Motor Accident Claim – Enhancement of Compensation – Contributory Negligence, Future Prospects, and Functional Disability – Supreme Court Enhances Award – Appeal by injured claimant seeking enhancement of compensation for permanent disability sustained in a motor vehicle accident – The Court affirmed the finding of 20% contributory negligence, but found error in the omission of future prospects and in adopting a lower percentage of disability – Held: Appellant entitled to 40% addition for future prospects (self-employed), and functional disability fixed at 41.77% based on unchallenged medical evidence – Total compensation recalculated and enhanced to ₹16,60,891/- with interest at 6% per annum from the date of claim petition till payment, after deduction for contributory negligence; insurer directed to deposit the enhanced amount within six weeks [Paras 4-11].

Future Prospects for Self-Employed – Law Settled – Supreme Court reiterates that self-employed claimants are entitled to future prospects as laid down in Santosh Devi and Pranay Sethi – 40% added to income for calculation of loss of future earning capacity [Para 7].

Assessment of Functional Disability – Medical Evidence Paramount – The unchallenged evidence of the neuropsychologist (PW3) assessing neuro-behavioural and cognitive disability at 41.77% accepted as functional disability, rejecting arbitrary reduction by Tribunal and High Court – Compensation for loss of future earning capacity recalculated accordingly [Para 8].

Computation and Apportionment – Calculation of compensation detailed under all heads, including medical expenses, pain and suffering, attendant and conveyance, loss of income during treatment, and loss of amenities – Contributory negligence deduction applied – Directions for prompt deposit and disbursal to claimant [Paras 9-11].

Decision – Appeal Allowed in Part – Compensation enhanced to ₹16,60,891/- with interest; directions issued for compliance – All pending applications disposed of [Paras 11-13].

Civil Law - Specific Performance – Forged Settlement Agreement – Decree Set Aside – Alleged Fraudulent Compromise – The petitioner obtained a favorable decree from the Supreme Court in terms of an alleged settlement agreement dated 24.10.2024, resulting in the setting aside of concurrent findings by three lower courts dismissing a suit for specific performance – Respondent filed a Miscellaneous Application alleging he never entered into the said settlement or engaged any counsel in the Supreme Court – Held: Prima facie case of fraud established, Supreme Court recalled its earlier order dated 13.12.2024 and restored the appeal – Bar Council of India directed to conduct inquiry into the involvement of advocates and authenticity of representation [Paras 3-4, 6-7].

Fraud on Court – Unauthorized Representation – Caveat Abuse – Order Recalled – Respondent alleged unauthorized filing of caveat and fraudulent appearance of counsels – Court noted discrepancies in appearance records and denials by advocates – Ordered detailed inquiry into the conduct and role of the advocates, and reserved further directions, including criminal proceedings – Restored SLP to file for fresh hearing [Paras 4-6].

Professional Misconduct – Bar Council of India Inquiry – Supreme Court expressed serious concern over possible misconduct and unethical practices in representing parties without authority – Directed Bar Council to complete inquiry and submit report by October 2025 – Case listed for further proceedings in November 2025 [Para 7].

Final Decision – Order dated 13.12.2024 recalled – Civil Appeal No. 14414/2024 restored to file – Bar Council of India directed to submit report – Case to be listed for further hearing in November 2025 [Para 8].

Criminal Law - Section 21(c), 29, and 52A of the NDPS Act – Clubbing of Contraband Quantity – No Presumption of Conspiracy – Conviction Set Aside – The appellant and co-accused were apprehended together and found with 125g and 130g of heroin respectively – Held: Mere physical proximity does not justify presumption of common intent or conspiracy – No evidence led to establish prior knowledge or conspiracy between accused – Therefore, quantity cannot be clubbed to reach commercial threshold under Section 21(c) [Paras 22–25].

Procedural Lapses – Section 52A NDPS Act – Violation Undermines Prosecution – Non-Compliance Fatal – Samples were not drawn in duplicate nor in presence of Magistrate – Inventory not certified – Absence of appellant’s signature on sealed packets – Failure to produce test memo and weighment chart – Held: Cumulative procedural lapses render seizure and sampling unreliable – Violation of Section 52A and Standing Order 1/1989 vitiates trial [Paras 26–30].

Evidentiary Value – Forensic Report Not Admissible – Flawed Sampling Process – Since FSL report was based on improperly collected samples and no procedural safeguards were followed, the report was deemed inadmissible – Held: Without legally admissible evidence, conviction cannot be sustained [Paras 31–32].

