Criminal Law – Prevention of Corruption – Demand and Acceptance – Appellant, a Labour Officer, allegedly demanded ₹9,000 bribe and accepted ₹3,000 for license renewal – Trap set by ACB, tainted currency recovered from drawer of appellant's desk – Trial Court acquitted appellant citing inconsistencies in complainant’s account, procedural lapses, negative phenolphthalein test, and credible defence witnesses – High Court reversed acquittal – Held: Acquittal based on plausible view grounded in evidence – High Court failed to consider key contradictions and defence version – Demand and acceptance not proved beyond reasonable doubt – Presumption under Section 20 PC Act not attracted [Paras 1, 10–14, 18–20, 33].

Evidence – Hostile Witness – Credibility – Office attendant (PW-4) turned hostile, admitted to pressure from ACB and supported defence in contemporaneous letter – Defence witnesses (DW-1, DW-2) corroborated absence of accused during alleged bribery moment – High Court unjustifiably rejected their testimony – Held: Defence version plausible, supported by consistent independent evidence – Cannot be discarded merely due to official relationship with accused [Paras 26–30].

Criminal Procedure – Reversal of Acquittal – Appellate Interference – Appellate court must show perversity or grave error in Trial Court's view – High Court failed to address material inconsistencies, speculative reasoning on motive – Suspicion cannot replace proof – Held: Trial Court’s acquittal restored as it was reasonable and based on cogent evaluation of record – No justification for appellate reversal [Paras 11–13, 33].

Public Servants – Legal Authority – Inspection of Registers – High Court held demand for registers by appellant was coercive tactic – Held: Such findings unwarranted – Labour Officers empowered by law to call for records – Written notice issued by appellant validated his actions – No illegality in procedure followed [Para 34].

Decision: Appeal allowed – Conviction set aside – Acquittal restored – Bail bonds discharged [Para 35].

Public Interest Litigation – Unauthorized Constructions – Right of Hearing – High Court, in a PIL, directed closure of 172 civil suits and removal of unauthorized constructions in Gurugram, citing violations of planning norms – Appellants (landowners/occupiers) were not parties to the writ petition – Supreme Court held: Directions issued without impleading affected parties and affording hearing violate principles of natural justice – Order liable to be set aside [Paras 2, 6, 9]

Urban Development – Jurisdiction of Civil Courts – Section 15 of HDRUA Act – High Court directed closure of pending civil suits citing bar on jurisdiction under Section 15 – Held: Civil court jurisdiction cannot be conclusively ousted without adjudication – Affected persons entitled to be heard before such directions are passed [Paras 5, 6, 9]

Administrative Law – Due Process – Mandamus issued by High Court for demolition/removal of constructions – Held: Authorities must afford opportunity to affected owners/occupiers before enforcing such actions – Determination of illegality must follow due process [Paras 8–10]

Procedural Directions – Appeals Allowed – High Court’s order dated 13.02.2025 set aside – Writ Petitions (CWP Nos. 1528 and 2106 of 2021) restored – Appellants allowed to file appropriate applications within 2 weeks – High Court to re-decide the matter after hearing all affected parties, preferably within 6 months – State directed to give wide publicity to facilitate impleadment of affected persons [Paras 10–12]

Decision: Appeals allowed – High Court order set aside – Writ Petitions restored for fresh adjudication after affording hearing to all affected persons – Pending applications disposed of.

Criminal Law – Quashing of Proceedings – Domestic Violence – Maintainability – Appellants approached High Court under Section 528 of BNSS (earlier Section 482 Cr.P.C.) seeking quashing of proceedings under Section 12(1) of the DV Act – High Court dismissed the petition as not maintainable – Supreme Court held that the law on maintainability is settled in Shaurabh Kumar Tripathi vs. Vidhi Rawal, 2025 INSC 734 – Petition under Section 528 BNSS against DV Act proceedings is maintainable – High Court's view contrary to settled law – Impugned order set aside – Matter remanded to High Court for fresh decision on merits [Paras 2–5]

Decision: Appeal allowed – Impugned High Court order dated 10-12-2024 set aside – Matter remanded for reconsideration – All pending applications disposed of.

