Arbitration Law – Section 31(7)(a) of the Arbitration and Conciliation Act, 1996 – Power to Award Interest – Party Autonomy – Held: The phrase "Unless otherwise agreed by the parties" at the beginning of Section 31(7)(a) qualifies the entire provision. Where the parties have agreed to a specific rate of interest in the contract, the Arbitral Tribunal ceases to have any discretion to award a different rate or "reasonable" interest. The Tribunal is bound by the terms of the agreement. The discretion to deem a rate reasonable arises only in the absence of an agreement between the parties. [Paras 53-65, 140(iv), 140(vii)]

Contract Law – Section 74 of the Indian Contract Act, 1872 – Penalty vs. Liquidated Damages – Test for Commercial Contracts – Adoption of Cavendish Principle – Context: The contract provided for a concessional interest rate of 22.5% p.a., which would be withdrawn in case of default, reverting to a normal rate of 36% p.a. with monthly rests. Appellant argued this was a penalty. – Held: The Court adopted the test propounded by the UK Supreme Court in Cavendish Square Holding BV v. Talal El Makdessi, moving beyond the strict "genuine pre-estimate of loss" test from Dunlop. The true test is whether the impugned provision is a secondary obligation imposing a detriment on the contract-breaker out of all proportion to any legitimate interest of the innocent party. In commercial contracts between parties of equal bargaining power, a clause withdrawing a concession and reverting to a higher agreed rate upon default is commercially justifiable to ensure punctual payment and is not penal. The 36% compound interest was upheld as it protected the legitimate commercial interest of the lender in a high-risk, unsecured bill discounting facility. [Paras 74-91, 102-104, 140(ii), 140(viii)]

Commercial Law – Bill Discounting Facility vs. Loan – Usurious Loans Act, 1918 – Held: A bill discounting facility is distinct from a traditional loan; it is a short-term financing option where a business sells unpaid invoices for immediate liquidity. Given the higher risk profile and unsecured nature, higher interest rates are a trade-off for immediate liquidity. The transaction was purely commercial, and the Usurious Loans Act, 1918 (as amended by Punjab Relief of Indebtedness Act) does not apply to such bill discounting facilities. [Paras 47-50, 140(i)]

Interpretation of Statutes – Maxim Verba Chartarum Fortius Accipiuntur Contra Proferentem – Applicability to Commercial Contracts – Held: The rule of contra proferentem (interpreting ambiguity against the drafter) applies primarily to standard form contracts like insurance where bargaining power is unequal. It has no application to bilateral commercial contracts negotiated between parties of equal bargaining power. Where the contract terms regarding interest are clear and unambiguous, they must be enforced as written. [Paras 116-127, 140(v)]

Public Policy – Unconscionability of Interest Rates – Held: In voluntary commercial agreements between sophisticated corporate entities, a high rate of interest (36% with monthly rests) cannot be termed unconscionable or opposed to public policy if the borrower knowingly accepted the terms. A party cannot invoke the doctrine of unconscionable contract to frustrate recovery after enjoying the financial facilities. [Paras 107-108, 140(ii)]

Decision: Appeals dismissed. The Arbitral Award and the High Court's orders upholding the interest rate of 36% p.a. with monthly rests are affirmed. [Para 141]

Contempt of Court – Non-compliance of Court Directions – Land Acquisition – Original writ petition sought mandamus for return of land and compensation – High Court in 2003 recorded government’s assurance to hand over possession of unutilized land and pay compensation – Contempt petition filed due to non-compliance – High Court dismissed contempt petition stating the earlier order was ambiguous and open to dual interpretation – Held: Order dated 17.01.2003 contained clear and categorical directions for handing over land and payment of compensation – High Court erred in not examining whether compliance had in fact occurred – Matter remanded for fresh consideration [Paras 2-10].

