Service Law – Disciplinary Proceedings – Post-Retirement Punishment – Validity – Reduction of Pay Scale – Appellant, a Punjab & Sind Bank officer, was served a charge sheet on 30.09.2011, the same date he superannuated – Charge No. 2 (failure to ensure end-use of loan) found partly proved – Punishment of reduction by three stages in pay scale on permanent basis imposed vide order dated 15.06.2013 – Appellate Authority dismissed appeal – Single Judge of High Court set aside punishment holding post-retirement penalties under Service Regulations impermissible – Division Bench reversed, relying on Regulation 20(3)(iii) and Mahanadi Coalfields Ltd. – Held: Where extant Service Regulations permit continuance of disciplinary proceedings initiated before superannuation, such proceedings can be continued and concluded post-retirement, and appropriate punishment including reduction of pay scale is permissible – Appeal dismissed [Paras 3–39].

Misconduct – Bank Officer – Failure to Ensure End-Use of Loan – Charge Proved – Appellant allowed cash withdrawals of several lacs without supporting bills, resulting in account turning NPA – Inquiry Officer found Charge No. 2 partly proved – Appellant's comments to Inquiry Report did not challenge the finding regarding absence of bills – Held: A bank officer holds a position of trust dealing with public funds; failure to ensure end-use of loan constitutes financial irregularity exposing the Bank to risk; penal action on proof of such charge cannot be questioned merely because no loss was suffered – Finding neither perverse nor disproportionate [Paras 14–22].

Disciplinary Proceedings – Post-Superannuation – Regulation 20(3)(iii) – Deeming Fiction – Regulation 20(3)(iii) of the Service Regulations provides that an officer against whom disciplinary proceedings have been initiated shall cease to be in service on the date of superannuation but proceedings will continue as if he was in service until conclusion and final order – Held: This deeming fiction permits the proceedings to be continued and brought to logical conclusion; where penalty imposed results in reduction of pay scale, pension can be computed accordingly and such punishment is implementable post-retirement [Paras 25–38].

Distinction Between Penalties – Dismissal vs. Reduction of Pay – Pension Regulations – Where ultimate penalty is dismissal, it may result in forfeiture of pension and retiral dues under Regulation 22 of Pension Regulations, raising no technical difficulty – Where punishment results in mere reduction or adjustment of pension rather than forfeiture in entirety, Court must examine implementability – In present case, reduction in pay scale relates back to date of superannuation and pension is computable accordingly – Held: Punishment is implementable [Paras 36–37].

Precedents Reconciled – Prabhakar Sadashiv Karvade Distinguished – Ramesh Chandra Sharma and Mahanadi Coalfields Ltd. Followed – In Prabhakar Sadashiv Karvade, charge sheet was served after retirement; hence substantive penalties under Service Regulations held impermissible – Distinguished on facts as in the present case charge sheet was served while appellant was in service – Ramesh Chandra Sharma approved; Mahanadi Coalfields Ltd. (three-Judge Bench) followed – Jaswant Singh Gill not followed as overruled by Mahanadi Coalfields Ltd. [Paras 27–34].

Decision: Appeal dismissed – Punishment of reduction of three stages in pay scale on permanent basis upheld – Division Bench order affirmed – No order as to costs.

Consumer Law – Definition of 'Consumer' – Body Corporate – Fixed Deposit – Commercial Purpose – Dominant Object Test – Appellant, a State undertaking, deposited Rs. 9 crores as FDR with respondent-bank; bank subsequently adjusted FDR proceeds against overdraft allegedly sanctioned fraudulently without appellant's sanction – NCDRC dismissed complaint holding deposit was for commercial purpose – Held: Merely because a fixed deposit earns interest does not mean banking service was availed for a commercial purpose; the identity or status of the depositor (individual or body corporate) is not the determining factor; the dominant object and purpose of the transaction must be examined – NCDRC's blanket holding that the deposit was for commercial purpose is not entirely correct – However, in the present case, serious disputed questions of fact regarding alleged fraud and pledge exist which cannot be adjudicated in summary consumer proceedings – Appeal dismissed [Paras 1–33].

Consumer – 'Commercial Purpose' – Test of Dominant Intention – Principles Summarised – No straitjacket formula exists; commercial purpose ordinarily includes manufacturing/industrial activity or business-to-business transactions – Purchase of goods or services must have close and direct nexus with profit-generating activity – Identity of purchaser or value of transaction not conclusive – Dominant intention or purpose must be to facilitate profit generation – Parking of surplus funds by a body corporate with a bank for safe custody or statutory compliance is not per se reflective of a commercial purpose – Deposit made to leverage credit facility for business use, however, may amount to availing banking service for commercial purpose [Paras 14–26].

