Taxation Law - Broken Period Interest – Deduction for Securities Held as Stock-in-Trade – Revenue Expenditure – The court held that broken period interest, paid when a bank purchases government securities, should be treated as a revenue expenditure when the securities are held as stock-in-trade. This is because the income from securities is chargeable under Section 28 of the Income Tax Act as business income. Therefore, the interest paid for the broken period should not be capitalized as part of the cost of the securities but should be allowed as a deduction in the profit and loss account [Paras 5-12, 20].

HTM (Held to Maturity) Securities – Treatment as Investment or Stock-in-Trade – Whether broken period interest is deductible depends on how the bank treats HTM securities. If HTM securities are held as investments, the interest will not be deductible as revenue expenditure. However, if they are held as stock-in-trade, the deduction will apply [Paras 35-40].

Application of Previous Decisions – The court ruled that the decision in Vijaya Bank Ltd. v. Additional Commissioner of Income Tax does not apply to cases after the repeal of Sections 18-21 of the Income Tax Act in 1989. This is because interest on securities, when treated as business income, falls under Section 28, not under the previously repealed provisions [Paras 25-30].

Circulars and Guidelines – RBI Circulars of 1998 and 2001, as well as the CBDT Circular No. 4 of 2007, were taken into account, affirming that broken period interest should be treated as revenue expenditure in the case of securities held as stock-in-trade. The court emphasized that the practice of treating such interest as an expense is well-settled [Paras 42-45].

Decision: The court allowed the appeals in favor of the appellant Bank of Rajasthan, setting aside the High Court's judgment. The decision of the Appellate Tribunal was restored. The court also dismissed all the other civil appeals brought by the Revenue.

Criminal Law – Bank Fraud – Discharge of Accused – Appeal against the High Court’s decision to discharge the respondent (Accused No. 7) from charges of conspiracy, cheating, and criminal misconduct related to fraudulent credit facilities granted to a company – Allegation of undue haste in sanctioning loans without proper appraisal or clearance by the relevant departments – The High Court held that mere suspicion was insufficient to proceed against the respondent – Supreme Court upheld the discharge, stating no direct evidence implicated the respondent beyond signing a memorandum approved by senior officials – Held: No scope for interference, appeal dismissed [Paras 1-17].

Conspiracy – Participation and Knowledge – Submission by the learned Additional Solicitor General that a conspiracy does not require all conspirators to know every detail, and suspicion alone can suffice for framing charges – However, the Supreme Court found that although the process was expedited, there was no material to show that the respondent actively engaged in fraudulent conduct – The Loan Advisory Committee and senior officers’ involvement minimized the respondent’s role – No direct evidence of pecuniary benefit or improper influence by the respondent – Held: Suspicion alone does not justify framing charges [Paras 5, 18].

Banking Procedure – Loan Sanctioning – Court examined the procedures followed in sanctioning loans, noting the Zonal Office, Credit Department, and Loan Advisory Committee's roles in recommending the loans – The respondent’s role was limited to signing the memorandum, and no evidence showed personal involvement in misconduct – Despite the rapid processing of the loans, this did not amount to criminality – Held: Discharge was appropriate as no criminal intent or participation in the conspiracy could be proven [Paras 16-17 ].

Decision: Appeal dismissed – High Court’s order of discharge upheld – No findings made regarding other accused persons

Decision: The appeal was dismissed, and the High Court's order discharging the respondent was upheld. The court clarified that its findings were limited to the respondent's role and did not affect the trial against the other accused.

Medical Negligence – Enhancement of Compensation – National Commission's Order Upheld – The LRs of the deceased patient sought enhanced compensation for medical negligence after the patient died following a nasal polypectomy procedure. The National Commission had awarded ₹3,00,000/- against the treating doctors, along with ₹50,000/- each from two doctors for giving contradictory CT scan reports, and ₹1,20,000/- refund for treatment costs. Held: The compensation awarded was found reasonable, and the plea for enhancement was dismissed. The court emphasized that the value of life cannot be quantified in monetary terms, and the award serves as solace rather than exact compensation. [Paras 9-16]

Medical Negligence – Contesting Doctors’ Challenge to Liability – Doctors filed SLPs challenging the compensation, arguing that they provided appropriate care. Held: Notice was not issued in the doctors’ petitions, and the court found no merit in their contentions, dismissing the petitions. [Paras 12, 18]

Decision: SLPs Dismissed – The petitions filed by the LRs of the deceased patient seeking enhanced compensation were dismissed, as were the petitions filed by the doctors challenging the compensation awarded. The National Commission’s order was upheld in its entirety. [Paras 17-18]

Motor Vehicle Accident – Compensation – Assessment of Income – Future Prospects

The appellant, who sustained severe brain injuries resulting in 100% functional disability, challenged the High Court’s award of compensation – Held: The annual income of the appellant should have been enhanced considering salary progression, and future prospects were to be included – The appellant’s income was reassessed to ₹200,000 per annum with an additional 40% for future prospects, in line with Pranay Sethi [Paras 12-14, 22].