Practice and Procedure – Adverse Remarks Against Counsel – Modification of Order – Supreme Court had imposed Rs. 2 lakh costs and made adverse observations against State Election Commission’s counsel for persistent insistence despite repeated disinclination expressed by the Bench – Counsel filed Miscellaneous Application seeking expungement and waiver of cost – Held: Once Court indicates its mind, further insistence by counsel is inappropriate and undermines courtroom decorum – However, considering unqualified apology and first-time conduct, adverse remarks and cost are deleted with caution against future recurrence [Paras 3, 6–9].

Advocacy – Duty Towards Court vs Client – Counsel must strike balance between duty to client and maintaining decorum of court – Persistent submissions after clear judicial indication disturb dignified functioning of Court – Assurances from senior bar members considered in granting relief [Paras 6–7].

Decision: Application allowed – Remarks against counsel expunged – Cost of Rs. 2,00,000 deleted – Counsel cautioned not to repeat such conduct [Para 9].

Insolvency and Bankruptcy Code – Maintainability of Section 7 IBC Petition – Preference Shareholders – Financial Debt – Appellant, a preference shareholder, filed Section 7 petition for non-payment of redemption amount of CRPS – NCLT and NCLAT dismissed petition, holding CRPS did not constitute financial debt – Supreme Court upheld dismissal – Held: Preference shares are part of share capital, not debt – Redemption contingent on company having profits or proceeds of fresh issue – Appellant ceased to be creditor upon accepting preference shares in lieu of receivables – No default under IBC established – Petition under Section 7 IBC not maintainable [Paras 1, 2, 19, 20, 24-26, 29-34, 36, 38-39, 46-47, 50].

Company Law – Nature of Preference Shares – CRPS do not constitute debt – As per Section 55 of Companies Act, redemption of preference shares only permissible from profits or fresh share issue – Preference shareholders are not creditors – Preference shares are part of capital structure – Non-redemption does not convert them into debt – Held: Even after maturity, preference shares remain share capital, not enforceable debt – No right to initiate insolvency proceedings arises [Paras 19-24, 26-27].

Interpretation of IBC – Financial Debt – Essential elements – For a claim to be financial debt under Section 5(8) IBC, there must be disbursal against consideration for time value of money – CRPS not disbursed amount – No loan or borrowing established – No commercial effect of borrowing under Section 5(8)(f) IBC – Held: Preference share capital lacks foundational elements of financial debt – Conversion of receivables into CRPS extinguished earlier debt – CRPS issuance was an equity infusion, not a debt transaction [Paras 28-31, 46-48].

Default under IBC – Applicability of Section 3(12) – Default requires due and payable debt that remains unpaid – Redemption of CRPS not due as company had no profits or fresh issue proceeds – No default within meaning of Section 3(12) IBC – Petition under Section 7 rightly rejected on this ground [Paras 34-36].

Corporate Insolvency – Entries in Books of Account – Not conclusive – Treatment of CRPS in financial statements as unsecured loan or financial liability irrelevant – Accounting treatment cannot override statutory provisions or alter legal nature of transaction – Entries in accounts do not determine existence of financial debt under IBC [Paras 43-45].

Distinction between Creditor and Shareholder – Redeemable Preference Shareholder cannot be equated with creditor – Supreme Court reiterated that redemption obligation does not create creditor-debtor relationship – Conversion of outstanding receivables into CRPS amounted to capital restructuring, not a borrowing – No right to recover via insolvency proceedings [Paras 38-39, 49].

Precedents Distinguished – Case law cited by appellant including Sanjay D Kakade, Global Credit Capital, and Pioneer Urban Land held inapplicable – Each case turned on distinct facts or involved different forms of debt – Present case involved clear and conscious conversion of dues into equity capital – Earlier receivables stood extinguished – No underlying intent to mask borrowing established [Paras 38, 41-42, 49].

