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].

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.

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.

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.

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.

Arbitration Law – Liquidated Damages – Delay in Commissioning Power Project – Public Utility Contract – Solar Power Developer failed to commission 20 MW project within stipulated time under Power Purchase Agreement executed under Jawaharlal Nehru National Solar Mission – Delay of two months for first 10 MW and five months for remaining 10 MW admitted – Clause 4.6 of PPA provided for liquidated damages – Held: Clause attracted on admitted breach and delay [Paras 11–12].

Contract Act – Section 74 – Proof of Actual Loss – Public Interest Exception – Contention that employer must prove actual loss rejected – Supply of solar power under national mission held to be a project involving public interest and environmental concerns – In public utility projects, delay itself constitutes loss – Pre-estimated damages enforceable unless shown to be penal – Burden lies on defaulting party to prove absence of loss – Principle in Construction and Design Services v. DDA applied [Paras 12, 16].

Arbitration Act – Section 34 – Power to Modify Award – Majority arbitral award granting nominal damages of ₹1.2 crores interfered with by Single Judge – Single Judge enhanced compensation to 50% of contractual liquidated damages – Held: Modification permissible within limited jurisdiction under Section 34 – No re-appreciation of evidence or merits undertaken – Power to modify affirmed in light of Constitution Bench decision in Gayatri Balasamy v. ISG Novasoft Technologies Ltd. [Paras 14–15].

Arbitration Act – Section 37 – Limits of Appellate Interference – Division Bench reduced compensation from ₹27.06 crores to ₹20.70 crores by recalculating damages – Held: Section 37 court cannot substitute its own view where Section 34 court exercised discretion reasonably and within contractual framework – Re-working of damages amounts to excess of jurisdiction – Appellate court confined to examining correctness of Section 34 exercise [Paras 18–19].

Liquidated Damages – Reasonable Compensation – Judicial Discretion – Single Judge determined contractual damages at ₹54.12 crores and awarded 50% as reasonable compensation – No finding of arbitrariness or perversity recorded by Division Bench – Reduction by Division Bench unjustified – Restoration of Single Judge’s determination warranted [Paras 17–19].

Decision: Appeals by NTPC Vidyut Vyapar Nigam Ltd. allowed – Appeals by Saisudhir Energy Ltd. dismissed – Judgment of Division Bench set aside to extent it modified compensation – Judgment of Single Judge under Section 34 restored – Parties to bear own costs.

Public Interest Litigation – Maintainability – Stem Cell Therapy for ASD – Maintainable – The Supreme Court held the writ petition to be maintainable as it raised an issue of public importance concerning the regulatory framework for stem cell therapies for Autism Spectrum Disorder (ASD), despite contentions regarding commercial interests – The petitioners were found to be bona fide, and no personal grievance was sought to be addressed [Paras 50-52].

Medical Negligence – Standard of Care – Stem Cell Therapy for ASD – Not Permissible as Routine Treatment – Medical practitioners owe a duty to exercise a reasonable degree of care, skill, and knowledge—Administering interventions lacking credible scientific evidence of safety and efficacy, or expressly advised against by authoritative medical bodies, fails to meet this standard—Stem cell therapy for ASD is not recognized as a "sound and relevant medical practice" based on current scientific knowledge and should not be offered as a standard or routine clinical service outside approved research/clinical trials [Paras 58, 63, 64, 70, 73, 75, 90, 151(ii), 151(vi)].

Medical Ethics – Professional Misconduct – Stem Cell Therapy for ASD – Constitutes Misconduct – The Ethics & Medical Registration Board (EMRB) of the National Medical Commission (NMC) recommendations (06.12.2022), approved by the NMC (28.03.2024), unequivocally state that the use, promotion, and advertisement of stem cell therapy for ASD constitute 'professional misconduct' due to the lack of adequate evidence—Medical practitioners indulging in such practices are liable for disciplinary action under the Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations, 2002 / National Medical Commission Registered Medical Practitioner (Professional Conduct) Regulations, 2023 [Paras 26, 28, 67, 68, 70, 74, 140, 145, 151(iii), 151(vi), 151(xiii)].