Civil Procedure – Contempt Jurisdiction – Interpretation of Court Orders – Where specific grievance is made regarding non-compliance of directions recorded in a judicial order, it is incumbent on the court to assess the veracity of the claim based on available records – Statement recorded in judgment binds the parties and cannot be brushed aside as ambiguous in the face of specific allegations and rejoinders by the petitioner – Held: Contempt petition warranted examination on merits and could not be dismissed summarily [Paras 8-10].

Decision: Appeal allowed – High Court’s dismissal of Contempt Petition No. 315 of 2003 set aside – Contempt proceedings restored and remanded to the High Court for fresh adjudication in light of this judgment – No opinion expressed on merits of the contempt allegations [Para 11].

PIL - Disability Rights – Reasonable Accommodation – Civil Services Examination – Visually impaired candidates sought permission to use screen reader-enabled laptops and modify scribe details closer to exam date – Supreme Court held that such accommodations are essential to uphold Articles 14 and 21 – UPSC directed to permit change of scribes up to 7 days before exam and decide requests within 3 working days – Commission to submit a roadmap and timeline for screen reader software rollout after infrastructure and testing completion [Paras 2-5, 9-11].

Assistive Technology – Screen Reader Software – UPSC acknowledged lack of infrastructure for immediate implementation but made in-principle decision to enable screen reader use in future exams – Court directed coordination with NIEPVD and DEPwD to standardise protocols and ensure implementation from next examination cycle [Paras 6-8, 10-11].

Equal Opportunity – Exam Accessibility – Court held that denial of assistive accommodations violates fundamental rights and undermines inclusive public recruitment – Mandated that UPSC ensure accessibility while maintaining integrity and fairness of exam process – Implementation not an act of benevolence but constitutional obligation [Paras 12-13].

Decision: Writ Petition disposed of – Directions issued to UPSC and Union of India to ensure timely, inclusive implementation of accessibility measures in future exams – Matter to be listed on 16/02/2026 for compliance affidavit [Paras 11-16].

Criminal Law – Withdrawal of Prosecution – Permission from High Court Mandatory – Appellant, a former MLA, challenged criminal proceedings arising from FIRs under Arms Act and IPC – State had issued orders to withdraw cases citing public interest, and Public Prosecutor filed withdrawal application before trial court – Held: As per Ashwini Kumar Upadhyay v. Union of India, no prosecution against sitting/former MP/MLA can be withdrawn without leave of the High Court – In present case, no such permission was obtained – Hence, trial court and High Court rightly declined to quash the proceedings [Paras 2–5, 10].

Section 321 CrPC – Judicial Function of Granting Consent – Court reaffirmed that even though withdrawal is initiated by Public Prosecutor, the court must ensure that such application is not to thwart justice – Public Prosecutor must form an independent opinion – Consent must subserve public interest and not be tainted by mala fides or extraneous purposes – Cited principles from State of Kerala v. K. Ajith and Ram Naresh Pandey – Emphasised High Court’s duty to judicially scrutinise such withdrawal applications concerning MPs/MLAs [Paras 6–9].

Public Prosecutor’s Role – Duty to Assist with Reasons – Held: Prosecutor must disclose all reasons for withdrawal to court – Mere good faith is insufficient – Courts must ensure the application is not an abuse of process – Reasons are essential to both administrative and judicial decision-making [Paras 9, 13].

Decision: Appeals dismissed – High Court’s rejection of petitions under Section 482 CrPC upheld – No permission having been obtained from High Court as required – Proceedings to continue as per law – Observations on merits expressly kept open for trial/discharge stage [Para 10].

Criminal Law – Discharge – Section 227 CrPC – Discharge granted – Appellant accused of restraining complainant from entering a property during a civil dispute and capturing her photos – High Court upheld dismissal of discharge – Supreme Court held that strong suspicion necessary for framing charges must be based on legally admissible material – Observed that complainant refused to make any judicial statement – Chargesheet lacked supporting evidence – Held: Allegations did not constitute offences under Sections 341, 354C, or 506 IPC – Discharge allowed [Paras 14-27].

