Civil Law – Article 227 – Rejection / Striking off of Plaint – Availability of Remedy under Order VII Rule 11 CPC – High Court erred in exercising supervisory jurisdiction to strike off plaint despite existence of specific statutory remedy – Held: Availability of remedy under CPC constitutes a near-total bar to invocation of Article 227 – Impugned order set aside and suit restored [Paras 2, 5–11].

Constitution of India – Article 227 – Scope and Nature of Supervisory Jurisdiction – Powers are supervisory and not appellate – To be exercised sparingly and only to keep subordinate courts within bounds of jurisdiction – Cannot be invoked to correct mere errors or to bypass statutory remedies – High Court cannot act as a court of appeal in disguise [Paras 5, 5.1–5.7].

Civil Procedure Code, 1908 – Order VII Rule 11 – Rejection of Plaint – Statutory remedy for challenging maintainability of suit – Grounds for rejection often involve factual inquiry – Where such specific remedy is available under CPC, High Court must insist upon recourse to the same and desist from exercising powers under Article 227 [Paras 6.2–6.2.3, 7.4].

Article 227 vs Statutory Remedies – Availability of Alternative Remedy – In cases governed by CPC, existence of appellate or revisional remedy operates as a near-total bar against invoking Article 227 – Distinguished between civil court proceedings under CPC and proceedings under special statutes – High Court ought not to entertain petitions under Article 227 when CPC remedies exist [Paras 5.6–5.7, 7.1–7.4].

Order VI Rule 16 CPC – Striking Out Pleadings – Scope Limited to Portions of Pleadings – Cannot be stretched to justify striking off entire plaint – Rejection of plaint and striking out pleadings operate in distinct legal fields – Reliance on Order VI Rule 16 to strike off plaint under Article 227 held misconceived [Paras 6.1–6.4.1].

Property Disputes – Title Disputes – Allegations of Fraud – Such issues necessarily involve disputed questions of fact – Must be adjudicated through trial and evidence – High Courts should refrain from exercising supervisory jurisdiction in routine civil disputes involving factual controversies [Paras 6.3–6.3.2].

Judicial Discipline – Legislative Intent – When legislature provides a specific remedial mechanism, courts must respect the statutory scheme – Supervisory jurisdiction cannot be used to supplant or circumvent remedies expressly provided under CPC [Paras 8–9].

Final Relief – Appeal Allowed – High Court’s order striking off plaint under Article 227 set aside – Original suit restored to file – Liberty granted to defendants to file application under Order VII Rule 11 CPC – No order as to costs [Paras 10–11].

Bail – Interim Bail – Economic Offences – Liquor Scam – Former Excise Minister of Chhattisgarh arrested in ACB and ED cases alleging receipt of ₹2 crores per month from illegal liquor syndicate and framing of tailor-made excise policy – Multiple FIRs and ECIR based on same set of allegations – Seven chargesheets/prosecution complaints filed against 37 accused including the petitioner – Large-scale scam involving entire State and other parts of the country – Proposed examination of 864 witnesses – Investigation still ongoing with possibility of supplementary chargesheets – Prolonged custody since 15.01.2025 (ED case) and 02.04.2025 (ACB case) – Balancing prosecution’s right to complete complex investigation and accused’s right to liberty under Article 21 – Held: Indefinite incarceration not justified at interim stage – Interim bail granted with stringent conditions [Paras 1–11].

Bail Jurisprudence – Right to Liberty – Article 21 – Complex and Multi-Agency Investigation – Court observed that directing time-bound completion of investigation in complex cases involving specialised agencies may adversely impact prosecution – At the same time, continued incarceration for an uncertain duration infringes personal liberty – Interim arrangement warranted on peculiar facts of the case [Paras 8–10].

Conditions of Bail – Restrictive Conditions – Non-entry into State – Travel Restrictions – Witness Protection – While granting interim bail, Court imposed strict conditions including prohibition on entering State of Chhattisgarh except for court appearances, surrender of passport, disclosure of place of stay and contact details, non-interference with witnesses, and restraint on public statements concerning pending investigations – Breach of conditions to entail cancellation of bail – Held: Conditions necessary to balance liberty with fair investigation [Paras 10(i)–(x)].