Drugs and Cosmetics Act, 1940 – Definition of "Drug" – Stem Cells – Included – Autologous stem cells, even if not classified as "stem-cell derived products" under the New Drugs and Clinical Trial Rules, 2019 due to minimal manipulation, fall within the broader definition of "drugs" as 'substances' intended for treatment under Section 3(b)(i) of the Drugs Act, 1940—This ensures that protections under the Act are available for such therapies [Paras 103, 109, 151(i), 151(ix)].

Patient Rights – Informed Consent – Unproven Treatments – Invalid Consent – Patient autonomy allows choosing or refusing offered treatments but does not confer a right to demand unproven treatments—Valid consent requires "adequate information" about the treatment's nature, purpose, benefits, risks, and alternatives—For stem cell therapy in ASD, where scientific evidence is absent or inconclusive, adequate information cannot be provided, rendering consent invalid and leading to "therapeutic misconception," which is a gross violation of medical ethics [Paras 91, 94, 95, 96, 128, 130, 151(vii)].

Regulatory Framework – Stem Cell Research/Clinical Trials – Mandatory Clinical Trial Setting – Therapeutic use of stem cells for ASD is permissible only within an approved and monitored research/clinical trial setting—"Stem-cell derived products" (substantial manipulation) are regulated as "new drugs" under NDCT Rules, 2019—Stem cells with minimal manipulation are governed by "biomedical and health research" framework under Chapter IV of NDCT Rules, 2019, with Rules 15 and 16(4) making National Ethical Guidelines binding, which mandate that all stem cell research (except for hematopoietic stem cell transplantation for haematological disorders) must be undertaken as a clinical trial [Paras 113-119, 151(x)].

Statutory Interpretation – Executive Orders vs. Statutory Rules – DHR's Regulatory Role – Executive Order Non Est – Clause 2(vi) of the Order dated 03.03.2024, dissolving the National Apex Committee for Stem Cell Research and Therapy (NAC-SCRT) and stating "no regulatory role is anticipated to be carried out by DHR related to stem cell research," is in conflict with Rules 17 and 18 of the NDCT Rules, 2019, which mandate DHR oversight on Ethics Committees (ECs) for biomedical and health research—Executive instructions cannot supplant statutory rules; therefore, Clause 2(vi) of the Order dated 03.03.2024 is non est—The Department of Health Research (DHR) or its appointed authority must continue to monitor ECs reviewing clinical trials for stem cells [Paras 133-138, 151(xi), 151(xii)].

Commercial Practices – Stem Cell Banking and Processing – Regulation – Commercial banking of only Umbilical Cord Blood stem cells is permitted with Central Drugs Standard Control Organisation (CDSCO) licenses—Commercial banking of all other biological materials is prohibited until further notification—Any entity processing stem cells, even partially, must obtain necessary prior approvals for biomedical and health research or clinical trials [Para 147].

Legislative Reform – Regulatory Vacuum – Consolidation of Framework – The current fragmented legal framework for stem cell research leads to ambiguity and exploitation of patients—The Union, specifically the Ministry of Health and Family Welfare (MoHFW), is urged to consolidate rules, regulations, and guidelines, clearly define stem cells, establish specific clinical trial procedures, ensure patient safety and compensation, provide timelines for approvals, and create a dedicated monitoring authority (suggesting reconstitution of NAC-SCRT) [Paras 148-150, 152].

Transitional Arrangement – Ongoing Treatments – Continuity Permitted – Patients already undergoing stem cell therapy for ASD are permitted to continue their treatment to avoid detrimental effects from abrupt cessation—The Secretary, MoHFW, in consultation with officials of AIIMS and the National Medical Council (NMC), is directed to provide the best possible solution within four weeks to ensure these patients can continue receiving therapy until re-routed to institutions conducting approved clinical trials [Paras 153-154].

Decision: Matter treated as part heard – Specific directions issued for regulatory clarity, patient safety, and continuation of ongoing treatments under a transitional arrangement – Secretary, MoHFW, to file submissions within four weeks [Paras 153-155].

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.