Insolvency Law – Corporate Insolvency Resolution Process (CIRP) – Appellant challenged the settlement approved by the NCLAT under Rule 11 of the NCLAT Rules, 2016, which set aside the CIRP initiated against the Corporate Debtor under Section 9 of the Insolvency and Bankruptcy Code (IBC) – The appellant, a financial creditor, raised concerns about the legality of the settlement and its source of funds, contending that the NCLAT should not have used its inherent powers, bypassing the prescribed procedure for settlement under Section 12A of the IBC – Held: Rule 11 could not be invoked, as the legal framework under Section 12A and Regulation 30A of the CIRP Regulations 2016 provides an exhaustive procedure for withdrawal or settlement of CIRP post-admission [Paras 77-80].

Settlement of Claims – Inherent Powers of NCLAT – Rule 11 of the NCLAT Rules – The NCLAT invoked its inherent powers to approve the settlement despite the admitted CIRP and the absence of a formal application through the IRP – The Supreme Court held that Rule 11 could not be used to bypass Section 12A and Regulation 30A, which provides a detailed process for withdrawal or settlement after the initiation of CIRP – The Court noted that once the CIRP is admitted, the proceedings become in rem, and all creditors, including financial creditors like the appellant, become stakeholders whose interests must be considered – The NCLAT failed to adequately address the appellant's objections regarding the source of funds used in the settlement and potential violations of Delaware Court orders concerning fraudulent transfers [Paras 79-81].

Withdrawal of CIRP – Procedural Infirmities – Appellant raised concerns over the NCLAT’s approval of the settlement without following the due process laid out under Section 12A of the IBC and Regulation 30A – The Supreme Court emphasized that the proper procedure for withdrawal of CIRP includes filing an application through the IRP and placing it before the NCLT for approval, which was not followed in this case – The use of Rule 11 in this context was unwarranted and bypassed the prescribed legal process [Paras 79, 80].

Locus Standi of Financial Creditor – Appellant’s standing – The appellant, a financial creditor whose claims had been verified by the IRP, challenged the NCLAT’s decision to approve the settlement – The Supreme Court held that the appellant, as a necessary stakeholder in the CIRP, had locus standi to raise objections and challenge the settlement – The interests of all creditors must be protected in insolvency proceedings, and the appellant's grievances were validly raised [Paras 75, 76].

Decision: Appeal allowed – The NCLAT’s order approving the settlement and setting aside the CIRP is set aside – The parties are at liberty to seek withdrawal or settlement through the appropriate procedure under Section 12A of the IBC – The escrow amount of Rs 158 crore to be deposited with the CoC until further directions from the NCLT [Paras 86-88].

Constitutional Law – Right to Legal Aid – Fundamental Right under Article 21 – Writ Petition under Article 32 filed seeking humane treatment for prisoners, decongestion of jails, and access to legal aid – NALSA's efforts in ensuring legal aid for prisoners emphasized – Court acknowledges the importance of legal aid in ensuring equal justice as per Article 39-A of the Constitution – Held: Right to legal aid for indigent prisoners is a fundamental right under Article 21 of the Constitution – Ensuring this right is not merely a formality but must be actively implemented through effective legal representation [Paras 5, 7, 8, 10, 11].

Overcrowding in Prisons – Degrading Treatment of Prisoners – Issue raised regarding overcrowded prisons leading to inhumane conditions – Petitioner sought relief for prisoners facing overcrowded and unhygienic conditions – Court stressed the importance of addressing the issue through systemic reforms, including the establishment of Open Correctional Institutions – Held: The matter of overcrowded prisons will be addressed separately [Paras 1, 3].

Role of Legal Aid Clinics in Prisons – NALSA SOP-2022 – Legal aid provided through Prison Legal Aid Clinics (PLACs) established by NALSA across 1265 prisons – Detailed functions of PLACs outlined, including providing legal representation, bridging communication gaps between prisoners and courts, and facilitating the filing of appeals – Held: PLACs play a crucial role in ensuring prisoners' access to justice, particularly for vulnerable groups such as women and foreign nationals [Paras 11-13].