Consumer Complaint – Maintainability – Fraud and Forgery – Summary Proceedings – Allegations of fraudulent hypothecation and forged FDR – Complaint alleged that FDR was pledged without appellant's consent for overdraft of Rs. 8.10 crores and maturity proceeds were adjusted against overdraft dues; bank claimed original FDR was with it and the document in appellant's possession was forged – Held: Where complaint allegations involve highly disputed questions of fact pertaining to criminal or tortious liability such as fraud or forgery, the same cannot be adjudicated in summary proceedings under the 1986 Act and must be addressed before an appropriate civil or criminal court – Deficiency in service is distinct from criminal or tortious acts of the service provider [Paras 28–32].

Burden of Proof – Deficiency in Service vs. Commercial Purpose – Burden of proving that goods purchased or services availed were for a commercial purpose lies on the respondent and not the complainant – Burden of proving deficiency in service lies on the complainant [Para 19].

Decision: Appeal dismissed – NCDRC order of dismissal affirmed, though not entirely for the same reasons – Dismissal shall not bar the appellant from pursuing appropriate proceedings before a civil or criminal court – No order as to costs.

Gratuity – Withholding and Adjustment – Non-vacation of company quarters – SAIL withheld gratuity of retired employees who continued in occupation – High Court directed release relying on Ram Naresh Singh – Held: Rule 3.2.1(c) permits withholding of gratuity for non-compliance including failure to vacate – Management entitled to adjust dues including penal rent – Action valid [Paras 11, 19]

Precedent – Binding nature – Whether order constitutes precedent – High Court relied on order dated 31.03.2017 in Ram Naresh Singh – Held: Said order passed on facts and equitable considerations – Not a binding precedent under Article 141 – Reliance misplaced [Paras 16–18]

Penal Rent – Adjustment against gratuity – Validity – Three-Judge Bench order dated 15.12.2020 clarifies law – Unauthorized retention attracts penal rent – Such rent can be adjusted against gratuity and other dues – Supported by ONGC v. V.U. Warrier – Held: Adjustment permissible [Paras 8, 17]

Reciprocal Obligations – Employer and employee – Vacation of quarters and payment of gratuity – Held: Obligations are mutual and simultaneous – Employee must vacate accommodation – Employer to release gratuity after deductions – Neither enforceable independently [Para 19]

Interest on Gratuity – Withheld amount – Unauthorized occupation – Held: No interest payable for period of unauthorized occupation as per Rules – Employees having retained quarters cannot claim interest – Grant of interest would reward wrongful occupation [Paras 20, 22]

Equitable Relief – Fixation of penal rent – Supreme Court exercised equitable jurisdiction – Considering hardship, penal rent fixed at Rs. 1,000 per month – Balance struck between employer rights and employee hardship – Clarified: Not a precedent [Para 21]

Decision: Civil Appeals allowed – Impugned High Court orders set aside – Withholding and adjustment of gratuity upheld – Interest denied – Penal rent fixed at Rs. 1,000 per month (case-specific) – Directions issued for simultaneous discharge of obligations – Judgment not to be treated as precedent

Motor Accident Compensation – Functional Disability vs Physical Disability – Determination of loss of earning capacity – Medical Board assessed 63% permanent disability – High Court reduced functional disability to 30% without proper reasoning – Held: Functional disability must reflect actual impact on earning capacity considering nature of work – Reduction without cogent reasons unsustainable [Paras 21–22]

Appellate Interference – Reappreciation of Evidence – Duty of High Court – High Court modified MACT findings without detailed analysis of medical and neuropsychological evidence – Held: Appellate court must assign clear and cogent reasons while reversing factual findings – Failure renders judgment unsustainable [Paras 22–23, 35]

Functional Disability – Neurological Impairment – Cognitive deficits – Appellant suffered head injury leading to memory loss, frontal lobe impairment and IQ of 65 – Held: Injuries had severe impact on managerial functions requiring cognitive ability – Functional disability assessed at 100% [Paras 26–30]

Principles for Assessment – Raj Kumar v. Ajay Kumar – Physical disability not equivalent to economic loss – Tribunal must assess real impact on earning capacity based on profession and abilities – Held: Structured approach required; in appropriate cases functional disability may equal or exceed physical disability [Paras 27–28]