Public Office – Legislative Assembly Participation – Judicial Restraint – Question regarding petitioner’s participation in State Legislative Assembly during pendency of investigation left open – Decision to be taken by Speaker – Court declined to express any opinion on the issue [Para 10(vii)].

Nature of Order – Interim Bail – No Opinion on Merits – Court clarified that grant of interim bail does not amount to expression of opinion on merits of allegations or entitlement to regular bail – Order passed considering peculiar facts and circumstances [Para 10(xi)].

Decision: Special Leave Petitions disposed of – Interim bail granted in FIR No. 04/2024 (ACB/EOW) and ECIR No. RPZO/04/2024 (ED) subject to stringent conditions – Pending applications closed.

Election Law – Panchayat Elections – Bar under Article 243-O – Respondent's nomination for Zila Panchayat election was rejected – Writ Petition dismissed by Single Judge citing constitutional bar and availability of remedy under Section 131H of Uttarakhand Panchayati Raj Act – Division Bench stayed rejection and directed participation in elections – Held: Article 243-O expressly bars interference in Panchayat elections except by way of election petition – Division Bench acted beyond jurisdiction by interfering with completed electoral process [Paras 8-10].

Judicial Review – Article 226 of Constitution – Limitation – High Court’s plenary jurisdiction under Article 226 is subject to statutory schemes like Panchayat election law – Supreme Court reiterated that where election laws provide for a complete mechanism (such as election petition), writ jurisdiction must be exercised sparingly – High Court erred in granting interim relief bypassing statutory remedy [Paras 9.3-10.3].

Election Process – Rejection of Nomination – Improper Rejection – Respondent claimed wrongful rejection based on non-disclosure of acquittal in prior criminal case – Held: Even such claims fall within purview of election petition under Section 131H(1)(b) of the Panchayati Raj Act – Courts cannot entertain such grievances at pre-election stage [Paras 10.1-10.3].

Due Process – Natural Justice – High Court stayed order of Single Judge without impleading or hearing appellant, who had been declared elected unopposed – Held: Interim directions issued without hearing directly affected party are legally unsustainable [Para 11].

Constitutional Framework – Purpose of Article 243-O – Provision aims to preserve sanctity of electoral process by limiting judicial interference – Remedy lies in election petition after process concludes – Upholding procedural integrity is in public interest [Paras 9-12].

Decision: Appeal allowed – Interim order of High Court set aside – Special appeal before High Court dismissed – Appellant's unopposed election upheld – Supreme Court cautions against judicial interference in electoral processes contrary to constitutional mandate.

Arbitration – Existence of Arbitration Agreement – Allegation of Forgery – Partnership dispute centered on an "Admission Deed" allegedly executed by partners to induct respondent into firm – Appellant denied execution and alleged forgery – Held: Arbitration clause embedded in forged document renders entire contract, including arbitration agreement, seriously disputed – Such a dispute is non-arbitrable as consent is foundational to arbitration – Prima facie doubt on document's authenticity makes arbitral reference impermissible [Paras 12-16, 20].

Arbitrability – Serious Fraud – Legal Position Reiterated – Where serious allegations of fraud affect the existence of arbitration clause itself, such disputes are non-arbitrable – Test: whether the allegation permeates the contract and the arbitration clause, rendering the agreement void – Court must decline arbitral reference if arbitration clause’s very existence is in question [Paras 13-15].

Section 8 and Section 11 Arbitration Act – Concurrent Findings – Trial and Appellate Courts rejected arbitration plea citing non-production of original deed and complex fraud – High Court under Article 227 overturned these findings – Supreme Court held: High Court exceeded jurisdiction – Supervisory power under Article 227 cannot be used to reappreciate evidence or reverse well-founded concurrent factual findings [Paras 21-22].

Finality of Judicial Determination – Section 9 Proceedings – Earlier High Court order declined interim relief citing absence of prima facie arbitration agreement – SLP against it dismissed – Held: Though Section 9 findings are prima facie, once final between parties, they cannot be ignored in later Sections 8/11 analysis [Paras 17-19].

Section 11 – Appointment of Arbitrator – Not Permissible – High Court rightly refused appointment under Section 11 due to unresolved question over arbitration agreement’s existence – Held: Appointment of arbitrator without establishing agreement would be premature and legally untenable [Para 23].