Jail Visiting Lawyers and Paralegal Volunteers – Role and Responsibilities – Jail Visiting Lawyers (JVLs) and Paralegal Volunteers (PLVs) designated to provide legal assistance to prisoners, including filing bail applications, parole, and other petitions – Their role extends to monitoring prison conditions and ensuring the rights of prisoners are upheld – Held: The roles of JVLs and PLVs are vital in bridging the information gap and ensuring that prisoners are not left without legal representation [Paras 13-14].

Statistical Data on Legal Aid Services – NALSA’s Performance – Court reviewed the statistical data on the number of prisoners who received legal aid – 324,867 inmates assisted in 2023-24 – Emphasis placed on continuing to address the gaps between those eligible for legal aid and those receiving it – Held: NALSA’s performance is commendable, but gaps in service provision must be addressed for effective implementation [Paras 15-16].

Pre-Litigation Assistance – NALSA’s Early Access to Justice Framework – NALSA introduced measures to provide legal assistance to suspects at the pre-arrest, arrest, and remand stages – Court emphasized the importance of legal representation at these crucial stages to prevent unlawful detention – Held: NALSA’s pre-litigation assistance is crucial for safeguarding the rights of suspects and arrestees, and its implementation should be diligently pursued [Paras 24-26].

Recommendations and Directions – Court issued detailed directions to NALSA, SLSAs, and DLSAs to ensure the efficient operation of PLACs and legal aid systems – Regular monitoring and audits of Legal Aid Defence Counsels, periodic interaction with convicts, and increased awareness campaigns were emphasized – Steps to strengthen the infrastructure and service conditions of legal aid lawyers were recommended – Held: Legal aid should not merely be available in theory but must be accessible and effective in practice, ensuring that the right to legal representation for indigent prisoners is realized [Paras 34-35].

Decision: Petition disposed of – Directions issued to NALSA, SLSAs, DLSAs, and relevant authorities to ensure efficient implementation of legal aid services – High Courts directed to issue practice directions to inform convicts of their right to legal aid when furnishing judgments – Appreciation expressed for the contributions of the Amicus Curiae and NALSA representatives in advancing the case [Paras 34-36].

Criminal Law – FIR Quashing – HDFC Bank officials accused of violating a restraining order under Section 132(3) of the Income Tax Act, 1961 – FIR registered for offenses under Sections 34, 37, 120B, 201, 206, 217, 406, 409, 420, and 462 IPC – High Court dismissed the writ petition to quash the FIR – On appeal, Supreme Court held that the allegations did not prima facie disclose the commission of any offense or the presence of mens rea by the appellant-bank or its officials – Held: Continuation of the criminal proceedings would cause undue hardship, FIR quashed [Paras 1, 3, 6, 7, 16, 21, 24, 27, 31].

Mens Rea – Absence of Fraudulent Intent – Appellant-bank argued that the bank officials acted under a bona fide mistake, misinterpreting the revocation order as extending to bank lockers – No allegations of fraudulent intent or inducement were made in the FIR – Supreme Court held that for offenses under Sections 420 and 409 IPC, mens rea is essential – In this case, there was no dishonest intent, nor were the bank officials shown to have induced anyone fraudulently [Paras 5, 21, 22, 25].

Entrustment and Breach of Trust – Section 409 IPC – FIR alleged breach of trust concerning bank locker operations – The Court observed that there was no entrustment of property to the appellant-bank or its officials, and thus no criminal breach of trust under Sections 406 or 409 IPC – The misinterpretation of the revocation order did not amount to dishonestly misappropriating any property [Paras 22, 24].