Compensation – Enhancement – Multiplier Method – MACT awarded Rs.65,53,811/- – High Court reduced to Rs.35,61,000/- – Supreme Court reassessed compensation considering 100% functional disability – Enhanced to Rs.97,73,011/- with interest @ 7.5% [Paras 31–32]

Just Compensation – Beneficial Legislation – Motor Vehicles Act – Courts must ensure fair and reasonable compensation considering long litigation and victim’s condition – Remand avoided to prevent delay – Supreme Court itself determined compensation [Paras 24, 35]

Decision: Appeal allowed – High Court judgment set aside – Functional disability assessed at 100% – Compensation enhanced to Rs.97,73,011/- with 7.5% interest – Insurer directed to pay with right of recovery – Directions issued for deposit within six weeks

Securities Law – Preferential Allotment – Diversion of Proceeds – PFUTP Regulations – Fraud – SAT Order Set Aside – Respondent-company raised Rs. 15,87,50,000/- through preferential allotment to 42 entities disclosing objects including capital expenditure, working capital, marketing and setting up offices abroad – From the very next day of receipt of funds, proceeds were diverted to purchase shares of other companies and extend loans and advances to various entities – Adjudicating Officer imposed penalties of Rs. 70 lakhs on the company and Rs. 25 lakhs each on the Managing Director and Director for violations of Regulations 3(a), 3(b), 3(c), 3(d), 4(1), 4(2)(f), 4(2)(k) and 4(2)(r) of the PFUTP Regulations and Section 21 of SCRA read with Clause 43 of the Listing Agreement – SAT set aside the penalties holding that a shareholder resolution dated 29.09.2017 ratifying the diversion was valid – Held: SAT order unsustainable; AO order restored [Paras 1–2, 16–22, 79].

Fraud under PFUTP Regulations – Expanded Definition – Diversion of Preferential Allotment Proceeds – Regulations 3 and 4 of PFUTP Regulations – Under the PFUTP Regulations, fraud is broadly defined and is not confined to its ordinary meaning – Fraud includes any act, expression or concealment committed whether in a deceitful manner or not, to induce any person to deal in securities, and includes a promise made without any intention of performing it – Diversion of funds raised through preferential allotment to objects not disclosed in the EoGM notice, immediately upon receipt, clearly constitutes violation of Regulations 3 and 4(2)(f), 4(2)(k) and 4(2)(r) – The speed of diversion establishes that from inception the respondents had no intention to use the funds for the stated objects – Held: Diversion of preferential allotment proceeds to undisclosed objects constitutes fraud under the PFUTP Regulations [Paras 33–51].

Ratification – Illegality Cannot Be Ratified – Section 27 of the Companies Act – PFUTP Regulations – Public Interest – SAT had exonerated respondents solely on the ground that a shareholder resolution dated 29.09.2017 ratified the variation in utilization of proceeds – Held: Section 27 of the Companies Act applies only to variation of objects in a prospectus and has no application to preferential allotment made through private placement – Even if Section 27 read with Section 62(1)(c) were applied analogously, ratification could only operate where there are unutilised funds, whereas here the entire amount stood diverted – SEBI regulations protect multiple stakeholders and have public law dimensions; liability crystallized under such regulations cannot be wiped off by a shareholder resolution – Illegality cannot be ratified; only an irregularity can be – A private resolution cannot condone acts contrary to public policy [Paras 52–66].

Disclosure Obligations – Objects of Preferential Issue – Regulatory Significance – Regulation 73 of ICDR Regulations, Clause 43 of Listing Agreement – Objects stated in the explanatory statement appended to the EoGM notice are statutorily mandated disclosures under Regulation 73 of the ICDR Regulations – Investors and stakeholders adjust their conduct based on such disclosures, whether or not they subscribe to the shares – Clause 43 of the Listing Agreement requires quarterly reporting of variations between projected and actual utilisation of funds – LODR Regulations 32 and 35 further mandate reporting of deviations – A conspectus of the SEBI Act, PFUTP Regulations, SCRA, ICDR Regulations and the Listing Agreement shows that stated objects of a preferential issue are of utmost significance and cannot be casually compromised [Paras 33–49].

