Mortgage by Deposit of Title Deeds – Creation of Security – Equitable Mortgage – Appellant claimed a mortgage was created by the respondent by depositing title deeds as security for a loan. The Single Judge held that a valid mortgage had been created under Section 58(f) of the Transfer of Property Act. However, the Division Bench reversed the judgment, concluding that the evidence did not prove the creation of a mortgage. The Supreme Court restored the judgment of the Single Judge, holding that the agreement between the parties constituted an equitable mortgage by deposit of title deeds and that the Division Bench had erred in its interpretation [Paras 22-30].

Burden of Proof – Coercion and Threat – Respondent’s plea of coercion in signing the agreement was rejected due to the absence of supporting evidence. The Court emphasized that mere allegations without evidence cannot negate the legal effect of the agreement [Paras 24-25].

Registration Requirements – Section 17(1)(c) of the Registration Act – The Court reiterated that a memorandum recording the deposit of title deeds as security does not require registration unless it creates or extinguishes rights or liabilities. In the present case, the agreement did not require registration as it merely recorded the transaction already concluded [Paras 26-29].

Decision: Appeals allowed – Judgment of the Single Judge restored with a modification – Interest reduced from 36% p.a. to 12% p.a. – Costs imposed on the appellant for legal misadventure [Paras 33-36].

Criminal Law – Revision against Framing of Charges – High Court's Revisionary Power under Section 397 Cr.P.C. – Further Investigation Ordered by High Court Challenged – The Supreme Court considered whether the High Court could set aside a Sessions Court order framing charges and order further investigation – High Court exceeded its jurisdiction by allowing the revision application and discharging the accused despite previous dismissal of a similar application – Held, High Court’s order was illegal, and the framing of charges was restored by the Supreme Court [Paras 1-13].

Criminal Procedure – Section 397 Cr.P.C. – Revisional Jurisdiction of High Court – The Supreme Court emphasized that revisional jurisdiction under Section 397 Cr.P.C. is limited, particularly against interlocutory orders like framing of charges – The High Court improperly exercised this power, leading to the setting aside of its order [Paras 9-11].

Costs and Directions – The Supreme Court imposed costs of ₹50,000 on the Respondent for filing frivolous applications and directed the Sessions Court to expedite the trial, warning that non-cooperation by the accused could lead to cancellation of bail [Paras 13-15].

Decision – Appeal Allowed – The Supreme Court set aside the High Court’s order, restoring the original order of the Sessions Court that framed charges against the accused – The Respondent was directed to pay costs to the Appellant and cooperate with the trial proceedings [Paras 13-15].

Criminal Law – Bail under the Prevention of Money Laundering Act (PMLA) – Appeal against the High Court’s order denying bail – The appellant, charged under Sections 3 and 4 of PMLA, sought bail which was rejected by the High Court – The Supreme Court examined the twin conditions under Section 45 of PMLA, emphasizing that these conditions do not impose an absolute restraint on granting bail – The Court reiterated that ‘bail is the rule and jail is the exception,’ aligning with the principles of Article 21 of the Constitution – The Court found that the prosecution failed to provide substantial evidence to satisfy the foundational facts required under Section 24 of PMLA, which includes proving that the property in question was derived from criminal activity and that the accused was involved in money laundering – The Court also held that prolonged pre-trial detention should not be used as a form of punishment, particularly when the trial is not likely to conclude soon – The appeal was allowed, and the High Court’s order was set aside, granting bail to the appellant with conditions [Paras 11-45].

Admissibility of Evidence – Statements under Section 50 PMLA – The Court addressed the admissibility of statements made under Section 50 of PMLA while the accused was in judicial custody for another Enforcement Case Information Report (ECIR) – It was held that such statements are inadmissible under Section 25 of the Evidence Act if made while in custody in another case, as they are not made with a free mind – The Court emphasized that the procedural law must align with constitutional guarantees under Article 21, which ensures that any deprivation of liberty must follow a reasonable and fair procedure – The Court rejected the prosecution's reliance on the co-accused’s statements as substantive evidence, stating that such statements can only lend assurance and cannot be the sole basis for conviction – The appellant's statements were found inadmissible, further weakening the prosecution's case [Paras 19-34].