Functional Disability – Assessment of Compensation – Loss of Future Income - High Court correctly assessed the appellant's functional disability at 100%, despite a 60% physical disability, due to the mental incapacity caused by brain injuries – Compensation for loss of future income recalculated based on full functional disability [Paras 16-18].

Pain and Suffering – Enhancement of Compensation - The sum awarded for pain, suffering, and loss of amenities was enhanced from ₹50,000 to ₹100,000, acknowledging the severity and long-term impact of the injuries [Paras 20-21].

Additional Compensation – Future Attendant Charges and Loss of Marriage Prospects

The appellant was also awarded ₹100,000 each for future attendant costs and loss of marriage prospects, considering his need for long-term care and the impact of his injuries on his personal life [Paras 23-25].

Decision: Appeal allowed – The compensation awarded by the High Court was enhanced from ₹3,099,873 to ₹5,231,000, with interest at 6% per annum on the enhanced amount [Paras 28-29].

Criminal Law – Sections 420, 467, 468, and 471 IPC – Requirement of Intentional Deception – Quashment of Proceedings – The appellant challenged criminal proceedings initiated on allegations of fraud and forgery under Sections 420, 467, 468, and 471 IPC, arguing that issues in the sale deed registration related to undervaluation should have been addressed under Section 47-A of the Indian Stamp Act, rather than criminal law. The Court found no prima facie basis for the charges as no evidence of intentional deception or forgery was demonstrated. Held: Criminal proceedings should not be a substitute for appropriate statutory processes under revenue laws, especially where no criminal intent is evident [Paras 1-3, 7-10].

Scope of Section 482 CrPC – Frivolous Proceedings – High Court’s Dismissal Reversed – The Court observed that misuse of criminal process in cases involving civil or administrative issues undermines judicial efficiency. Referring to Mohd. Ibrahim v. State of Bihar and other precedent, the Court reiterated that Section 482 CrPC is a remedy to prevent unnecessary prosecutions and procedural abuses. In light of this, the High Court’s refusal to quash the FIR and criminal charges was set aside [Paras 6-7, 12-13].

Revenue Law – Invocation of Section 47-A of the Indian Stamp Act – Appropriate Procedure in Disputes over Stamp Duty – The Court stated that undervaluation in registration does not amount to an IPC offense unless criminal intent is evident, reinforcing that disputes regarding registration fees fall under the Stamp Act. The District Registrar should have pursued redressal under the Stamp Act instead of filing criminal charges, making the initiation of criminal proceedings legally unfounded [Paras 4-5, 11-14].

Decision – Appeal Allowed; Criminal Proceedings Quashed – The Court quashed the criminal proceedings initiated under IPC Sections 420, 467, 468, and 471, concluding that the case pertained solely to procedural missteps under revenue law and did not substantiate the serious criminal charges levied against the appellant [Paras 15-17].

Constitutional Law – Disability Rights – Admission to Medical Course – Rights of Persons with Disabilities Act, 2016 -  appellant, diagnosed with a speech and language disability of 44%, was denied admission to the MBBS course under the PwD category due to National Medical Commission guidelines disqualifying candidates with a disability exceeding 40% – Held: The strict application of the 40% disability rule was deemed overly broad and discriminatory under Article 14, as it failed to consider individual circumstances – The Court directed the National Medical Commission to reformulate its guidelines, emphasizing reasonable accommodation under the RPwD Act [Paras 18-22, 30-35].

Reasonable Accommodation – Interpretation of Disability Regulations - Court held that mere quantification of disability at 40% or more does not automatically disqualify a candidate for admission – Disability Assessment Boards are required to assess whether the disability actually impedes the candidate's ability to pursue the course, rather than relying on blanket exclusions – The decision reinforced the need for reasonable accommodation to enable the full participation of persons with disabilities in higher education [Paras 38-40].