Decision: Appeal dismissed – Application under Section 7 IBC held not maintainable – Appellant, being a preference shareholder, is not a financial creditor – No order as to costs [Para 50].

Arbitration – Appointment of Arbitrator – Scope of Judicial Interference under Section 11(6) – Appellant suffered an arbitral award in dispute with third-party contractor – Based on contract clause shifting liability for award to respondent, appellant sought arbitration – High Court rejected application holding that liability arises only upon payment of award and cause of action had not arisen – Supreme Court held that existence of arbitration agreement was undisputed – Whether claim is arbitrable or cause of action has arisen is matter for arbitral tribunal to decide – Reiterated limited scope of judicial scrutiny under Section 11(6) as clarified in Office for Alternative Architecture and In Re: Interplay – Held: High Court erred in refusing to refer dispute to arbitration – Appeal allowed – Justice Bhaskar Bhattacharya (Retd. C.J., Gujarat High Court) appointed as sole Arbitrator [Paras 8–14].

Criminal Law – Quashing – Offence under Sections 379 and 411 IPC – Petitioner allegedly misused relationship with complainant’s wife to misappropriate cheque, hundis, and gold necklace belonging to complainant’s mother – Police report and private complaint led to cognizance only under Section 420 IPC – Sessions Court modified order and directed Magistrate to reconsider applicability of Sections 379 and 411 IPC – Supreme Court held that the question of taking cognizance under Sections 379 and 411 IPC must be considered afresh by the Magistrate uninfluenced by the Sessions Court’s observations – Held: Trial Magistrate to independently assess whether ingredients for theft and receipt of stolen property are made out – SLPs disposed of with liberty to Magistrate [Paras 5–7].

Criminal Law – Double Homicide – Unlawful Assembly – Common Object – Boundary dispute between related villagers escalated into a violent clash – Appellants armed with sharp-edged spades (phawaras) attacked complainant side causing instantaneous death of two persons and grievous injuries to others – Evidence revealed appellants came armed and initiated attack – Held: Assembly had common object to commit murder and cause injuries; findings of guilt under Sections 302/149 and 307/149 IPC fully justified – No perversity in concurrent findings of Trial Court and High Court [Paras 29-31, 45, 51-52].

Appellate Review – Scope under Article 136 – Concurrent findings on fact and law – Supreme Court reiterates that interference is warranted only when findings are manifestly perverse, based on no evidence, or result in grave miscarriage of justice – Since both courts below had examined the evidence threadbare and reached concurrent conclusions supported by record, no ground to interfere made out [Paras 23-25].

Evidence – Ocular vs Medical – Injured Eyewitness Testimony – Reliability – PW-2 (injured eyewitness) sustained multiple wounds consistent with prosecution case – Presence at scene admitted even by defence – Her version corroborated by medical evidence and by PW-3 and PW-4 – Minor discrepancies or omissions in narration do not dilute overall credibility – Medical evidence fully supports ocular account regarding use of sharp weapons and location of injuries – Held: Injured eyewitness testimony has greater evidentiary value and cannot be discarded on trivial inconsistencies [Paras 33-41].

Motive – Not Sine Qua Non where Direct Evidence Exists – Existence of long-standing enmity over partition of agricultural fields and a recently demolished ridge (mendh) established motive for assault – Court reiterates that where credible eyewitness evidence is available, motive assumes secondary importance – However, motive here corroborates the prosecution narrative, showing premeditated aggression by accused party [Paras 42-43].

Culpable Homicide – Section 300 Exception 4 – Plea of Sudden Fight and Free Fight Rejected – The incident was not a spontaneous brawl but a deliberate attack by armed assailants – The nature of injuries on vital parts such as skull and head, inflicted with lethal implements, demonstrates intention and knowledge necessary to constitute murder – Exception 4 to Section 300 IPC not applicable – Conviction rightly under Section 302 IPC and not reduced to Section 304 IPC [Paras 44-45].

