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.

Arbitration Law – Expiry of Arbitrator’s Mandate – Substitution of Arbitrator – Section 29A(6) – Arbitrator became functus officio upon expiry of statutory period under Section 29A – Despite failure to make award within prescribed time, High Court erroneously extended mandate – Held: Mandate of sole arbitrator had already terminated by operation of law under Section 29A(4) – Court is obligated to substitute arbitrator in such cases – New arbitrator to continue from existing stage [Paras 11–14].

Statutory Interpretation – Independent Remedies under Arbitration Act – Sections 14, 15 vs. 29A – Rejection of petitions under Sections 14 and 15 does not preclude substitution under Section 29A(6) – Section 29A operates independently to address delay and ensure time-bound arbitration – Mandate can be terminated and fresh arbitrator appointed even if prior termination petitions have failed [Paras 12–13].

Arbitration – Delay in Proceedings – Effect of COVID-19 on Limitation – Delay period between 15.03.2020 and 28.02.2022 excluded due to pandemic – On calculation, arbitrator was bound to render award by 28.02.2023 – Failure to do so without extension rendered arbitrator’s mandate terminated – Held: Continuation of arbitrator after expiry of mandate without valid extension is impermissible [Paras 11–12].

Judicial Power – Court’s Role under Section 29A(6) – Scope – Section 29A(6) grants discretion to substitute arbitrator once mandate ceases – High Court erred in merely extending time without addressing termination – Substitution necessary to uphold intent of time-bound arbitration regime – Appellate Court appoints former High Court judge as substituted arbitrator [Paras 13–14].

Decision: Appeals allowed – High Court order dated 22.04.2025 set aside – Mandate of arbitrator Mr. Anjum Javed stands terminated – Justice Najmi Waziri (Retd.), Former Judge of Delhi High Court appointed as substituted sole arbitrator – Proceedings to continue from prior stage and conclude within six months [Paras 14–15].

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.

POSH Act – Inter-departmental Complaint – Jurisdiction of ICC – Phrase “where the respondent is an employee” in Section 11 is procedural and not jurisdictional – ICC at aggrieved woman’s workplace competent to inquire into complaint even if respondent is from another department – No requirement under POSH Act for respondent and complainant to belong to the same department – Wide and inclusive definitions of “employee”, “workplace”, and “respondent” support such interpretation – Appeal dismissed [Paras 30-46, 72].

Sexual Harassment – Statutory Interpretation – Social Welfare Legislation – Narrow reading of Section 11 would defeat purpose of POSH Act – Requirement for aggrieved woman to complain only to ICC at respondent’s department would create procedural and psychological barriers – Interpretation must advance the object of enabling redressal at the complainant’s own workplace – Expansive scope of "workplace" under Section 2(o)(v) includes inter-departmental scenarios [Paras 47-57, 72].

Service Law – Role of ICC – Two-stage Inquiry – ICC has dual role: preliminary fact-finding under POSH Act and formal inquiry under CCS (CCA) Rules if disciplinary action is warranted – ICC at aggrieved woman’s department conducts fact-finding; ICC at respondent’s department acts as inquiry authority during disciplinary proceedings – Such bifurcation aligns with DoPT OM dated 16.07.2015 – No violation of respondent’s rights or prejudice caused [Paras 58-68, 70-71, 72].

Employer’s Duty – Departmental Coordination – ICC’s fact-finding report to be sent to respondent’s employer for action – Employer of respondent bound to cooperate and act under Section 19(f) of POSH Act – Inter-departmental cooperation necessary for effective implementation – Held: No procedural error or jurisdictional defect – Recommendations of ICC to be acted upon by disciplinary authority of respondent [Paras 66-68, 73].

Decision: Appeal dismissed – ICC at aggrieved woman’s workplace held competent to conduct inquiry – Report to be transmitted to respondent’s employer for necessary action – ICC at respondent’s department to conduct further disciplinary inquiry if initiated – No jurisdictional infirmity in proceedings [Paras 72-73].

Criminal Law - Contempt of Courts Act, 1971 – Section 12 – Apology – Power to Remit Sentence – Appellant issued a circular criticizing the judiciary ("Dog mafia", "Judges don't want to see") regarding stray dog orders – High Court convicted her for criminal contempt and rejected her unconditional apology as perfunctory – Held: The power to punish carries the concomitant power to forgive – The Appellant tendered an unconditional apology at the earliest opportunity and demonstrated genuine remorse – The High Court erred in rejecting the apology based on distinguishable precedents where apologies were either not offered or withdrawn – Sentence remitted and appeal allowed - [Paras 1, 9.4-9.6, 10]

Contempt of Courts Act, 1971 – Section 12 Explanation & Proviso – Bona Fide Apology – An apology should not be rejected merely because it is qualified if made bona fide – However, where the apology is unconditional and sincere, the Court must exercise its discretion under the proviso to Section 12 to discharge the contemnor or remit the punishment – The power of contempt is not a sword to silence criticism but requires fortitude to accept contrition - [Paras 8.3-8.4]

Judicial Precedent – Ratio Decidendi – High Court relied on Rajendra Sail and D.C. Saxena to convict – Held: Reliance misplaced as factual matrices were distinct (e.g., allegations of bribery against judges or lack of apology in those cases) – Ratio of a decision must be understood in the context of its specific facts - [Paras 9.1-9.3]

Decision: Appeal allowed - Impugned judgment set aside to the extent of the sentence - Sentence remitted.

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]

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]

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.