Evidence Evaluation – Foundational Facts under Section 24 PMLA – The Supreme Court stressed the importance of establishing foundational facts under Section 24 PMLA, which include proving that the alleged property is proceeds of crime, that the accused was involved in a related criminal activity, and that the accused engaged in money laundering – The Court held that the prosecution’s evidence failed to establish these foundational facts, thereby not shifting the burden of proof to the accused – The Court found the prosecution’s reliance on the co-accused’s statements and the appellant’s Section 50 statements insufficient to meet the stringent requirements of Section 24 PMLA – As such, the appellant could not be presumed guilty of money laundering, and bail was granted [Paras 13-15, 35-44].

Constitutional Law – Interpretation of Article 21 in the Context of PMLA – The Court interpreted Article 21 of the Constitution, which guarantees the right to life and personal liberty, in the context of PMLA – The Court held that the twin conditions of Section 45 PMLA should not override the fundamental right to liberty, and any procedural law must be reasonable and just – The Court underscored that liberty is the rule and deprivation is the exception, emphasizing that detention before trial should not be equated with punishment – The Court also highlighted that where the trial is delayed, and the prosecution fails to present compelling evidence, bail should be granted to prevent unjustified deprivation of liberty [Paras 11-12, 30-34, 45-48].

Decision – Bail Granted – Held – The appeal is allowed; the impugned order of the High Court denying bail is quashed and set aside – The appellant is granted bail in connection with ECIR No. 5 of 2023, subject to the conditions that he furnishes bail bonds, surrenders his passport, reports regularly to the investigating officer, and refrains from influencing witnesses or tampering with evidence – The Court found no prima facie evidence of the appellant’s involvement in money laundering and no likelihood of him committing an offense while on bail – The Trial Court is instructed to proceed without being influenced by the observations in this judgment [Para 49].

Demolition of School Building Without Approval – Staff Entitlement to Compensation and Re-employment – Supreme Court upheld the High Court's decision directing the New Delhi Municipal Council (NDMC) to pay the arrears of salary, pension, and other benefits to the staff of a school managed by Delhi Sikh Gurdwara Management Committee (DSGMC), which was closed without prior approval – The Court held DSGMC liable for reimbursement of these payments to NDMC. DSGMC's appeal was dismissed, and the NDMC was granted the right to seek reimbursement from DSGMC through appropriate legal remedies. [Paras 1-28]

Employment of Surplus Staff – Absorption Rights under Rule 47 – The Supreme Court clarified that the rights of surplus staff to be absorbed in other schools, as per Rule 47 of the Delhi Education Rules, only apply in cases where the school closure was legally compliant. Since DSGMC’s closure was illegal, NDMC was not obligated to absorb the staff or cover their salaries [Paras 17-19].

Contempt of Court – DSGMC’s Non-compliance – The DSGMC's failure to re-employ the displaced staff as directed by the High Court constituted contempt of court. The Supreme Court upheld penalties, including payment of salaries with interest, for non-compliance [Paras 14-15, 23].

Limitation Period – Right to Reimbursement – The Supreme Court affirmed NDMC's right to seek reimbursement from DSGMC for payments made to the school staff. Concerns about the limitation period were dismissed due to prior court directions that preserved NDMC’s right to reimbursement [Paras 23].

Decision: Appeals by DSGMC (Civil Appeal Nos. 7442-7444 of 2012) dismissed. Appeals by NDMC (Civil Appeal Nos. 7440-7441 of 2012) disposed of with instructions for NDMC to pay remaining dues to the staff and pursue reimbursement from DSGMC, with the possibility of joining ongoing contempt proceedings.

Criminal Law – Cancellation of Bail – Economic Offences – High Court granted bail to respondent accused in a case involving misappropriation of ₹79.54 Crores by a credit society's president and co-accused – Supreme Court set aside the High Court's bail order due to lack of consideration of relevant factors, such as the gravity of the offence and likelihood of tampering with evidence – Bail order found to be perverse and not in consonance with established legal principles – Direction issued for respondent to surrender, with liberty to apply for bail under changed circumstances – [Paras 18-27].