Criminal Law – Section 354C IPC – Voyeurism – Ingredients not satisfied – No allegation in FIR that complainant was engaged in a ‘private act’ as defined under statute – FIR and chargesheet silent on essential ingredients – Held: Allegation of photographing complainant in public space without consent does not meet threshold for voyeurism [Paras 19-21].

Criminal Law – Section 506 IPC – Criminal intimidation – FIR lacked any specific threat or utterance of injury to person or property – No statement recorded from complainant or witnesses – Held: Bare allegation of intimidation without details cannot attract offence under Section 506 IPC [Para 22].

Criminal Law – Section 341 IPC – Wrongful restraint – Complainant failed to establish any legal right to enter the premises – No evidence of tenancy – Complainant was only a prospective tenant – Obstruction by accused made in good faith under protection of civil court’s injunction order – Held: Offence under Section 341 IPC not made out [Paras 23-26].

Criminal Justice System – Abuse of Process – Filing of Chargesheets without Strong Suspicion – Court cautioned against mechanical filing of chargesheets and framing of charges where no prima facie case exists – Emphasised need to avoid clogging judicial system with trials destined for acquittal – Held: Prosecution must have reasonable prospect of conviction to proceed – Otherwise, fair process compromised [Paras 27-29].

Decision: Appeal allowed – Impugned judgment set aside – Appellant discharged from G.R. Case No. 223 of 2020 arising from FIR No. 50 of 2020 – No offences under Sections 341, 354C, 506 IPC made out.

Taxation Law - Excise Duty – Exemption – Use of Power – Clubbing of Units – Appellant sought to deny exemption under Notification No. 5/98-CE to Unit No.1 alleging that entire manufacturing process, including stages at Unit No.2, involved power – Supreme Court held that even if units are separate entities, when their processes are integrally connected and collectively lead to manufacture, exemption is not available – Clubbing justified [Paras 11–13]

Manufacture – Definition – Integrated Process – Manufacture under Section 2(f) of Central Excise Act includes all integral processes – Bleaching and mercerizing at Unit No.1, followed by squeezing and stentering at Unit No.2, and final bailing/packing at Unit No.1, formed one continuous manufacturing chain – Held: Use of power at any stage disqualifies exemption [Paras 10–12]

Interpretation of Notification – Beneficial Construction – Exemption Notification to be strictly construed – Since stentering process used power and was essential to final product, exemption not applicable – CESTAT erred in ignoring cumulative processing and focusing only on formal separation between units [Paras 10–13]

Retraction of Statements – Evidentiary Value – Statements of partners recorded during inspection were retracted six months later – Commissioner rightly held retractions were afterthoughts – CESTAT’s reliance on retracted affidavits erroneous [Para 4]

Judicial Review – Scope under Section 35-L(b) – CESTAT’s finding ignoring binding precedents and factual integration of processes not a “possible view” – Justified interference by Supreme Court – Order-in-Original restored [Paras 6, 13–14]

Decision: Appeals allowed – CESTAT judgment dated 05.10.2011 set aside – Order-in-Original dated 27.09.2006 passed by Commissioner of Central Excise restored – Respondents held liable for duty, interest, and penalty under the Central Excise Act, 1944.

Criminal Law – Sentence Reduction – Compromise – Appellants convicted under Section 326 IPC and Section 3(1) of the TNPPDL Act for assault and property damage – Sentenced to five years and two years respectively (to run concurrently) – High Court affirmed conviction and sentence – In appeal before Supreme Court, compromise entered between parties – Appellants had already undergone 2 years and 3 months in custody – Held: While maintaining conviction, sentence reduced to period already undergone – Appellants to be released forthwith if not wanted in any other case [Paras 4-11].

Criminal Procedure – Limited Notice on Sentence – Supreme Court issued notice confined to quantum of sentence – No interference with conviction – Court exercised discretion to reduce sentence considering compromise and substantial sentence already served [Paras 8-11].

