Insolvency and Bankruptcy Code, 2016 – Section 9 – Operational Creditor vs Corporate Debtor – Pre-existing Dispute – Moonshine Defence – The NCLAT set aside the NCLT's admission order on the ground of pre-existing disputes regarding short supply and faulty cables raised in 2018-2019 – The Appellant (Operational Creditor) relied on the Corporate Debtor's own email from 2021 confirming the ledger balance and subsequent payments made even after the demand notice – Held: The defence of pre-existing dispute was mere moonshine and had no credible basis – The minor issues raised by the Corporate Debtor did not stop further supplies or payments, as evidenced by the ledger account – The NCLAT failed to attach requisite importance to the Corporate Debtor's admission of liability and the payments made after the alleged dispute – Order of admission restored - [Paras 19-21]

Insolvency and Bankruptcy Code, 2016 – Section 9 – Adjudicating Authority’s Duty – The Adjudicating Authority must determine if the dispute truly exists in fact and is not spurious, hypothetical, or illusory – Where the Corporate Debtor continued to make payments and confirmed the debt balance in writing after the alleged correspondence regarding faulty goods, the dispute cannot be termed as a genuine pre-existing dispute warranting dismissal of the Section 9 application - [Paras 15, 20]

Decision: Appeal allowed - Judgment of NCLAT set aside - Order of admission by NCLT restored.

Tax Law – Deduction under Section 36(1)(viii) – Interpretation of "Derived From" – The appellant claimed deduction on various income streams, arguing they were part of an integrated business of providing finance. The Revenue disallowed this, citing the strict "derived from" requirement introduced by the Finance Act, 1995. – Held: The phrase "derived from" connotes a direct, first-degree nexus between the income and the specific business activity. It is significantly narrower than "attributable to." The 1995 amendment intended to "ring-fence" the fiscal benefit to profits arising strictly from the core activity of providing long-term finance, explicitly excluding ancillary or incidental income. The "integrated business" theory cannot expand the scope of a specific incentive deduction. - [Paras 13-20, 33].

Tax Law – Dividend Income on Redeemable Preference Shares – Appellant claimed deduction on dividends received from investments in redeemable preference shares, arguing they were effectively loans. – Held: Dividend income is not deductible under Section 36(1)(viii). Dividends arise from a contractual relationship of shareholding (ownership), not from the business of providing loans (creditor relationship). Under Section 85 of the Companies Act, 1956, preference shares are share capital. A shareholder cannot sue for debt like a creditor. The immediate source is the investment in shares, not the activity of lending. - [Paras 21-23].

Tax Law – Interest on Short-Term Bank Deposits – Appellant earned interest on idle funds parked in short-term deposits and claimed it was "business income" eligible for deduction. – Held: Not eligible for deduction. While such interest may be classified as "Business Income" generally, it does not satisfy the specific species of "profits derived from the business of providing long-term finance." The immediate source is the bank deposit, which is a step removed from the core activity of long-term lending. Allowing deduction here would create a perverse incentive to park funds rather than lend them for agricultural development. - [Paras 24-28].

Tax Law – Service Charges on Sugar Development Fund (SDF) Loans – Appellant received service charges for monitoring loans funded by the Government of India, acting as a nodal agency. – Held: Not eligible for deduction. The funds belonged to the Government, and the appellant bore no risk and utilized no capital of its own. The income is a fee for agency/administrative services, not profit derived from the business of providing long-term finance. - [Paras 29-31].

Decision: Appeals dismissed - The appellant is not entitled to deductions under Section 36(1)(viii) for the disputed heads of income - Paras [35-36].

Electricity Law – Change in Law – Carrying Cost – Interest at LPS Rate – Compounding of Interest – Remand Orders – Scope and Effect – Appellant power generator supplying electricity under long-term PPAs sought compensation for Change in Law events along with Carrying Cost – State Commission initially denied Carrying Cost – APTEL by remand order allowed Carrying Cost applying restitution principles – On remand, Commission granted Carrying Cost but computed interest on simple interest basis – APTEL upheld LPS rate but denied compounding of interest on the ground that remand order did not expressly provide for it – Held: Remand order did not finally decide the issue of rate or compounding – Lis remained alive and required adjudication in accordance with law prevailing at the time of decision – APTEL erred in holding itself bound by remand observations alone without examining binding Supreme Court precedents [Paras 34–43].