Delay in Appeal – Appeal Rejected by High Court – Supreme Court Intervenes – The High Court rejected the appeal solely on the ground of 1183-day delay – Held: Incarcerated appellant with financial constraints ought not be penalized – Delay should have been condoned – Supreme Court decided to hear appeal on merits instead of remand [Paras 13–20].

Decision – Conviction and Sentence Quashed – Acquittal Ordered – Due to failure in proving conspiracy, clubbing of quantity, and multiple procedural lapses, conviction under Sections 21(c) and 29 of NDPS Act held unsustainable – Appellant acquitted and ordered to be released forthwith [Paras 33–34].

Civil Law - Maintainability of Suit under Section 92 CPC – Nature of Suit Must be Representative – Leave Upheld – The appellant-society challenged the Delhi High Court’s order granting leave under Section 92 CPC to respondents for instituting a representative suit – The plaint included allegations of gross financial impropriety, misconduct by trustees, and misadministration, as well as private grievances such as wrongful removal of respondent no. 1 from the post of President – Held: Suit was not solely based on private grievances – The presence of reliefs under clauses (a), (d), and (g) of Section 92(1) justified grant of leave – Leave granted by the High Court was proper and appeal dismissed [Paras 1, 133–138].

Registered Society – When Can Be Subject to Section 92 CPC – Trust or Constructive Trust Must Exist – Court considered whether a society registered under the Societies Registration Act, 1860 could fall within Section 92 CPC – Held: Though a society is not a juristic person and cannot hold property in its own name, the governing body may hold property under a fiduciary obligation – If misappropriation or misuse of property by governing members is established, a constructive trust arises – Suit under Section 92 is maintainable in such circumstances [Paras 120–125, 137(iv–xv)].

Constructive Trust – Misuse of Fiduciary Powers – Court Must Examine Allegations – Plaintiffs alleged siphoning of funds and abuse of fiduciary position by board members – Held: If established, such conduct would give rise to constructive trust – Constructive trustees can be proceeded against under Section 92 CPC – The trial court must determine whether the constructive trust exists and delineate the properties subjected to it [Paras 134–135, 138].

Private Grievances in Section 92 Suit – Not Bar to Maintainability if Suit Predominantly Public – Suit included personal claims of wrongful removal and reinstatement – Held: Inclusion of personal grievances does not invalidate the entire suit – Only those reliefs that fall within Section 92 CPC can be considered – Others must be agitated in separate proceedings – Courts must focus on predominant purpose and object of the suit [Paras 133–136, 137(xviii–xx)].

Reliefs Under Clauses (a), (d), and (g) – Other Reliefs to be Treated as Further Reliefs – Prayers in the plaint included reliefs for removal of trustees, account-taking, and settling of scheme – These fall within clauses (a), (d), and (g) of Section 92(1) – Held: Remaining private reliefs may be treated as further reliefs and do not affect maintainability – If the suit had contained only personal claims, it would have failed [Paras 135–136].

Purpose and Character of Suit – Representative Nature Essential – Capacity of Plaintiffs Crucial – Court reiterated that the true nature of a Section 92 suit depends on the purpose and the capacity in which it is instituted – Held: The court must go beyond the language of the reliefs and examine the intent and dominant object – Suit filed by persons with a substantial interest in the trust and in a representative capacity is maintainable [Paras 129–132, 136, 137(xvii–xix)].

Decision – Appeal Dismissed – Suit directed to proceed before the High Court – High Court to examine whether constructive trust is established and whether reliefs under clauses (a), (d), and (g) may be granted – Other reliefs must be dealt with as per law [Paras 138–140].

Arbitration Law  – Section 11 Appointment – Serious Fraud Allegations – Scope of Referral Court – Appeals against High Court orders allowing Section 11 applications and appointing arbitrators despite pendency of criminal proceedings and allegations of large-scale fraud by rice millers – Held: At Section 11 stage, court’s enquiry is limited to existence of arbitration agreement as per Section 11(6A) – Issues of arbitrability, fraud, limitation, and pendency of criminal or recovery proceedings to be decided by arbitral tribunal – Mere pendency of criminal proceedings or invocation of Recovery Act does not bar arbitration – All objections raised by appellant are kept open to be decided by arbitral tribunal as preliminary issues [Paras 2, 5, 8, 10, 16-18, 21, 23-29].