Evidence Evaluation – Court considered the extensive forensic audit report and witness statements indicating respondent’s involvement in the misappropriation – Noted the High Court's failure to appreciate the material evidence and the potential impact on the victims of the scam – Supreme Court emphasized the need for strict scrutiny in granting bail in economic offences involving public funds [Paras 19-24].

Decision – Bail order set aside – Held – Supreme Court directed the respondent to surrender within three weeks, with the option to apply for bail if circumstances change – The trial court to proceed without being influenced by the observations in this judgment, ensuring that the case is decided purely on its merits [Para 27].

Compassionate Appointment – Nature of Employment – High Court’s determination of the appointment under the Dying in Harness Rules as permanent – Challenge before Supreme Court – Appointment found to be contractual under the preferential policy, not compassionate – Termination order for misconduct without inquiry held invalid despite contractual nature of employment – High Court orders partially set aside.

The Supreme Court examined the nature of the respondent's appointment, which the High Court had treated as permanent under the Uttar Pradesh Dying in Harness Rules, 1974. The Supreme Court held that the appointment was contractual under a preferential scheme for dependents, not compassionate under the Dying in Harness Rules. The Court further found that the termination for misconduct violated the Principles of Natural Justice due to the absence of a proper inquiry. Thus, while the High Court's quashing of the termination order was upheld, the characterization of the appointment as permanent was overturned. [Paras 1-22]

Principles of Natural Justice – Termination of Employment – Contractual Employee – Termination order stigmatic and passed without regular inquiry – Supreme Court upholds quashing of termination order despite the employee being on a contract basis – Clarification on employee’s right to claim regularization under the law.

The Supreme Court addressed the procedural impropriety in terminating the respondent’s contractual employment for alleged misconduct without holding a proper inquiry or providing an opportunity to be heard. The termination was found to be in violation of the Principles of Natural Justice as it was based on a stigmatic report that was not communicated to the respondent. The Court upheld the quashing of the termination order by the High Court but clarified that the employee's appointment was contractual, not permanent, thus leaving open the possibility for the respondent to seek regularization according to the law. [Paras 19-22]

Decision – Appeal Partly Allowed – Held – The Supreme Court partially allows the appeal by setting aside the High Court's finding that the respondent's appointment was under the Dying in Harness Rules and permanent in nature. However, it upholds the quashing of the termination order due to the violation of Natural Justice.

The Supreme Court allowed the appeal in part, setting aside the High Court’s determination that the respondent's appointment was under the Dying in Harness Rules and thus permanent. However, it upheld the High Court’s decision to quash the termination of the respondent due to the procedural irregularities in the termination process. [Para 22]

Constitutional Law – Scheduled Castes/Tribes – Jurisdiction to Amend Presidential Orders – Supreme Court reaffirms that the power to include or exclude castes from the Scheduled Castes/Tribes list rests solely with the Parliament. State Governments cannot amend or modify the list through circulars or notifications. Any such amendments or inclusions by State Governments, even if implemented through administrative measures, are deemed ultra vires and without legal standing [Paras 7, 26].

Employment – Validity of Caste Certificates – Protection of Service – The Court held that employees who secured employment based on caste certificates issued under State Government circulars, which were later invalidated, are entitled to retain their positions under the General Merit category. This protection is conditional on the caste certificates being obtained through the due process at the time, without misrepresentation or fraud [Paras 25-29].

Service Law – Government Circulars – Effect and Applicability – The Karnataka Government's circulars dated 11th March 2002 and 29th March 2003, which provided protection to employees whose caste certificates were invalidated, are binding on state and central institutions. The Ministry of Finance’s communication dated 17th August 2005, which endorsed these circulars, reinforces this protection, barring disciplinary actions against such employees [Paras 28-35].

Decision:

Appeals allowed. The Court quashed the impugned judgments of the Karnataka High Court and set aside the show-cause notices issued to the appellants by their employers. The appellants’ services are to be protected, and they are to be reclassified as General Merit category employees without further disciplinary actions.