Parallel Jurisdiction – WTM and Adjudicating Officer – Section 11B and Section 15HA of SEBI Act – Validity of Separate Proceedings – Amicus contended that the AO proceedings were impermissible since the WTM had already adjudicated the same facts – Held: The two proceedings operate in separate fields – The WTM exercises powers under Sections 11(1), 11(4)(b) and 11B to restrain market access and order disgorgement, whereas the AO exercises power under Section 15(I) to impose monetary penalties under Section 15HA – Prior to the Finance Act 2018, the WTM had no power to levy penalty under Section 15HA – Having imposed only market restraint, the WTM left the field of penalty open for the AO – Two authorities vested with different powers operating in separate fields can exercise jurisdiction on the same underlying facts without conflict – Judgments in Ram Kishori Gupta and Nirmal N. Kotecha distinguished [Paras 67–77].

Decision: Appeals allowed – Order of the Securities Appellate Tribunal in Appeal Nos. 116, 114 and 115 of 2021 set aside – Order of the Adjudicating Officer dated 29.04.2020 imposing monetary penalties on the respondent-company and the individual directors restored.

Coal Supply – Compliance of Court Orders – Suspended Period – Choice of Reference Date – Union of India and SECL directed to supply coal at current price for the suspended period (09.11.2011 to 31.07.2013) in compliance with orders dated 09.04.2014 and 17.05.2019 – Respondent/PIL given the choice to select either 09.04.2014 or 17.05.2019 as the reference date for operating the current price and prevalent policy in the proposed Fuel Supply Agreement – Supply to be on normal coal linkage basis, not tapering – Fuel Supply Agreement to be completed within four weeks [Paras 13-15].

Compensation – Price Difference – Rejection of Monetary Claim – Respondent claimed compensation of approximately Rs. 106 Crore representing the difference between E-auction prices paid and FSA prices during the suspended period – Held: No order of the High Court or this Court can be construed as a direction to pay monetary compensation towards price difference – The direction is solely to supply coal for the suspended period at the current price in accordance with prevalent policy [Para 14].

Compliance Affidavit – Adequacy – SECL offered to supply coal via fresh MoU at current E-auction rates – Respondent contended that offer was not in conformity with Order dated 09.04.2014 and that coal was not required due to existing FSAs valid till 2027 – Court found both sides interpreting orders to suit their convenience and rejected such approach – Prayers in M.A. Nos. 2111-2112 of 2025 held to be unavailable and rejected [Paras 10-11, 15].

Decision: Miscellaneous Applications disposed of – Union of India and SECL directed to call upon Respondent/PIL to choose the reference date (09.04.2014 or 17.05.2019) for current price and prevalent policy – Fuel Supply Agreement for suspended period to be entered into within four weeks on normal linkage basis – All pending applications including I.A. No. 250465 of 2025 disposed of.

Insurance Law – Fraudulent Claim – Fire in Godown – Arson – Respondent raised a claim of Rs. 28.20 crores attributing fire in its godown on 25.03.2011 to a short circuit — Insurance coverage enhanced shortly before the incident from Rs. 15 crores to Rs. 19 crores and an additional policy for Rs. 17 crores obtained — Truth Labs forensic report established presence of kerosene, a known fire accelerant, at the seat of fire through GC-MS analysis, ruling out accidental cause — Forensic examination of electrical infrastructure found no evidence of short circuit or electrical malfunction — Held: Fire was the result of deliberate human intervention engineered for unlawful gain [Paras 4, 5, 13, 14, 18].

Fraudulent Claim – Fabricated Supplier Invoices – Surveyor's Report – Surveyor's report disclosed material discrepancies between VAT returns submitted by alleged suppliers and those filed with the Commercial Taxes Department — Alleged suppliers found to be non-existent or unrelated to claimed transactions — Invoices produced found to be fabricated — Accounts and records manipulated to inflate the claim — Respondent failed to rebut these findings with credible material — Held: Policy conditions violated — Repudiation warranted [Paras 6, 16, 17].

Fraud – Principle that Fraud Vitiates All Solemn Acts – No Partial Relief – Fraud vitiates all judicial and solemn acts — Once a claim is founded on fraud, the entire edifice of the claim collapses and no relief can be granted — There is no concept of partial or equitable relief in cases tainted by fraud — Quantification of loss cannot override the foundational requirement of a genuine and bona fide claim — Insurance contract cannot be used as an instrument of unjust enrichment — Held: NCDRC fell into error in awarding Rs. 3.33 crores merely because some loss was shown to have occurred [Paras 20, 21, 22, 23].

SIT – Directions for Criminal Investigation – Fraudulent insurance claims involving staged incidents have serious ramifications on the integrity of the insurance system and public confidence — Commissioner of Police, Ahmedabad, directed to constitute a Special Investigation Team (SIT) headed by an officer not below the rank of Deputy Commissioner of Police — SIT to conduct comprehensive investigation into the incident and persons involved — Investigation to be completed within three months — Report to be submitted before this Court in a sealed cover [Paras 25, 26, 27].