Decision:

Appeal arising from SLP (C) No. 6013 of 2021 (filed by Rajia Begum) dismissed –

Appeal arising from SLP (C) No. 20262 of 2021 (filed by Barnali Mukherjee) allowed –

Order directing arbitration under Section 8 set aside –

Order rejecting appointment under Section 11 affirmed.

Inter-State River Water Dispute – Original Jurisdiction of Supreme Court – Article 131 of Constitution – Pennaiyar River – Suit filed by State of Tamil Nadu alleging illegal unilateral construction of check dams/diversion structures by State of Karnataka without consent of lower riparian State – Reliefs sought included declaration of illegality, injunction against construction, direction to ensure natural flows and action by Union of India – Dispute pending since 2018 [Paras 1–2.7].

Inter-State Agreements – Agreement of 1892 – Effect and Continuance – Plaintiff-State relied on Agreement of 1892 between erstwhile States of Madras and Mysore to contend that prior consent of lower riparian State was mandatory – Defendant-State asserted that Agreement was political in nature and ceased to operate after independence – Controversy left open for adjudication by Tribunal [Paras 2.2, 2.6, 13].

Interim Relief – Refusal by Supreme Court – Application seeking restraint on construction and protection of natural flows dismissed as 75% of work already completed and prima facie permissions obtained – Liberty granted to approach Central Government for constitution of Tribunal under Inter-State River Water Disputes Act, 1956 [Para 2.9].

Statutory Negotiation Process – Failure of Amicable Settlement – Complaint lodged under Section 3 of 1956 Act – Negotiation Committee and ministerial-level talks conducted under aegis of Union of India – No consensus reached due to firm stand of Tamil Nadu seeking adjudication by Tribunal – Negotiations ultimately postponed indefinitely [Paras 2.10, 4–5, 8].

Constitution of Tribunal – Mandatory Duty of Central Government – Section 4, Inter-State River Water Disputes Act, 1956 – Once Central Government forms opinion that dispute cannot be settled by negotiation, constitution of Tribunal becomes obligatory – Word “shall” in Section 4 imposes mandatory duty – Reliance placed on T.N. Cauvery Neerppasana Vilaiporulgal Vivasayigal Nala Urimai Padhugappa Sangam v. Union of India [Paras 9–10].

Direction Issued – Constitution of Water Disputes Tribunal – Supreme Court directed Union of India to issue notification in Official Gazette and constitute Inter-State River Water Disputes Tribunal within one month – Suit disposed of with all issues and reliefs kept open for consideration by Tribunal [Paras 10–13].

Decision: Suit disposed of – Union of India directed to constitute Inter-State River Water Disputes Tribunal within one month – All questions left open for adjudication by Tribunal.

Criminal Law – Bail – Sections 304, 279, 337, 338, 427, 120-B, 201, 213, 214, 466, 467, 468, 471, 109 read with Section 34, Indian Penal Code, 1860 – Allegations of conspiracy, destruction and fabrication of evidence following a fatal road accident – FIR registered for offences under IPC, Prevention of Corruption Act and Motor Vehicles Act – High Court rejected applications for regular bail – Appeals before Supreme Court [Paras 2–3].

Bail – Subsequent Acts after Offence – Appellants not alleged to be perpetrators of the accident – Allegations confined to post-incident conduct relating to alleged replacement of blood samples – Juveniles travelling in backseat not accused of causing accident – Driver being tried before Juvenile Justice Board – Nature of allegations considered while assessing entitlement to bail [Paras 7–8].

Custodial Detention – Prolonged Incarceration – Appellants in custody for periods extending up to nearly eighteen months – Trial not commenced and likelihood of delay due to examination of nearly 100 prosecution witnesses – Continued incarceration held to cause grave prejudice to appellants [Paras 7, 11].

Bail – Balancing of Factors – Gravity of allegations under Sections 467 IPC and provisions of PC Act considered – Court held that seriousness of charge alone cannot justify indefinite detention when trial is likely to be prolonged – Bail can be granted with stringent conditions to safeguard trial [Paras 9–11].

Interference with Trial – Apprehension of Witness Tampering – State and impleaded respondents opposed bail on ground of possible influence on witnesses – Court held that such apprehension can be addressed by imposing strict conditions while granting bail [Paras 9–10, 12].