Decision: Conviction upheld – Sentence reduced to period already undergone – Appellants ordered to be released immediately, if not wanted in any other case [Paras 11-12].

Muslim Law – Post-divorce Property – Section 3 of 1986 Act – Return of Dower and Gifts – Appellant claimed ₹17.67 lakhs including ₹7 lakhs and 30 bhories of gold under Section 3 of the Muslim Women (Protection of Rights on Divorce) Act – Trial court decreed partial return – High Court reversed, relying on father’s statement that amount was given to husband – Supreme Court held: High Court erred in discounting registrar’s testimony and final acquittal in 498A case – Entitlement under Section 3 includes all property given at marriage regardless of to whom it was given – Appeal allowed – Respondent directed to pay amount [Paras 3–10]

Interpretation of Statutes – Beneficial Legislation – Muslim Women (Protection of Rights on Divorce) Act, 1986 – Must be construed to promote dignity, autonomy, and equality of divorced Muslim women – Court emphasized social context and purposive interpretation in light of Daniel Latifi – Held: Interpretation must be grounded in realities of patriarchal structures, especially in rural areas – Equality and social justice must guide application of Section 3 [Para 9]

Evidence Law – Contradiction Between Oral and Documentary Evidence – Discrepancy in two marriage certificates (Exhibits 7 & 8) and between testimony of registrar and father – High Court preferred father’s statement from prior 498A proceedings – Supreme Court held such evidence loses value post-acquittal and cannot outweigh registrar’s record – Registrar’s explanation of clerical error credible – Findings of lower court restored [Paras 4.5–8]

Writ Jurisdiction – Article 227 – High Court’s interference with concurrent findings of lower courts – Court held such superintendence must not be exercised to re-appreciate evidence or substitute plausible view – High Court’s intervention unjustified – Order set aside [Paras 5–6]

Decision: Appeal allowed – High Court judgment set aside – Respondent directed to remit ₹7 lakhs and 30 bhories of gold (or equivalent monetary value) to Appellant – Payment to be made within 6 weeks with compliance affidavit – Interest @9% per annum if delayed.

Criminal Law – Child Trafficking – Compliance with Directions – Victim Compensation and Education – Court reviewed the status of compliance with directions issued in the judgment dated 15.04.2025 – Held: Regarding education (Para 81h), trafficked children must be admitted to schools in accordance with the RTE Act, 2009; for children under 5, admission to be secured upon attaining age – Regarding compensation (Para 81i), Trial Courts must pass appropriate orders under BNSS, 2023 and the Uttar Pradesh Rani Laxmi Bhai Mahila Evam Bal Samman Kosh – Even where trials have concluded without compensation orders, courts are directed to proceed and pass appropriate orders for compensation. [Paras 3-6, 12]

Constitutional Law – Protection of Litigants – Retaliatory Termination of Service – Petitioner (Pinki) and her husband, employed as sweepers with the Varanasi Municipal Corporation through a contractor, were terminated from service – Amicus Curiae submitted that the termination was a result of authorities being "agitated" by the Supreme Court taking serious cognizance of the child trafficking issue raised by the petitioner – Held: The termination is "disheartening and shocking" – The Court ordered the immediate reinstatement of the husband and wife by 12:00 PM on the same day on the same terms and conditions – Warned that failure to reinstate would result in the suspension of the authority responsible for the termination. [Paras 14-17]

Administrative Law – Implementation of Policy – BIRD Report – Directions issued to State Governments to study the report by the BIRD (dated 12.04.2023) regarding child trafficking and implement its recommendations – High Courts directed to furnish data regarding the status of pending trials to facilitate the issuance of circulars for expeditious disposal. [Paras 7-12]

Decision: Directions issued for strict compliance regarding compensation and education; Immediate reinstatement of petitioner and husband ordered. [Paras 16-18]