Appeals – Finality – Cross-Appeal – Respondent’s Right to Challenge Adverse Operative Directions – Distribution licensee did not file appeal or cross-appeal against APTEL’s direction granting Carrying Cost with interest at LPS rate – Held: In absence of cross-appeal or cross-objection under Section 125 of the Electricity Act, respondent cannot challenge the operative part of the order adverse to it – Principles analogous to Order 41 Rules 22 and 33 CPC applicable – Award of Carrying Cost with LPS rate attained finality [Paras 44–51].

Restitution – Carrying Cost – Simple Interest vs Compound Interest – Restitution principle mandates restoration of affected party to same economic position as if Change in Law had not occurred – Supreme Court precedents recognize that mere grant of interest is insufficient if compounding is necessary to neutralize time value of money – However, whether compounding is warranted depends on factual determination – APTEL denied compounding solely on technical ground of remand limitation – Held: Such denial unsustainable – Issue of compounding of interest must be examined afresh on merits and facts in light of governing law [Paras 53–58].

Late Payment Surcharge – Nature and Application – LPS under PPA stipulates SBAR plus 2% with monthly compounding – Grant of interest at LPS rate distinct from application of LPS clause itself – Whether compounding follows from LPS rate depends on factual findings and restitution analysis – Matter remanded to APTEL limited to deciding compounding of interest – Direction granting LPS rate itself not disturbed [Paras 57–58].

Constitutional Powers – Article 136 – Commercial and Regulatory Disputes – Supreme Court declined to exercise extraordinary constitutional powers to interfere with grant of LPS rate in absence of exceptional circumstances – Emphasized restraint in commercial matters governed by statutory appellate framework [Para 52].

Decision: Appeal allowed – Impugned APTEL order set aside to the limited extent denying consideration of compounding of interest – Matter remanded to APTEL solely to decide entitlement to compounding of interest on Carrying Cost in accordance with law – Grant of Carrying Cost with interest at LPS rate upheld – No order as to costs.

Service Law – Pension – Forfeiture of Past Service on Resignation – Context: The deceased employee, a conductor with DTC, resigned after 29 years of service. The resignation was accepted, but a subsequent request to withdraw it was declined. The legal heirs claimed pension, arguing the resignation should be treated as voluntary retirement given the length of service – Held: Under Rule 26 of the CCS Pension Rules, 1972, resignation entails forfeiture of past service unless allowed to be withdrawn in public interest. The Court refused to re-classify the resignation as voluntary retirement, noting that doing so would obfuscate the legal distinction between the two concepts and render Rule 26 nugatory. Consequently, the employee is not entitled to pensionary benefits – Paras 9.1, 9.6, 17.

Labour Law – Payment of Gratuity – Entitlement upon Resignation – Context: The Corporation denied gratuity to the resigned employee, relying on the forfeiture clause in the Pension Rules – Held: Section 4 of the Payment of Gratuity Act, 1972 mandates that gratuity is payable to an employee on termination of employment after rendering continuous service of not less than five years, including cases of resignation. As the Corporation failed to produce any exemption notification under Section 5 of the 1972 Act, the employee is entitled to gratuity despite the resignation – Paras 10, 10.1, 10.2.

Service Law – Leave Encashment – Concession by Employer – Context: Claim for leave encashment by the legal heirs of the resigned employee – Held: The Counsel for the Respondent fairly submitted that there is no bar to releasing leave encashment. The Court directed the release of the same to the family members – Para 11.

Decision: Appeal partly allowed - The Appellants are entitled to Gratuity and Leave Encashment with interest @ 6% p.a. from the date of resignation till payment. The claim for Pension is dismissed - Paras 12.

Arbitration Law – Section 11 – Joinder of Non-Signatories – Scope of Referral Court’s Inquiry – Held: The Referral Court under Section 11 is required to prima facie rule on the existence of the arbitration agreement and whether the non-signatory is a "veritable party". While the Court should not conduct a laborious inquiry, it cannot mechanically refer the matter to the Arbitral Tribunal. If there is no prima facie evidence to show the non-signatory is a veritable party, the Court must reject the referral. The "hands-off" approach does not mean the Referral Court is a "monotonous automation" where absolute strangers can compel arbitration. [Paras 24-28, 33-35]

Arbitration Law – Veritable Party Doctrine – Sub-Contractors – Context: Respondent (BCL) was a sub-contractor to AGC, who had the main contract with Appellant (HPCL). HPCL’s contract prohibited subletting without written consent. BCL claimed to be a veritable party based on back-to-back agreements with AGC and assignment of receivables. – Held: Mere commercial relationship or back-to-back agreement between a contractor and sub-contractor does not make the sub-contractor a veritable party to the arbitration agreement in the main contract. The parties operated on "separate orbits". There was no privity of contract between HPCL and BCL, nor any intention by HPCL to be bound by BCL. [Paras 30-32, 36]

