The Court noted that guidelines such as HG 2021 are merely recommendatory and lack enforceability, failing to establish a mandatory baseline for accessibility [Paras 51-74].

Decision – Directed the Union Government to frame mandatory and enforceable rules for accessibility, segregating essential standards from broad guidelines to comply with Section 40 of the RPWD Act – Ensured that penalties and compliance measures under Sections 44, 45, 46, and 89 are applied for non-compliance – NALSAR-CDS awarded INR 50,00,000 in compensation for the comprehensive preparation of the accessibility report [Paras 76-80].

Principles of Accessibility Outlined for Compliance – New rules must emphasize:

• Universal Design principles to facilitate access without adaptation needs

• Comprehensive inclusion of all disabilities, including sensory, intellectual, and psychosocial conditions

• Integration of assistive technologies, such as screen readers and accessible digital formats

• Continuous consultation with disability organizations to incorporate lived experiences in policymaking [Paras 78-79].

Decision – Case adjourned to March 7, 2025, with Union Government required to report compliance – Union Government directed to address the accessibility challenges in a systematic and enforceable manner, ensuring accessibility is a right rather than an aspirational goal.

Proper Officer Jurisdiction – Section 6 and Section 5 of the Customs Act, 1962 – Jurisdiction of DRI Officers to Issue Notices – Canon India Clarified - The Supreme Court clarified that DRI officers had been validly empowered to issue show cause notices under Section 28 of the Customs Act, 1962, by virtue of prior notifications and statutory provisions under Sections 2(34) and 5. The Court noted that Section 6 was not necessary for such assignments, correcting the erroneous finding in Canon India that relied on Section 6 as the sole provision for assigning customs functions – Review Petition allowed; Canon India judgment modified [Paras 117-130].

Section 28(11) – Constitutional Validity – Multiplicity of Proper Officers Addressed – Retrospective Validation Upheld - The Court upheld the constitutionality of Section 28(11) introduced by the Customs (Amendment and Validation) Act, 2011, stating it provided a clear framework for multiple officers to act as "proper officers" without creating the confusion suggested in Canon India and Mangali Impex. The Court affirmed that past actions by DRI officers were valid under Section 28(11) and Section 28(11) did not overlap with Explanation 2, avoiding any inconsistency. The potential for misuse of Section 28(11) did not render it unconstitutional [Paras 131-154].

Finance Act, 2022 – Section 97 – Constitutional Validity – Validation of Past Notices by DRI Officers - Section 97 of the Finance Act, 2022, which retrospectively validated actions of officers issuing show cause notices under Section 28, was upheld as constitutionally valid. The Court emphasized that Section 97 cured the purported defect in Canon India by clarifying that DRI officers were proper officers with authority under the Customs Act and that retrospective validation served the Act’s legislative intent without arbitrary classification or disproportional impact on taxpayers. Consequently, Section 97’s validation of show cause notices issued before the Finance Act, 2022, was held constitutional [Paras 157-167].

Canon India Decision – Review Petition Allowed – Error in Jurisdictional Interpretation Corrected - The Court allowed the review petition and set aside the erroneous jurisdictional interpretation in Canon India. The decision in Canon India had overlooked relevant circulars and notifications that empowered DRI officers under Sections 2(34) and 5, leading to an incorrect finding that DRI officers lacked jurisdiction under Section 28 of the Customs Act. This review held that the proper officer status of DRI officers was in fact valid under the legal framework existing before the Finance Act, 2022 [Paras 168(ii)(a)-(c)].

Doctrine of Harmonious Construction – Section 28(11) and Explanation 2 – Mangali Impex Set Aside; Sunil Gupta Upheld - In construing Section 28(11) and Explanation 2, the Court found no inherent conflict warranting a harmonious construction. Rejecting the Delhi High Court’s approach in Mangali Impex, which limited Section 28(11) to the period post-2011, the Court upheld the Bombay High Court’s decision in Sunil Gupta, affirming that Section 28(11) validly empowered officers retrospectively and continuously as intended by Parliament [Paras 149-150].