FIR – Delay in Lodging – Explanation Acceptable – Cross-FIR filed after taking injured to hospital in Chandigarh – Delay reasonably explained and caused by priority of medical care – Law well settled that delay in lodging FIR is not fatal when satisfactorily explained – Held: Delay in filing cross-case does not undermine prosecution version supported by consistent eyewitness and medical evidence [Paras 46-48].

Investigation – Non-Recovery of Weapon – Not Fatal to Prosecution Case – Though weapons (phawaras and lathis) were not recovered, the ocular testimony and post-mortem reports conclusively established use of such instruments – Non-recovery or non-production of weapons not fatal when other evidence is unimpeachable – Prosecution evidence found natural, consistent, and trustworthy [Paras 49-50].

Defence Plea – Self-Defence and Suppression of Genesis – Defence plea of self-defence and suppression of genesis rejected – No convincing evidence to show complainant side was aggressor – Injuries on accused were superficial and not contemporaneous – Held: Defence version an afterthought and cannot displace consistent prosecution case [Paras 27-30, 34].

Principles Reiterated – Credibility of injured witnesses; limited interference under Article 136; delay in FIR not fatal; non-recovery of weapons immaterial when supported by medical and ocular evidence; motive though not indispensable strengthens prosecution version; Exception 4 to Section 300 IPC not attracted in premeditated assault cases [Paras 23-52].

Decision: Appeals dismissed – Conviction and sentence under Sections 302/149 and 307/149 IPC affirmed – Appellants directed to surrender forthwith; bail bonds cancelled – Liberty granted to seek remission as per statutory policy – Judgment of the High Court upheld in toto [Paras 51-53].

NDPS Act – Confiscation of Vehicle – Interim Release – Jurisdiction of Special Court – Rules of 2022 do not divest the Special Court of power to order interim custody of a seized conveyance – Subordinate legislation cannot override parent statute – Power under Sections 451 & 457 CrPC [497 & 503 BNSS] remains intact – High Court’s contrary view unsustainable [Paras 13, 22, 29-30]

NDPS Act – Sections 60(3) & 63 – Confiscation of Conveyance – Burden of proof on owner to show lack of knowledge or connivance – Confiscation can only follow judicial determination by Special Court after hearing claimant – Drug Disposal Committee cannot decide ownership or confiscation of vehicle – Violation of natural justice if deprived without hearing [Paras 19-22]

Subordinate Legislation – NDPS (Seizure, Storage, Sampling and Disposal) Rules, 2022 – Rules merely procedural and supplemental – Cannot curtail substantive rights of owner or judicial power of Court – Administrative Committee cannot substitute judicial adjudication under NDPS Act [Paras 13, 15-17, 27-30]

Interim Custody – Vehicle Seized under NDPS Act – Where owner not arrayed as accused and prima facie shows bona fides and absence of knowledge, Special Court empowered to release vehicle on supurdagi – Principle from Bishwajit Dey v. State of Assam, 2025 INSC 32 applied – Case fits within fourth category in Bishwajit Dey

(contraband recovered from third party without owner’s connivance) [Paras 31-35]

Presumption – Owner’s Knowledge – Mere presence of contraband in transport vehicle not sufficient to presume complicity of owner where no material indicates knowledge or connivance – Bonafide transporter carrying lawful goods entitled to interim release [Paras 31-33, 35]

Principles of Natural Justice – Property rights of innocent owner protected – Confiscation entails deprivation of property and must follow judicial process with opportunity of hearing – Rules of 2022 cannot override this constitutional safeguard [Paras 22, 27, 29]

Decision: Appeal allowed – Judgment of Madras High Court dated 20.12.2024 set aside – Vehicle bearing Registration No. TN 52 Q 0315 directed to be released to appellant on supurdagi subject to conditions imposed by the Special Court – Interpretation of Rules of 2022 clarified – Special Court retains jurisdiction to grant interim custody of seized conveyances [Paras 36-37].