Conditions of Bail – Directions Issued – Appellants directed to be produced before Trial Court and released on bail on appropriate conditions – Appellants directed to cooperate with trial, not misuse liberty, and not contact witnesses directly or indirectly – Violation to entail cancellation of bail [Paras 12–16].

Decision – Appeals Allowed – Impugned order of Bombay High Court dated 16.12.2025 set aside – Appellants granted regular bail subject to conditions – Pending applications disposed of [Paras 12–16].

Insolvency – Section 7 IBC – Threshold of 100 Allottees – Maintainability – Petition filed by 103 unit allottees for initiating insolvency proceedings against two interlinked corporate debtors – Objection raised that several allottees had settled or taken possession – Held: As per Manish Kumar v. Union of India, threshold must be met at time of filing – Subsequent events including settlements are irrelevant – Petition held maintainable [Paras 7-9, 21].

IBC – Filing Defects – Amendment of Petitioner Details – Petition filed was returned for curing defects – Names of some allottees substituted – Objection raised that this amounted to abuse – Held: Rule 28(3) of NCLT Rules allows amendment before registration – Substitution prior to registration is legally permissible and not abuse of process [Paras 22-24].

Real Estate Insolvency – Joint Petition against Two Companies – Challenge raised to maintainability of single petition against two corporate debtors – Held: Where companies are interconnected, having common directors and overlapping functions in the same real estate project, a joint petition is maintainable – Reliance on Mist Avenue and Edelweiss ARC cases – Agreement between the two entities showed agency relationship and shared responsibility – Argument of independent legal identity rejected [Paras 11-20, 25-27].

Construction Completion – UPSIDA Compliance – Developers claimed project was completed and possession offered – Court found no occupancy certificate issued – UPSIDA stated sublease deeds not executed and dues unpaid – Observer’s report confirmed many floors incomplete, lacking basic amenities – Held: Developers failed to prove project completion or valid possession – Insolvency properly admitted [Paras 19, 28-36].

Bonafide Offer – Payment of ₹15.62 Crores – Appellant offered payment to settle claims of remaining allottees – Offer rejected by NCLAT – Supreme Court held that premise of only 55 unsettled allottees was factually incorrect – Offer rightly rejected [Paras 38].

Decision: All three civil appeals dismissed – NCLT and NCLAT orders upheld – Petition under Section 7 IBC held maintainable – Project construction incomplete – Offer to settle found untenable.

Environmental Law – Environmental Compensation – Powers of NGT – Project Cost as Yardstick – Project proponents undertook large-scale real estate construction without obtaining mandatory statutory permissions and continued work despite stop-work/closure directions – NGT held violations established and imposed environmental compensation – In case of RHYTHM, compensation enhanced from Joint Committee’s recommendation to ₹5 crores by adopting project cost as yardstick – Held: Sections 15 and 20 of NGT Act confer wide discretionary powers on NGT to mould relief – Adoption of project cost or turnover as a relevant metric is legally permissible where it bears rational nexus with scale and impact of violations – Compensation of ₹5 crores, being approximately 1.49% of project cost, neither arbitrary nor disproportionate [Paras 18–31, 46.1].

Polluter Pays Principle – Scope and Application – Environmental compensation must ensure deterrence and restitution – Larger projects impose greater environmental stress and possess higher capacity to bear costs – Linking compensation with economic magnitude of project aligns with principles of sustainable development and polluter pays – Absence of a rigid statutory formula does not denude NGT of power to determine compensation on case-specific basis [Paras 19–28].

CPCB Guidelines – Nature and Applicability – Not Statutory or Exhaustive – CPCB methodology for computation of environmental compensation is sector-specific and primarily tailored to industrial units – Guidelines are facilitative and indicative, not prescriptive – They do not fetter NGT’s statutory discretion – NGT entitled to rely on expert-driven and guideline-based frameworks while independently applying its mind to facts of each case [Paras 40–44, 46.4].

Expert Committees – Role – Judicial Function of NGT – Expert or Joint Committees assist NGT in fact-finding and technical assessment – Committee reports are not binding and cannot supplant adjudicatory function – In present cases, NGT independently evaluated committee findings, objections of project proponents and surrounding circumstances before determining liability and quantum – No abdication of judicial function established [Paras 42–44].