Appeals arise from High Court’s order appointing arbitrators under Section 11 of Arbitration and Conciliation Act, 1996, in disputes between Bihar State Food and Civil Supplies Corporation and rice millers regarding default in supply under procurement contracts – Appellant contended non-arbitrability due to serious fraud, pendency of criminal proceedings, and bar by Recovery Act – High Court held arbitration clause valid and limitation objections to be decided by arbitrator – Criminal and recovery proceedings do not oust arbitration [Paras 2, 5, 8, 10, 16-18].

Contracts contained clause for recovery of dues under Bihar & Orissa Public Demands Recovery Act, 1914 and separate clause for arbitration before District Collector in case of disputes – Corporation initiated recovery and criminal proceedings after alleged fraud and misappropriation of more than a thousand crores by rice millers – Special Investigation Team constituted; criminal trials centralized [Paras 3, 4, 8, 11, 12].

High Court in earlier proceedings had held that arbitration was a parallel remedy and dismissed writs challenging recovery notices – SLPs against earlier Section 11 orders dismissed; review petitions pending [Paras 6, 13].

Impugned order reiterated that pendency of proceedings under Recovery Act or criminal proceedings does not bar arbitration – Omission to file Section 8 application in recovery proceedings does not amount to waiver – Pre-arbitral mutual discussion is not a mandatory pre-condition for arbitration [Paras 16-18].

Fraud and Arbitrability – Principle Restated – Mere allegation or pendency of criminal proceedings does not by itself render a dispute non-arbitrable – Distinction drawn between “serious fraud” and “fraud simpliciter” – Disputes involving complex fraud with public law implications or affecting third parties/public interest may be non-arbitrable; otherwise, arbitral tribunal may decide issues of fraud relating to contract performance – Burden on party alleging non-arbitrability [Paras 21(V)-(VII), 21(X)].

Referral court’s enquiry at Section 11 stage is confined to prima facie existence of arbitration agreement – All other issues, including arbitrability and limitation, must be left to tribunal – No mini-trial or detailed inquiry by referral court [Paras 23-27].

Issues of jurisdiction, limitation, bar by earlier proceedings, res judicata, etc., to be raised and decided before arbitral tribunal as preliminary issues – Tribunal to provide opportunity to all parties [Paras 28-29].

Decision: Arbitration agreement exists – All other issues kept open for decision by arbitral tribunal – Appeals dismissed – No order as to costs [Paras 28-30].

Fee Recovery – Brief of Judgment and Decision – Recovery of enhanced school fees by unaided private school – Dispute arose after government notification restricting fee hike was struck down – Suits by school decreed by trial court, decree made subject to FFRC’s decision under Haryana School Education Act and Rules – Appellate Court affirmed decree but directed refund of entire amount if FFRC found in favour of parents, and reduced interest – Review petition dismissed – High Court set aside decree on ground of alternate remedy and ouster of jurisdiction under Section 22 – Held: Supreme Court restored trial court decree (with 6% interest), holding there is no express or implied ouster of civil court’s jurisdiction for fee recovery – Decree subject to FFRC decision as originally directed – Appeals allowed, no costs [Paras 2-18].

Civil Court Jurisdiction – Ouster under Section 22 of Haryana School Education Act – Not attracted – Section 22 ousts jurisdiction only where government or its officers are empowered to adjudicate – No such adjudicatory power in fee recovery suits by schools – Civil court jurisdiction maintained [Paras 6, 12, 16].

Remedy Before FFRC – Scope and Limitation – FFRC under Rules 158A and 158B is only for complaints by parents/students regarding capitation or excessive fees – No provision for school to enforce fee recovery before FFRC – No alternate remedy for school for recovery of reasonable fee hike [Paras 11, 12].

Limitation – Suits held within time – Cause of action arose on disposal of government appeal against fee notification – Suits filed in 2014 within limitation – Limitation ground rejected [Paras 5, 13].

Fee Notification and Compliance – School complied with Rule 148 for notification and Form VI – No challenge on procedure – Recovery decree subject to FFRC decision [Para 14].

Review and Modification – Appellate Court’s direction for refund of entire amount if FFRC found in favour of parents held erroneous – Refund only to extent FFRC interferes with fee hike – Review ought to have been allowed – Decree modified accordingly [Paras 15, 16].

Decision – Civil Appeals Allowed – Order of trial court restored and modified (interest at 6%) – Fee recovery subject to FFRC’s finding – No costs [Paras 16-18].