Arbitration Law – Claiming "Through or Under" – Assignment of Rights – Context: Respondent relied on a Settlement-cum-Assignment Agreement with AGC to claim rights against HPCL. – Held: Mere legal or commercial connection is insufficient for a non-signatory to claim "through or under" a signatory. Assignment of obligations requires consent (novation). Since the main contract expressly prohibited assignment without written consent, and no such consent was obtained from HPCL, the assignment was not valid to bind HPCL to arbitration with BCL. [Paras 37-40]

Decision: Appeal allowed. Judgment and order of the High Court dated 07.04.2025 set aside. Arbitration Application dismissed. [Para 43]

Criminal Law – Quashing of FIR – Abuse of Process – Contradictory Civil Suit – Appellants sought quashing of FIR alleging offences under SC/ST Act regarding a property dispute – Complainant filed a civil suit on the very same day the FIR was lodged (25.01.2022) – The FIR alleged a specific incident of trespass and abuse on 21.01.2022, but the plaint in the civil suit made no mention of this incident and traced the cause of action to earlier dates – Held: The FIR based on the First Information Statement (FIS) is a clear abuse of process of law – The allegations in the FIS are unbelievable when compared to the clear averments in the suit filed simultaneously – High Court erred in not quashing the FIR – [Paras 7-10].

SC/ST Act – Section 3(1)(g) – Wrongful Dispossession – Appellants held title to the land via a registered sale deed from 2020 – Complainant sought recovery of possession in the civil suit – Held: Since the land is covered by a sale deed in favour of the first appellant and the complainant herself sought recovery of possession in the civil suit, there can be no question of an offence of wrongful dispossession under Section 3(1)(g) of the Act – [Para 10].

SC/ST Act – Section 3(1)(s) – Casteist Slur – Public View Requirement – Allegation that appellants hurled abuses using the caste name – Held: Offence under Section 3(1)(s) is not made out as there is no allegation that the casteist slur was made in a place within public view or that there was any member of the public present at the spot – [Para 10].

Decision: Appeal allowed - Order of the High Court set aside - FIR No. 18 of 2022 registered in Police Station Kanke, Ranchi quashed - [Para 10].

Revenue Law – Correction of Revenue Map – Jurisdiction under Section 30 of U.P. Revenue Code – Challenge to remand order by High Court – Application by private respondents for map correction dismissed in 1998 and affirmed in appeal in 2001 – After more than 17 years, same issue re-agitated under new Code – Authorities again dismissed application and appeal – High Court wrongly set aside those orders and remanded for fresh consideration – Held: High Court misinterpreted Section 30 – Jurisdiction under Section 30 available only for correction of clerical errors or omissions, not for re-opening settled location of plots – Appeal allowed – High Court order set aside [Paras 2, 4, 5.1, 8, 10, 12–15, 18]

Finality of Orders – Bar on Re-litigation – Private respondents’ application for correction of plot location under 1901 Act dismissed in 1998 and upheld in appeal in 2001 – Order attained finality – No subsequent challenge made – Held: Private respondents were barred from raising same issue after 17 years under new Code – Such attempt amounted to forum shopping and abuse of process – No cause of action arose post purchase as sale was with knowledge of location – Re-agitating same issue impermissible [Paras 3, 3.1, 4, 9, 14]

Interpretation of Section 30, U.P. Revenue Code, 2006 – Scope Limited to Error/Omission Correction – Section empowers Collector to maintain and annually update maps and correct errors or omissions – Not intended to permit re-allocation or change of location of plots already finalised – Word “also” in provision indicates limited scope for correction, not reopening concluded disputes – High Court misread provision by allowing substantive change under guise of correction – Held: Change of location of plot does not fall within ambit of Section 30 – Application rightly dismissed by revenue authorities [Paras 12, 13, 14]

Judicial Discipline – Remand Orders – Interference by Supreme Court – High Court remanded matter on misinterpretation of statute – Held: Though normally Supreme Court does not interfere with remand orders, in cases where remand causes multiplicity of litigation due to erroneous legal understanding, interference is warranted – Courts must avoid unnecessary remands – Reference to Satyadhyan Ghosal, M.C. Mehta, Sudhir Kumar Singh, and Krishnadatt Awasthy – Remand in present case based on flawed legal premise, hence liable to be set aside [Paras 6, 16, 17]