Common Intention and Criminal Conspiracy – Sections 34, 120B IPC – The Court held that the FIR and complaint did not establish any common intention or conspiracy among the bank officials to intentionally violate the restraining order – As a result, the provisions of Sections 34, 37, and 120B IPC were found inapplicable [Paras 27].

Decision: Appeal allowed – Judgment of the Patna High Court set aside – FIR registered against the bank officials under various IPC sections quashed – Continuation of criminal proceedings deemed unnecessary as it would cause undue hardship to the appellant-bank [Paras 29-31].

Corporate Insolvency - Initiation of CIRP – Application under Section 7 of the IBC – Acknowledgment of Debt in Balance Sheet – Validity of Application Confirmed – The appellant challenged the initiation of CIRP on the grounds that the Section 7 application was barred by limitation, and the debt owed to UCO Bank was not specifically acknowledged in the Corporate Debtor's balance sheet. The Supreme Court held that the entries in the balance sheets of the Corporate Debtor for the years 2017 and 2019, along with the One-Time Settlement (OTS) proposal, amounted to a valid acknowledgment of debt under Section 18 of the Limitation Act, thereby extending the limitation period. The CIRP initiation was upheld as being within the limitation period [Paras 3-6, 10-13].

Acknowledgment of Debt – Balance Sheets and OTS Proposal – Section 18 of the Limitation Act – Extension of Limitation Period – The Court observed that the balance sheet entries and the OTS proposal issued by the Corporate Debtor acknowledged the existence of a debt, even without the specific mention of UCO Bank's name. Citing the judgment in Asset Reconstruction Company (India) Ltd. v. Bishal Jaiswal, the Court affirmed that balance sheet entries, coupled with an auditor’s note on outstanding liabilities, can serve as acknowledgment of debt sufficient to extend the limitation period under Section 18 of the Limitation Act [Paras 7, 10-11].

Corporate Debtor’s Liability – OTS Proposal Constitutes Acknowledgment – The Corporate Debtor’s proposal for a One-Time Settlement (OTS) to UCO Bank was found to be a clear acknowledgment of a subsisting debt. The Court held that the OTS proposal indicated the existence of a debtor-creditor relationship and reaffirmed the Corporate Debtor's liability, further supporting the application of Section 18 of the Limitation Act to extend the limitation period [Paras 11-12].

Decision – The appeal was dismissed, affirming the orders of the Adjudicating Authority and NCLAT. The Court found no merit in the appellant’s arguments concerning the limitation and acknowledgment of debt [Paras 13-14].

Criminal Law – Murder Conviction – Appeal against the conviction under Sections 120B and 302 IPC – Appellants convicted for the murder of the deceased based on circumstantial evidence and medical testimony – High Court reversed the Trial Court’s acquittal and sentenced the appellants to life imprisonment – Prosecution established the guilt of the appellants beyond reasonable doubt by proving motive, presence at the crime scene, and falsity of their defense – Held: Appeals dismissed – Conviction and sentences upheld [Paras 1, 21, 26, 29].

Motive – Illicit Relationship – The prosecution argued that the motive for the murder was an illicit relationship between Accused Nos. 1 and 2, which the deceased had discovered – This strained the relationship between the deceased and the accused, leading to her murder – The High Court accepted this motive as plausible, supported by witness testimonies and circumstantial evidence – Trial Court's rejection of the motive as implausible was found to be erroneous – Held: The prosecution successfully established the motive for the crime [Paras 3, 11, 25].

Medical Evidence – Postmortem Report – Medical evidence, including the postmortem report, revealed multiple ante-mortem injuries and a broken hyoid bone, indicating death by strangulation – Testimony from P.W.-10 confirmed that the deceased could not have ingested any liquid (such as paint) after sustaining these injuries, ruling out the possibility of suicide – Medical evidence corroborated the prosecution’s case that the death was homicidal and consistent with strangulation – Held: The medical findings strongly supported the prosecution's version [Paras 7, 8, 22].