Directive Principles of State Policy – Right to Education – Persons with Disabilities - Article 41 of the Constitution emphasizes the State's duty to provide access to education for persons with disabilities – The Court ruled that regulations that impose blanket exclusions based on arbitrary thresholds are incompatible with this Constitutional mandate, affirming the right of persons with disabilities to be assessed individually [Paras 44-48].

Decision: Appeal allowed – The admission of the appellant to the MBBS course was confirmed, and the National Medical Commission was directed to revise its regulations in line with the Rights of Persons with Disabilities Act, 2016, by the next academic year [Paras 50-54].

Criminal Law – Quashing of FIR and Proceedings under Article 142 – Appeal Allowed – The appellant was charged with multiple offences, including under Sections 376 and 377 IPC, based on a complaint by his wife. However, during trial, the complainant retracted her statements, indicating she filed the complaint under family pressure. Held: Considering the retraction and the desire of the complainant to restore family harmony, the Court invoked Article 142 to quash the FIR and all proceedings arising from it – The appellant is thus set free, and his bail bond is discharged [Paras 8-12].

Evidentiary Value of Complainant's Retraction – Impact on Criminal Proceedings – Although the complainant initially reiterated her accusations in statements recorded under Sections 161 and 164 CrPC, she later testified in court that the complaint was filed due to familial influence, and she no longer wished to pursue it. The Court considered this retraction sufficient to warrant the quashing of proceedings, as further prosecution would serve no purpose and would disrupt family peace. The Court noted that the complainant’s deposition aligned with the appellant’s contention of innocence [Para 4].

Power of Supreme Court under Article 142 – Equitable Relief Granted in Quashing FIR – The Court exercised its extraordinary power under Article 142 to grant complete justice, quashing the FIR and proceedings to avoid unnecessary harassment of the appellant. This decision respects the complainant’s wishes and promotes family reconciliation. The interim bail granted to the appellant was confirmed, and he was discharged from his bail bond obligations [Paras 10-12].

Decision:

Appeal allowed – The Court quashed the FIR and all subsequent proceedings. The interim bail granted to the appellant was made permanent, and he is released and discharged from his bail bond.

Conviction under Section 302 IPC – Appeal against Conviction – Appellant's role in the murder was established – Appeal partially allowed - The appellant, along with co-accused, was convicted of murdering the victim due to a dispute over jaggery. The appellant was the sole convict as the co-accused were acquitted. The court upheld the conviction under Section 302 IPC, rejecting the acquittal request but modified the sentence to the period already served due to the appellant’s prolonged incarceration of over 14 years and good conduct in prison. However, the conviction under Section 34 IPC was set aside due to lack of evidence of common intention [Paras 2-5, 12, 18].

Evidence of Witnesses – Reliability of Ocular Evidence – Testimonies of eyewitnesses P.W.1 and P.W.2 corroborated - The court found the depositions of the eyewitnesses credible, detailing the presence and role of the appellant in firing the fatal shot. The minor discrepancies noted by the defense were deemed immaterial to the overall case [Paras 10-13, 17].

Non-examination of Key Witnesses – Impact on Prosecution – No adverse inference - The failure to examine certain witnesses, including the investigating officer and key eyewitnesses, was found insufficient to discard the other overwhelming evidence presented by the prosecution [Paras 14-16].

Sentence Modification – Good Conduct in Prison – Sentence reduced - The appellant had already served over 14 years, including time without remission, and exhibited good behavior during incarceration, leading to a reduction in his life sentence to the time already served [Paras 22-25].

Insolvency and Bankruptcy Law – CIRP Deferral – Jurisdiction Under Article 226 – The appellant challenged the High Court’s order deferring the CIRP of KSK Mahanadi Power Company Limited after denying the respondents’ request for consolidation of CIRP with two other entities – Held: The High Court erred in deferring the CIRP despite refusing consolidation – The High Court’s direction to defer the CIRP under Article 226 is unwarranted as it breaches the discipline of the Insolvency and Bankruptcy Code, 2016 – CIRP deferral quashed [Paras 6-11].

Consolidation of CIRP – High Court Declined Relief – The respondents had sought consolidation of the CIRP of three corporate entities before the NCLT, which was rejected – The High Court also declined the same relief but, paradoxically, deferred the CIRP process – Held: The High Court had no basis to issue the deferral order after rejecting the primary relief, and such a direction is beyond the scope of its jurisdiction under Article 226 [Para 10].

Decision:

Appeal allowed – The impugned order of the High Court directing the deferment of the CIRP is set aside – The CIRP shall continue as per the provisions of the Insolvency and Bankruptcy Code, 2016 [Paras 11-12].