Policy of Exclusion of Jurisdiction – Safeguard Against Multiple Show Cause Notices - Addressing concerns about potential misuse of Section 28 by issuing multiple show cause notices, the Court observed that the Customs department’s longstanding policy of exclusion of jurisdiction once a notice was issued by a proper officer acted as a safeguard. This policy mitigated the risk of administrative chaos and misuse raised in Canon India and Mangali Impex [Paras 151-153].

Guidance for Pending Cases – Disposition and Adjudication – Eight Weeks’ Time for Appeal - The Court provided specific directions for the disposal of pending writ petitions and appeals concerning show cause notices under Section 28 issued by DRI officers. High Courts and the CESTAT were directed to restore or adjudicate the notices in line with this judgment, and eight weeks were granted to file appropriate appeals where relevant [Paras 168(vi)].

Decision – The Court allowed the review petition in favor of the Customs Department, setting aside Canon India to the extent it invalidated DRI-issued show cause notices – Held: The Finance Act, 2022's Section 97 and corresponding notifications are constitutionally valid, and the DRI officers' jurisdiction under Section 28 is restored for pending and future matters – Directions issued to High Courts and CESTAT to process pending appeals and petitions in line with this decision [Paras 170-172].
 

Arbitration Law – Appointment of Arbitrator – Application for Arbitration – Respondent’s fresh petition under Section 11(6) of the Arbitration and Conciliation Act, 1996, filed after withdrawing the first petition, was held time-barred and non-maintainable in the absence of court’s permission for re-filing – NCLT had previously entertained insolvency proceedings under IBC upon respondent’s application, which was later reversed by NCLAT due to a pre-existing dispute – High Court had appointed an arbitrator upon respondent’s fresh petition despite appellant’s objections on maintainability and limitation – Held: Principles underlying Order 23 Rule 1 of CPC, governing withdrawal and re-filing, can be extended to Section 11 applications – Respondent’s fresh petition, having no liberty granted by court at first withdrawal, was not maintainable [Paras 31, 53, 61].

Insolvency Proceedings vs. Arbitration – Distinct Relief – Application under Section 9 of IBC differs in objective and nature from arbitration applications under Section 11 – High Court incorrectly allowed benefit of Section 14 of the Limitation Act for excluding time spent in pursuing insolvency proceedings under IBC – Held: IBC proceedings serve a public, in-rem purpose for corporate rehabilitation, while arbitration is a private dispute resolution mechanism, focused on adjudicating specific contractual disputes – No entitlement to benefit under Section 14(2) of the Limitation Act [Paras 97-106].

Limitation and Condonation of Delay – Section 5 of Limitation Act – Application of Section 5 for delay condonation in Section 11(6) petitions discussed – While Section 5 may apply to Section 11 petitions, discretion must be exercised strictly in favor of expeditious arbitration process – Given respondent’s strategic withdrawal of the first Section 11 petition to pursue insolvency proceedings despite awareness of a pre-existing dispute, court declined to exercise discretion for delay condonation [Paras 111-124].

Liberty to Pursue Arbitration Post-IBC Proceedings – Interpretation of Court’s Directions – Court’s dismissal of insolvency proceedings with liberty to pursue arbitration in “accordance with law” does not override procedural bars on time limitations or maintainability – Liberty to pursue remedies must align with statutory provisions and does not inherently bypass limitation periods [Paras 125-130].

Decision : Appeal allowed – High Court’s appointment of arbitrator under Section 11(6) set aside – Respondent’s petition held time-barred and non-maintainable – Respondent not entitled to relief under Sections 14(2) or 5 of the Limitation Act – Each party to bear its own costs [Paras 131-134].
 

Arbitration Agreement Interpretation – Seat vs. Venue Distinction – The Court addressed whether Dubai, designated as the arbitration "venue," also serves as the arbitration's "seat," which would impact jurisdiction for appointing an arbitrator. The petitioner argued for Indian jurisdiction due to non-exclusive language on Dubai courts, substantial business ties in India, and an absence of explicit seat designation. However, the Court upheld the principle that the "seat" of arbitration—when clear—is determinative of supervisory jurisdiction, prioritizing party autonomy [Paras 55-57, 58, 63-64].