Civil Law - Suit for Recovery Against A State Financial Corporation -  Maintainability of Suit – Jurisdictional Bar – Section 80 CPC – Decree Declared Nullity – The appellant/State Financial Corporation, not originally a party to the underlying contract, was impleaded much after the institution of the suit for recovery. The trial court decreed the suit without satisfaction of the mandatory requirement of prior notice under Section 80 CPC. Held: Absence of mandatory notice rendered the entire proceedings and decree a nullity, which could be challenged at any stage, including execution. Objection to jurisdiction may be raised at any time and cannot be cured by acquiescence. [Paras 21-30, 44, 45].

Applicability of Interest on Delayed Payments Act, 1993 – Prospective Operation – Supply Predates Act – The transaction in question, i.e., the supply of goods, occurred in 1985, prior to the enforcement of the 1993 Act. The trial court erroneously imposed liability for compound interest under the repealed Act, 1993. Held: The Act is prospective and applies only to supplies made after 23.09.1992; agreements predating the Act do not attract its provisions even if supplies were pursuant to such agreements. Decree imposing interest under the repealed Act is unsustainable and unenforceable. [Paras 31-35, 43, 52-58].

Liability of State Financial Corporation – Section 29 of SFC Act, 1951 – Limited Liability as Secured Creditor – No Privity of Contract – The appellant, having taken over the assets of the defaulting concern under Section 29, could only be held liable to the extent of surplus sale proceeds, not for the entirety of the defaulting company’s debts. Absence of privity of contract between appellant and supplier precludes direct liability. Orders attaching the Corporation’s personal accounts and assets were without jurisdiction. [Paras 39-40].

Impleadment and Limitation – Section 21 Limitation Act – Relatability of Date – Functus Officio – Impleadment of the appellant was erroneously related back to the institution of suit after decree was passed. Section 21 applies only to pending suits; post-decree application is not maintainable, and the trial court had no jurisdiction to alter party status or rights after decree. [Paras 41-41.1].

Execution and Recovery – Refund Ordered – No Enforceable Decree – Having found the suit to be non-maintainable and the decree a nullity, the Court held all recovery and execution proceedings against the appellant as unsustainable. Respondent directed to refund entire sum of Rs. 2,92,57,559/- received from the appellant, without interest, within three months. [Paras 43, 46].

Conduct of Litigation by State Entities – Duty of Diligence – Observations – The Court deprecated the lack of diligence by the appellant and its counsel, emphasizing that public institutions must pursue litigation responsibly and with all due procedural compliance, and that judicial oversight must not allow public resources to be unjustly depleted. [Para 47].

Decision – Civil Appeal Allowed – All orders and decrees against appellant set aside – Decree found to be a nullity and unenforceable – Directions for refund issued – No order as to costs. [Paras 45-49].

Civil Law - Specific Performance – Section 20, Specific Relief Act - Execution and Enforceability of Agreement to Sell – Plea of Fabrication and Blank Stamp Papers – Appeal Allowed – Respondents filed suit for specific performance based on alleged agreement to sell and delivery of possession, contending that substantial consideration had been paid and appellant failed to execute sale deed – Appellant denied execution, claimed signatures obtained on blank stamp papers in context of money-lending, and alleged misuse – Both Trial and First Appellate Courts found for appellant, holding respondents failed to prove valid execution of agreement or payment of rent and noting disproportionate consideration vis-à-vis market value – High Court reversed, relying on admission of signatures and handwriting – Held: Supreme Court found respondents failed to examine attesting witnesses or produce cogent evidence of agreement, and only self-serving evidence of plaintiff was adduced; plea of ‘blank paper theory’ not properly discredited; High Court erred in reversing findings on mere admission of signature without proof of consensus ad idem – Appeal allowed, impugned judgment set aside [Paras 1-16].

Burden of Proof – Onus on Plaintiff – Requirement to Prove Valid Execution – Respondents failed to discharge onus to prove execution of genuine agreement of sale and readiness and willingness to perform contract; did not produce attesting witnesses or evidence regarding movement of possession and payment of rent as per agreement – Held: Plaintiffs must prove existence of valid agreement and their readiness and willingness; burden not discharged by self-serving testimony alone [Paras 9, 14-15].

Money-Lending Transaction – Allegation of Fraud and Misuse of Documents – Appellant’s defence of borrowing money and providing signatures on blank stamp papers found plausible, with supporting evidence of professional money-lending practices by respondents; absence of credible evidence of agreement and consideration supports appellant’s version – Held: Courts below correctly accepted appellant’s defence and rejected claim of specific performance [Paras 8-9, 15].