Circumstantial Evidence – Chain of Events – Burden of Proof – The case rested on circumstantial evidence, including the appellants’ presence at the crime scene and their suspicious conduct before and after the incident – The prosecution established a complete chain of events that pointed conclusively to the guilt of the appellants – Under Section 106 of the Indian Evidence Act, the burden shifted to the appellants to provide an alternative explanation for the death, which they failed to do – False explanations offered by the appellants further strengthened the prosecution’s case – Held: Circumstantial evidence, coupled with the medical findings, pointed conclusively to the appellants' guilt [Paras 10, 19, 24].

Reversal of Acquittal – High Court's Intervention – The High Court overturned the acquittal granted by the Trial Court, noting that the Trial Court had failed to properly appreciate the circumstantial and medical evidence – The High Court found the view taken by the Trial Court to be unreasonable and perverse, justifying its reversal – Held: The High Court’s decision to convict the appellants was based on a thorough re-evaluation of the evidence, and the Trial Court’s findings were rightly set aside for misappreciation of the material on record [Paras 12, 13, 14, 28].

Decision – Appeals Dismissed – The prosecution proved the case beyond reasonable doubt by establishing motive, presence of the accused at the scene, and medical evidence confirming the cause of death – The appellants’ false defense further implicated them in the crime – Held: Appeals dismissed, conviction and life imprisonment sentences upheld [Paras 27, 29].

Service Law - Disciplinary Proceedings – Procedural Lapses – Quashing of Dismissal Order – The respondent, a storekeeper implicated in a misappropriation case involving government rations, was dismissed following departmental proceedings – The CAT found procedural deficiencies in the inquiry and set aside the dismissal, allowing for fresh proceedings – The High Court upheld the CAT's decision but denied the appellants the right to reinitiate proceedings – Held: The High Court erred in removing the liberty to conduct a fresh inquiry, as the gravity of the charges justified such action [Paras 11-13, 18-19].

Non-payment of Subsistence Allowance – Impact on Disciplinary Proceedings – The respondent claimed prejudice due to non-payment of subsistence allowance – Reiterated that non-payment does not inherently vitiate proceedings unless specific prejudice is shown – Reference made to Indra Bhanu Gaur and Ghanashyam Das Srivastava – Held: Proceedings were to resume from the stage where they stood vitiated, and allowance was ordered to be released with interest [Paras 10, 19-21].

Principles of Natural Justice – Right to Fair Inquiry – Inquiry Officer's adherence to procedural fairness is paramount in disciplinary proceedings – Departure from prescribed procedures can invalidate proceedings but allows for fresh inquiry depending on the misconduct's severity – Reinforced in Chairman, LIC of India & Ors. v. A. Masilamani [Paras 14-17].

Directive for Fresh Inquiry – Court's Powers and Time-bound Inquiry – Appellants permitted to resume disciplinary inquiry from the vitiated stage – Directions issued for a detailed procedure, including evidence submission, respondent's rights, and time frame for completion – Held: Appeal partially allowed, reinstatement ordered for limited inquiry purposes [Paras 24-25].

Decision: The Supreme Court partially allowed the appeal, granting the appellants the right to resume the inquiry from where it was vitiated. The respondent was to be reinstated solely for conducting the inquiry and placed under suspension, with entitlements to subsistence allowance and half salary for a specified period [Paras 23-26].

Service Law – Disciplinary Proceedings – Admonition – The appellant, an Airman in the Indian Air Force, was charged with insubordination and violation of good order after an incident at a railway crossing – The appellant was admonished and later sought quashing of the Admonition, arguing the proceedings were flawed due to lack of proper sanction under Section 83 of the Air Force Act – The Armed Forces Tribunal quashed the Admonition but did not grant compensation – Held: The Tribunal's order was upheld, and compensation of Rs. 1 lakh was awarded for the undue hardship caused by the long-drawn litigation and disproportionate punishment [Paras 1-12].