Doctrine of Concurrent Jurisdiction – Applicability of Part I of the Act, 1996 – The Court examined the scope of Part I of the Act, clarifying it applies only to arbitrations seated in India, excluding Indian jurisdiction for foreign-seated arbitrations. The Court referenced BALCO’s holding, which rejected concurrent jurisdiction by Indian courts over foreign-seated arbitrations, confirming that only Dubai courts held jurisdiction in this instance [Paras 28, 63].

Closest Connection Test – Determining the Seat of Arbitration – The Court rejected the applicability of the Closest Connection Test, asserting that where an express "seat" or "venue" designation exists, it supersedes indirect inferences about party intent. The Dubai designation was upheld as the exclusive arbitration seat due to explicit references to the UAE’s governing law and jurisdiction, aligning with the Shashoua principle that "venue" reflects the seat unless contrary indications exist [Paras 53-57, 64].

Forum Non Conveniens – Dubai as the Exclusive Forum – The Court applied the doctrine of forum non conveniens, finding Dubai as the appropriate forum given the contractual designation of Dubai as "seat," UAE governing law, and the respondent’s Dubai location. This assessment reinforced Dubai's exclusive jurisdiction and denied the petitioner’s attempt to invoke concurrent jurisdiction in India [Paras 66-70].

Decision on Petition – Jurisdiction Over Arbitration Denied to Indian Courts - Held: With Dubai designated as the seat of arbitration and UAE law governing, the Indian courts lack jurisdiction under Section 11. Consequently, the Court dismissed the petition, affirming the exclusive jurisdiction of Dubai courts [Paras 72-73].

Arbitration Law – Appointment of Arbitrator – Appeal under Section 11 of the Arbitration and Conciliation Act, 1996 – Appellant (Goqii Technologies Private Limited) challenged High Court’s dismissal of arbitration application, seeking appointment of arbitrator under Clause 18.12 of Master Services Agreement (MSA) with the Respondent (Sokrati Technologies Private Limited) – High Court held no arbitrable dispute existed, as appellant’s claims lacked merit based on independent audit report – Held: High Court exceeded its jurisdiction by assessing merits and engaging in detailed factual analysis beyond prima facie review under Section 11 – Appeal allowed, and arbitrator appointed [Paras 2, 8-9, 16-18, 21-23].

Scope of Referral Court under Section 11 – Prima Facie Review – Court held that inquiry at the Section 11 stage is limited to determining the existence of an arbitration agreement – Referral court should not assess merits or dismiss claims as frivolous or dishonest unless they are ex-facie frivolous – Arbitrator can adjudicate issues of frivolity and bad faith, including awarding costs if claims are found abusive – Emphasis on arbitral tribunal’s competence to examine disputed facts rather than the referral court’s jurisdiction at Section 11 stage [Paras 10-12, 17-19].

Audit Report and Existence of Dispute – Independent audit report highlighted serious deficiencies in respondent’s services, including overcharging and poor performance – Appellant relied on audit findings to invoke arbitration – High Court erred in concluding no dispute existed based on auditor’s findings without allowing arbitration to proceed – Tribunal is better suited to review evidence and merits of claims in detailed hearings [Paras 5-6, 18].

Judicial Restraint in Arbitration Matters – Citing SBI General Insurance Co. Ltd. vs. Krish Spinning and In Re: Interplay between Arbitration Agreements and the Indian Stamp Act, Court reaffirmed limited scrutiny by referral courts under Section 11 – Referral courts should defer to arbitral tribunal on factual disputes, as tribunal possesses competence to assess merits comprehensively, thereby preserving arbitration’s role as primary dispute resolution mechanism [Paras 17, 19].

Decision: Appeal allowed – Supreme Court appointed Mr. S.J. Vazifdar, former Chief Justice of the Punjab & Haryana High Court, as sole arbitrator to adjudicate disputes under the MSA. All legal objections are preserved for consideration by the arbitrator, who may assess the merits of the appellant’s claims and impose costs if claims are found to be abusive.