Seniority – Determination in Government Service – Direct Recruitment vs. Promotion – Dispute between direct recruits and promoted officers regarding seniority in the cadre of Junior Engineers – Contention that promoted Sectional Officers, Grade-I, whose posts were upgraded, should not be granted seniority over direct recruits – Held, direct recruits must be granted seniority from the date of their appointment as Junior Engineers, while those promoted after upgradation should be placed based on the date of upgradation – Seniority cannot be assigned retrospectively from a date when the incumbents were not yet in the cadre [Paras 1-16].

Promotion – Upgradation of Posts – Non-Gazetted to Gazetted Status – Posts of Sectional Officer, Grade-I, upgraded to Junior Engineer (Class-II Gazetted) – Court held that incumbents in upgraded posts cannot claim seniority over those directly recruited to the Junior Engineer cadre – Upgradation should be recognized from the actual date of entry into the cadre, not retrospectively [Paras 10-15].

Judicial Review – Misapplication of Service Rules – High Court misinterpreted service rules and granted undue seniority to promoted Junior Engineers over direct recruits – Supreme Court set aside the High Court’s decision, restoring the seniority list finalized on March 26, 2018 – Emphasized correct interpretation and application of service rules in determining seniority [Paras 13-16].

Decision:

Appeals allowed – The order passed by the Division Bench of the High Court is set aside – The seniority list of Junior Engineers as finalized on March 26, 2018, is upheld – No order as to costs.

Seniority – Determination in Government Service – Direct Recruitment vs. Promotion – Dispute between direct recruits and promoted officers regarding seniority in the cadre of Junior Engineers – Contention that promoted Sectional Officers, Grade-I, whose posts were upgraded, should not be granted seniority over direct recruits – Held, direct recruits must be granted seniority from the date of their appointment as Junior Engineers, while those promoted after upgradation should be placed based on the date of upgradation – Seniority cannot be assigned retrospectively from a date when the incumbents were not yet in the cadre [Paras 1-16].

Promotion – Upgradation of Posts – Non-Gazetted to Gazetted Status – Posts of Sectional Officer, Grade-I, upgraded to Junior Engineer (Class-II Gazetted) – Court held that incumbents in upgraded posts cannot claim seniority over those directly recruited to the Junior Engineer cadre – Upgradation should be recognized from the actual date of entry into the cadre, not retrospectively [Paras 10-15].

Judicial Review – Misapplication of Service Rules – High Court misinterpreted service rules and granted undue seniority to promoted Junior Engineers over direct recruits – Supreme Court set aside the High Court’s decision, restoring the seniority list finalized on March 26, 2018 – Emphasized correct interpretation and application of service rules in determining seniority [Paras 13-16].

Decision:

Appeals allowed – The order passed by the Division Bench of the High Court is set aside – The seniority list of Junior Engineers as finalized on March 26, 2018, is upheld – No order as to costs.

Contract Law – Interpretation of Force Majeure Clauses in Power Purchase Agreements (PPA) – Supreme Court’s appellate jurisdiction under Section 125 of the Electricity Act – Applicability of Force Majeure clause for extension of the Scheduled Commissioning Date (SCD) – Whether the delay in project commissioning due to delayed approvals from governmental authorities falls under force majeure – Held – Delay attributed to governmental authorities, not respondents, thus constituting a force majeure event – No reduction in tariff under the PPA warranted [Paras 1-16].

Scope of Supreme Court’s Appellate Jurisdiction – Examination of the substantial question of law under Section 125 of the Electricity Act – Whether a question of fact decided by the Appellate Tribunal for Electricity (APTEL) warrants interference by the Supreme Court – Held – No substantial question of law arises as the APTEL’s findings are neither illegal nor unreasonable, thereby affirming APTEL’s decision on the facts [Paras 7-8, 13].

Decision – Dismissal of Appeals – Held – The appeals are dismissed as no substantial question of law was presented, and the APTEL’s findings are upheld, including the application of the force majeure clause, the extension of SCD, and the restoration of the tariff rate to Rs. 8.40 per unit – The imposition of liquidated damages and reduction in tariff were not justified [Para 15-16].