Vindictiveness – Handling of Minor Infraction – The Tribunal noted that the incident could have been handled more appropriately by the superior officer without escalating it – The conduct of the officer was decried as vindictive, resulting in the appellant’s unnecessary detention and punishment – Held: The disproportionate response to a minor infraction was inappropriate, and the appellant was entitled to compensation for the harassment and humiliation suffered [Paras 6.1-6.2, 8-12].

Compensation – Monetary Award for Loss of Dignity – The Court observed that while monetary compensation cannot fully restore lost dignity, it serves as a token of recognition of the appellant’s identity and rights – Rs. 1 lakh was granted as compensation for the emotional and financial distress caused by the unjust disciplinary action [Paras 10-12].

Decision: Appeal allowed – The Admonition order was quashed, and the respondents were directed to pay Rs. 1 lakh in compensation to the appellant within 30 days [Paras 12-13].

Service Law – Pay Discrepancy – Appellant, an Artificer III in the Indian Navy, challenged the lower grade pay granted to Artificers I, II, and III, compared to the non-technical Chief Petty Officers, despite their technical competence and relative ranks – The appellant contended this was discriminatory, arguing that Artificers of Class III and above should receive the same grade pay as non-technical Chief Petty Officers (Rs. 4200) based on Navy instructions and regulations – Held: The differentiation in grade pay based on the promotional hierarchy and responsibilities is neither arbitrary nor illegal [Paras 2, 4, 6, 12].

Navy Regulations – Command and Rank – Regulation 247 and other Navy instructions indicated that Chief Artificers hold command over Artificers I, II, and III – While the rank equivalency for seniority purposes was acknowledged between Artificers III and Chief Petty Officers, the Court emphasized the operational and hierarchical differences between these ranks – The promotional avenues available to Artificers and Chief Petty Officers justified the variance in grade pay [Paras 7, 9, 10].

Grade Pay Anomaly – Speaking Order – The 2009 speaking order clarified that while Artificers I to III are given relative ranks akin to Chief Petty Officers for seniority, they are not directly promotable to higher posts like Master Chief Artificers, unlike Chief Petty Officers – The appellant’s claim for equal grade pay was denied as Artificers I to III are positioned between Artificer IV and Chief Artificer in the pay structure, justifying the lower grade pay of Rs. 3400 compared to the Rs. 4200 granted to Chief Artificers [Paras 11, 12].

Decision: Appeal dismissed – The Court upheld the Tribunal's decision, affirming that the pay disparity between Artificers III to I and Chief Petty Officers is lawful and not discriminatory – No merit in the appeal [Paras 13, 14].

Arbitration Clause – Applicability of Arbitration and Conciliation Act, 1996 – Public Premises Act, 1971 – The appellant raised a question whether the Public Premises Act overrides the Arbitration Act – Held: The dispute arises from the lease agreement containing a valid arbitration clause, covering issues of storage charges and lease renewal – The Public Premises Act governs eviction and possession post-expiry of lease but does not override or interfere with arbitration matters under the agreement [Paras 13-14].

Jurisdiction – Section 11 of the Arbitration Act – Appointment of Arbitrator – The High Court appointed an arbitrator for disputes under the agreement, including revised storage charges and the respondent's right to renew the lease – Held: The High Court correctly exercised its jurisdiction as the disputes fell under the arbitration clause, and the referral court’s role under Section 11 is limited to ascertaining the existence of a valid arbitration agreement [Paras 14-15].

Costs and Resumption of Arbitration – Appeal Dismissed – The appeal was deemed unnecessary and dismissed with costs imposed on the appellant – The arbitration proceedings, stayed during appeal, were directed to resume with the arbitral tribunal to expedite its award [Paras 15-17].

Decision: Appeal Dismissed – The Court rejected the appeal and upheld the High Court’s order appointing an arbitrator under Section 11 of the Arbitration Act. The appellant was ordered to pay costs of Rs. 50,000, and the arbitral proceedings were directed to continue without delay [Paras 15-17].