Economic Law – Royalty Computation – Writ Petition under Article 32 – Petitioners challenge the validity of Explanation to Rule 38 of the Mineral (Other than Atomic and Hydrocarbons Energy Minerals) Concession Rules, 2016 (MCR, 2016) and Explanation to Rule 45(8)(a) of the Mineral Conservation and Development Rules, 2017 (MCDR, 2017) – Contend that these provisions create a compounding effect by including previously paid royalty, District Mineral Foundation (DMF), and National Mineral Exploration Trust (NMET) contributions in the Average Sale Price (ASP) for subsequent royalty computations – Held: Mechanism of royalty computation falls within policy-making domain and does not exceed statutory authority – No basis for judicial intervention unless evidence shows clear illegality or constitutional violation – Petition dismissed, respondents directed to conclude public consultation on royalty policy reforms within two months [Paras 1, 45-61, 84-86].

Policy-Making – Judicial Restraint on Economic Decisions – Petitioners argue that compounding of royalty in ASP computation is arbitrary and contrary to Article 14 – Contention that differential treatment between coal and other minerals lacks rational basis – Court finds no intelligible differentia requiring ASP calculation to exclude royalty for coal but not other minerals – Held: Economic policy decisions warrant judicial deference unless shown to contravene statutory or constitutional boundaries – Complexity of royalty determination and fiscal impact on state revenues justify executive latitude in royalty policy – Judicial review limited to assessing legality, not merits of economic policies [Paras 46-49, 67-71].

Royalty on Royalty – Manifest Arbitrariness – Court examines whether inclusion of prior royalty payments in ASP calculation constitutes ‘royalty on royalty’ and manifestly arbitrary policy – Finds that Explanation in Rule 38 and Rule 45 clarifies computation of gross sale value and does not exceed or alter the main provisions – No statutory prescription prohibits inclusion of royalty, DMF, or NMET contributions – Explanation in Rules merely clarificatory and aligns with statutory scheme of MMDR Act, therefore, not arbitrary or unreasonable [Paras 15, 25-27, 45, 62-66].

Policy Adjustment for Minerals – Inconsistency in Treatment of Coal – Petitioners point to exclusion of royalty and contributions in ASP calculation for coal, arguing similar treatment should apply to iron ore and other minerals – Court acknowledges potential anomaly, but declines to mandate similar calculation method without statutory requirement – Observes that policy distinctions in royalty calculation may stem from fiscal considerations and economic impact assessments – Directive to respondents to complete public consultation to address compounding of royalty within two months [Paras 16, 72-76, 83-84].

Separation of Powers – Court’s Deference to Legislative and Executive in Economic Regulation – Citing established precedent, Court emphasizes deference to executive decisions in economic matters like royalty determination, especially where policy decisions involve technical expertise – Courts avoid reviewing wisdom or efficacy of such policies unless shown to breach legal or constitutional limits – Observes that courts should assume policy-makers act in good faith absent clear evidence otherwise, emphasizing judicial restraint in economic governance [Paras 46-57, 59-60].

Decision and Directions – Respondents granted 2 months to conclude public consultation on amendments to MMDR Act to address cascading royalty impact in ASP computation – Petition dismissed with liberty to petitioners to challenge final policy decision if respondents adopt revised rules – Registry to notify matter for compliance report after two months [Paras 84-86].

Criminal Law - Quashing of FIR – Absence of Specific Allegations – Investigation Necessity – Appellant’s complaints centered on family disputes and alleged forced execution of property gift deeds to family members – Supreme Court found complaints lacked specific allegations against certain respondents (4th and 5th), noting that vague claims and considerable delay in filing the FIR weakened prosecutorial validity – Held: High Court’s quashing of FIR against the 4th and 5th respondents upheld due to lack of detailed accusations and appellant’s inability to substantiate claims against them [Paras 7-12].

Delay in Filing FIR – Impact on Quashing – Significance of Specific Accusations – Complaint filed over 16 months after executing gift deeds, despite awareness of alleged coercion earlier – Court emphasized that undue delay without substantial allegations against all respondents affects the legitimacy of an FIR in family property disputes – Held: Absence of specific, timely accusations undermined the appellant's challenge against quashment [Paras 5, 10].

Decision: Criminal appeal dismissed – Supreme Court affirmed the High Court's order partially quashing the FIR for the 4th and 5th respondents, emphasizing the insufficiency of specific accusations and substantial delay in filing the complaint.