Decision: Appeal allowed – Impugned order dated 21.09.2023 of High Court set aside – Orders dated 15.01.2020 (by Respondent No.4) and 25.04.2023 (by Respondent No.5) restored – Private respondents’ attempt to reopen settled issue disallowed – No further relief to be granted to them [Para 18]

Constitutional Law – Judicial Review of Economic Policy – Revision of Property Tax – Akola Municipal Corporation revised property tax rates after a gap of 16 years (since 2001) – High Court quashed the resolution citing procedural lapses – Held: The High Court exceeded its jurisdiction by sitting in appeal over a policy decision. Tax revision falls squarely within the domain of the Corporation. Courts cannot substitute their judgment for that of the legislature or its agents in matters of economic policy unless the decision is ex-facie arbitrary, perverse, or unconstitutional. Trivial procedural errors do not vitiate the entire tax regime. – [Paras 19-24, 26].

Public Interest Litigation (PIL) – Locus Standi and Abuse of Process – Writ Petition by Corporator – Respondent No. 1, a sitting Corporator, filed a PIL challenging the tax revision and the tender process for property survey – Held: The PIL was a subterfuge to air individual grievances and potential business conflicts (challenging specific tenders). The petitioner did not represent the public at large but raised technical procedural objections. PILs cannot be entertained when filed to settle personal scores or business interests, especially when statutory remedies (Section 406 of the Maharashtra Municipal Corporations Act) exist. – [Paras 12-16, 18].

Municipal Laws – Financial Autonomy of Municipal Bodies – Obligation to Revise Taxes – Context: The Corporation had not revised taxes for 16 years, leading to revenue stagnation – Held: Municipal bodies have a statutory obligation and financial autonomy to generate revenue for public welfare (sanitation, health, infrastructure). Dependence on State grants weakens their functional efficacy. The revision of tax after 16 years was justified and necessary to match rising costs; the lack of revision for such a long period depicted gross laxity. – [Paras 6-9, 27].

Decision: Appeals allowed - Impugned judgment of the High Court set aside - [Paras 28-29].

Criminal Law – Conviction under IPC and SC/ST Act – Acquittal – Appellants convicted by Special Court for offences under Sections 354, 323 IPC and Section 3(1)(xi) of the SC/ST Act based on victim’s complaint of assault and caste-based abuse – High Court affirmed conviction – Supreme Court finds inconsistencies in victim’s and her brother’s (PW-2) testimonies – Medical evidence not fully supporting prosecution version – Witnesses from locality not examined despite claim that many saw the incident – Held: Prosecution failed to prove guilt beyond reasonable doubt – Conviction unsustainable [Paras 7, 9, 14–18, 20–22]

Evidence Law – Hostile Witness – Admissibility of Testimony – Held: The evidence of a hostile witness cannot be totally rejected if it supports either the prosecution or the accused; it must be subjected to closer scrutiny. The High Court erred in ignoring the testimony of PW-4 (a relative of the victim) solely because he was declared hostile. PW-4’s deposition regarding a scuffle at a crowded Ganesh Puja pandal supported the defense theory of how injuries were sustained, offering a probable alternative to the prosecution's narrative. [Paras 19, 21]

SC/ST Act – Section 3(1)(xi) – Motive based on Caste – Held: A finding that an offence was committed simply because the victim belonged to a Scheduled Caste cannot be recorded abruptly without evidence. The High Court’s conclusion that the offence was committed "simply for reason that the complainant was belonging to scheduled caste" was termed perverse, as neither the victim nor the eyewitness (PW-2) deposed that the accused acted based on the victim's caste identity. [Para 20]

Criminal Law – Appreciation of Evidence – Medical vs. Ocular Evidence – Held: Significant discrepancies existed between the ocular version and medical evidence. The victim alleged nail marks on her back, and PW-2 alleged bleeding from the nose/mouth, but the medical officer (PW-5) found no such specific injuries, noting only simple scratches consistent with a fall or being dragged. This medical opinion corroborated the defense version of a scuffle/fall at a pandal rather than the assault described in the FIR. [Paras 10, 15-16]

Criminal Law – Non-examination of Independent Witnesses – Held: The prosecution failed to examine any independent witnesses from the locality despite the claim that "many people" had seen the incident. The failure to produce independent witnesses, coupled with the fact that no one intervened during the alleged assault, rendered the testimony of the interested witness (PW-2) unbelievable. [Paras 14, 18]

Decision: Appeal allowed. Conviction and sentence set aside. Appellants discharged from bail bonds. [Paras 23-24]