Decision: Civil Appeal No. 6100 of 2024 allowed — Impugned order of NCDRC set aside — Claim of respondent repudiated in toto — Appellant-Insurance Company absolved of all liability — Amount deposited before the Registry to be refunded with accrued interest within two weeks — SIT directed to be constituted by Commissioner of Police, Ahmedabad — Matter listed on 21.07.2026 — Civil Appeal No. 10019 of 2024 dismissed.

Criminal Law – Murder – Conviction under Sections 302 and 498A IPC – Dying Declaration – Eyewitness Testimony – Conviction Upheld – Appellant-husband convicted for pouring kerosene on his wife and setting her on fire, causing 80–90% burn injuries resulting in death after three days – Trial Court acquitted the appellant on the ground that the bathroom was too small for the incident, family witnesses were inconsistent, and the dying declaration was unreliable given the extent of injuries – High Court reversed the acquittal and convicted the appellant – Held: High Court justified in reversing the acquittal; appeal dismissed [Paras 1–25].

Dying Declaration – Reliability – Medical Certification – Fit State of Mind – Deceased recorded statement (Exhibit P-12) at 2:00–2:30 a.m. with medical endorsement certifying fitness to make a statement – Attending doctor (PW-11) examined the deceased and permitted police to record her statement after satisfying himself that she was conscious – Though OPD slip mentioned self-inflicted burns, PW-11 could not identify who recorded that entry – Contrary oral evidence of PW-7 and PW-16 suggesting unconsciousness held unreliable – Held: Burn injuries being superficial though extensive, the deceased was conscious most of the time and capable of making the dying declaration; absence of nurse at the time of recording does not invalidate it [Paras 13–19].

Eyewitness Testimony – Daughter as Eyewitness – PW-3, the sixteen-year-old daughter of the appellant and the deceased, deposed that she witnessed her father bring kerosene, pour it on her mother and set her on fire – Her testimony was consistent and unrebutted – No material on record to suggest why she would falsely depose against her own father – Held: Testimony of PW-3 clinchingly proves the commission of the offence by the appellant [Paras 10–11].

Circumstantial and Medical Evidence – Recovery of Kerosene Tin and Matchbox – Post-Mortem – PW-4 (post-mortem doctor) confirmed death due to septicaemia resulting from 85–90% superficial burn injuries – Recovery of kerosene tin, matchbox and burnt cloth from the scene of incident proved through Recovery Memo (Exhibit P-1) and neighbour PW-6 – Cumulative evidence of eyewitness PW-3, dying declaration, medical evidence of PW-4, PW-10 and PW-11, and physical recovery unequivocally establish the appellant's guilt – Held: Trial Court erred in acquitting on slight discrepancies; conviction by High Court confirmed [Paras 20–24].

Decision: Appeal dismissed – Conviction and sentence under Sections 302 and 498A IPC affirmed – Appellant directed to surrender forthwith to undergo the remaining part of the sentence.

Service Law – Recruitment – Law Officer – Multiple Choice Examination – Ambiguous Question – Ninth Schedule and Judicial Review – Both Candidates to be Accommodated – Question No. 73 in the recruitment test asked which Schedule of the Constitution is immune from judicial review on grounds of violation of fundamental rights – The recruiting body treated Option 'B' (Ninth Schedule) as the correct answer; the third respondent answered Option 'D' (None of the above) and was penalised 1.25 marks by way of negative marking – Single Judge upheld the recruiting body's answer key relying on Article 31B and the continued validity of Ninth Schedule immunity as affirmed in I.R. Coelho – Division Bench held Option 'D' to be legally correct on the ground that Ninth Schedule immunity is not absolute and is subject to the basic structure test – Held: When Judges of the High Court are themselves at variance on the correct answer, it cannot be expected of mere law graduates to arrive at a definitive answer by interpreting constitutional provisions across several decades of judicial pronouncements – Both answers may be treated as correct; both candidates deserve to be accommodated – Municipal Corporation directed to create a supernumerary post and appoint the third respondent; the appellant already in service to be treated as senior [Paras 10–11].

Decision: Appeal disposed of – Municipal Corporation, Chandigarh directed to accommodate both the appellant and the third respondent by creating a supernumerary post – Upon appointment of the third respondent, the appellant to be treated as senior.