Environmental Violations – Distinction Between Regularised and Independent Infractions – In KEYSTONE’s case, post-facto EC obtained under one-time violation window covered certain past violations – However, prolonged construction without Consent-to-Establish, continuation despite closure directions and occupation without Consent-to-Operate constituted distinct statutory violations – NGT rightly imposed separate environmental compensation for such infractions [Paras 8–10, 46.3].

Turnover / Project Cost – Not a Mechanical Formula – Turnover or project cost cannot be used as a blunt or mechanical instrument – Must be applied with rationality, proportionality and reasoning – Permissible indicium where facts justify correlation between scale of operations, environmental impact and violator’s capacity – Present determinations fall within permissible judicial discretion recognised by Supreme Court precedents [Paras 25–39, 46.2].

Judicial Review – No Interference Warranted – Findings of violations supported by evidence and contemporaneous material – Compensation imposed proportionate to gravity, duration and scale of violations – Orders of NGT neither perverse nor arbitrary – Supreme Court declined interference [Paras 46–47].

Decision: Appeals dismissed – Environmental compensation imposed by NGT upheld – Time to deposit compensation extended by three months – Parties to bear their own costs.

Service Law – Regularization – Contractual Employees – Sanctioned Posts – Article 14 – Appellants appointed in 2012 as Junior Engineers (Agriculture) against sanctioned vacant posts through a duly advertised selection process – Engagement labelled as contractual with yearly renewals – Services continued uninterrupted for more than a decade with satisfactory performance – Respondent-State declined further extension in 2023 and refused regularization – High Court dismissed writ petitions and LPAs relying mechanically on contractual terms – Held: Prolonged contractual engagement on sanctioned posts followed by abrupt discontinuance is manifestly arbitrary and violative of Article 14 – State not justified in perpetuating ad-hocism under contractual nomenclature [Paras 9–14].

State as Model Employer – Constitutional Obligation – Fairness and Dignity in Public Employment – State bears heightened duty of fairness, probity and candour – Cannot exploit unequal bargaining power of employees – Mechanical reliance on contractual clauses ignoring constitutional mandate deprecated – High Court erred in reducing dispute to mere acceptance of contract divorced from constitutional context [Paras 11–11.2].

Constitutional Law – Waiver of Fundamental Rights – Contractual Terms – Acceptance of contractual stipulations barring regularization does not amount to waiver of fundamental rights – Fundamental rights under Article 14 incapable of waiver – Contractual clauses cannot immunize arbitrary State action from constitutional scrutiny – Reliance placed on Basheshar Nath and Central Inland Water Transport Corporation [Paras 11.3–12.3].

Contract Law – Unconscionable Contracts – Unequal Bargaining Power – “Lion and Lamb” Analogy – Contracts between State and employees marked by structural inequality – Employees compelled to accept standard form contracts to secure livelihood – Courts duty-bound to strike down unfair and unreasonable clauses – State cannot take advantage of dominant position to deny constitutional protections [Paras 12–12.3].

Legitimate Expectation – Long Continuous Service – Due Selection Process – Repeated extensions over a decade created legitimate expectation of recognition of service – Doctrine applicable where engagement followed a lawful selection process – Umadevi not an absolute bar where appointments are not illegal but at best irregular – Legitimate expectation operates to check arbitrariness in State action [Paras 13–13.1].

Service Jurisprudence – Limits on Perpetual Contractual Engagements – Practice of engaging employees on contractual basis for years deprecated – State cannot discard long-serving employees without cogent reasons or speaking order – Abrupt discontinuance after exploiting service during prime years held arbitrary – Reliance placed on Jaggo, Shripal, Vinod Kumar and Dharam Singh [Paras 13.2–13.10].

Article 136 – Interference with Concurrent Findings – Grave Injustice – Supreme Court may interfere with concurrent findings where non-interference results in substantial injustice – Mechanical application of precedents by High Court warranted correction – Exceptional circumstances made out for exercise of jurisdiction under Article 136 [Paras 9–9.3].

Relief – Regularization Directed – Judgments of Single Judge and Division Bench set aside – Respondent-State directed to forthwith regularize services of appellants against sanctioned posts – Appellants entitled to all consequential service benefits from date of judgment [Paras 14–16].

Decision: Appeals allowed – Writ petitions allowed – Impugned High Court judgments set aside – Regularization directed with consequential benefits.