Relief – Refund of Amount Received – Appellant’s Admission of Debt – Supreme Court, despite allowing appeal and setting aside specific performance decree, directs appellant to pay Rs. 3,00,000/- to respondents towards repayment of admitted debt, in view of appellant’s admission of borrowing and absence of proof of discharge – Held: Respondents entitled to receive amount; appeal otherwise allowed [Para 10].

Second Appeal – Interference with Concurrent Findings – Principles – Supreme Court reiterates that High Court’s interference with concurrent factual findings is limited to cases of misreading, non-appreciation, or perversity; not justified on mere re-appreciation of evidence or admission of signature alone – Held: High Court’s judgment unsustainable; concurrent findings of lower courts restored [Paras 11, 16].

Decision – Appeal Allowed – Decree for Specific Performance Set Aside – Respondents to Receive Rs. 3,00,000/- from Appellant – Impugned High Court judgment set aside, concurrent findings of Trial and Appellate Courts restored, but appellant directed to pay Rs. 3,00,000/- within four weeks; all pending applications disposed of [Paras 10, 16].

Criminal Matrimonial Law  – Quashing of FIR under Section 498-A IPC – Matrimonial Dispute – Irretrievable Breakdown of Marriage – Marriage Dissolved under Article 142 – Parties married on 25.07.2015 – After brief conjugal life, appellant-husband alleged harassment and left the matrimonial home at Mumbai for Faridabad to care for aged parents and autistic child from previous marriage – Respondent-wife filed FIR alleging cruelty and abandonment under Section 498-A IPC one year after separation – Both parties engaged in protracted litigation – Settlement agreement reached during divorce mediation but respondent-wife subsequently resiled demanding enhanced alimony – Allegations found vague, commonplace, and without substantial specifics – FIR and related criminal proceedings quashed invoking power under Article 142, dissolving marriage due to irretrievable breakdown, ensuring closure of all matrimonial litigation – Held: No prima facie case under Section 498-A established, quashing justified, marriage irretrievably broken down; dissolved under Article 142 subject to settlement terms and conditions [Paras 1-23].

Section 498-A IPC – Allegations Vague and Commonplace – Quashing Justified – Allegations by respondent-wife against appellant under Section 498-A IPC held to be vague, general, commonplace marital disputes without specific credible instances – FIR filed belatedly, one year after separation – Held: Allegations did not constitute prima facie offence; FIR quashed to prevent misuse of judicial process [Paras 8-14].

Divorce on Mutual Consent – Respondent-Wife Resiled from Agreement – Effect on Criminal Proceedings – Wife initially agreed to mutual divorce and property settlement, resiled later demanding enhanced permanent alimony – Appellant sought quashing of FIR based on withdrawal from consent terms – Held: Wife's statutory right to withdraw consent for second motion divorce affirmed; however, this alone not sufficient for refusal to quash FIR when no substantive offence under Section 498-A made out [Paras 4,12-13].

Permanent Alimony – Irretrievable Breakdown of Marriage – Just and Equitable Compensation – Respondent demanded Rs. 12 crore alimony in addition to encumbrance-free apartment – Respondent highly educated, capable, previously employed; appellant currently unemployed with substantial responsibility of autistic child from first marriage – Appellant agreed to gift valuable Mumbai apartment with parking areas and settle all pending dues as final settlement – Held: Gift of apartment sufficient compensation, further claim of alimony unjustified considering financial status of parties [Paras 16-20].

Article 142 – Dissolution of Marriage – Irretrievable Breakdown – Closure of Multiple Proceedings – Prolonged litigation, acrimonious relationship, and failed reconciliation attempts established irretrievable breakdown of marriage – Supreme Court invoking powers under Article 142 dissolved marriage to achieve complete justice and terminate all pending and future litigations between the parties – Held: Marriage dissolved, criminal and civil litigations closed, no further proceedings permitted [Paras 16-23].

Decision – Criminal Appeal Allowed – FIR and Criminal Proceedings Quashed – Marriage Dissolved under Article 142 – Criminal proceedings against appellant under Section 498-A IPC quashed – Marriage dissolved due to irretrievable breakdown under Article 142 of Constitution subject to compliance with terms agreed upon in settlement, including gifting of apartment and payment of maintenance charges by appellant – All pending matrimonial litigation between parties terminated – Held: Appeal allowed, proceedings closed, marriage dissolved under Article 142 [Paras 21-23].