SARFAESI Act – Auction Sale – Statutory Timeline – Rule 9(4) – Sale Set Aside – Borrowers availed credit facilities of Rs. 4 crore from secured creditor; upon default, loan classified as NPA and SARFAESI proceedings initiated – E-auction conducted on 04.09.2020; auction purchasers deposited 25% bid amount – Confirmation of sale remained restrained by successive judicial orders of DRT, DRAT and High Court – Balance 75% deposited only on 31.03.2022, approximately 15 months after the outer limit under Rule 9(4) – Sale certificate issued and registered on 18.04.2022 – High Court set aside the auction sale holding the delay violated Rule 9(4) – Held: Completion of sale prorogued beyond mandatory statutory timeline not due to any default of borrowers but owing to subsisting judicial orders and procedural restraints – Sale remained inchoate and could not operate to divest borrowers of secured assets – Appeals dismissed [Paras 16–35].

Right of Redemption – Survival after Sale Certificate – Article 300-A – Where auction sale itself had not attained statutory finality under Rule 9(4) of the SARFAESI Rules owing to non-compliance with mandatory deposit timelines, the issuance and registration of a sale certificate did not extinguish the borrowers' right of redemption – Borrowers had discharged entire outstanding liability of Rs. 3,89,31,614/- through successive deposits made under judicial supervision and remitted the balance amount of Rs. 2,29,31,614/- on 02.12.2022 pursuant to High Court direction – Divestment of constitutional right to property where debt stands fully discharged would be disproportionate and unsustainable – Held: Borrowers entitled to redemption; secured creditor directed to release secured assets and return title deeds [Paras 23–34].

Misrepresentation – Incorrect Statement before Court – Mitigating Effect of Prompt Correction – During hearing of writ petition, borrowers' counsel incorrectly stated that sale certificate had not been issued; error promptly corrected by affidavit dated 16.12.2022 – High Court condoned the misrepresentation in the interest of justice – Held: Where correction is swiftly made and no unfair advantage was derived, discretion of High Court to proceed on merits rather than dismiss on procedural ground is within jurisdiction and aligned with broader concept of justice – Appeal cannot be allowed solely on ground of misrepresentation [Paras 12–15].

Interpretation of Order – "No Further Steps" – High Court order dated 15.12.2020 permitted secured creditor to accept balance sale consideration while restraining "no further steps" till disposal of S.A. No. 263/2020 – High Court in impugned judgment interpreted "no further steps" as barring only issuance and registration of sale certificate, not receipt of balance consideration – Held: Such interpretation is correct; to construe the expression as prohibiting receipt of balance consideration would render the first part of the order otiose – Secured creditor was free to accept balance consideration but failed to do so; delay inures to benefit of borrowers [Paras 19–22].

Decision: Appeals dismissed – Auction sale and sale certificates set aside – Secured creditor directed to release secured assets and return title deeds to borrowers – Auction purchasers entitled to refund of entire sale consideration with interest at 12% per annum – Parties to bear their own costs.

Service Law – Disciplinary Enquiry – Oral Enquiry – Dismissal from Service – Vitiation of Enquiry – Appellant, employed as in-charge of paddy procurement centre, was dismissed on charges of short delivery of paddy and embezzlement – No witness was examined by the department in the enquiry despite the appellant having denied all charges – High Court dismissed the writ petition holding that the enquiry was fair and principles of natural justice were complied with – Held: Enquiry stood vitiated for failure to examine witnesses in support of charges denied by the appellant – Order of dismissal and consequential recovery set aside [Paras 3, 8, 18].

Natural Justice – Principles of – Departmental Enquiry – Burden of Proof – Unless the charged employee admits guilt in clear terms, the employer must lead evidence to prove the charges – Examination of witnesses is mandatory and the charged employee must be given opportunity to cross-examine such witnesses – An evasive reply to a charge-sheet in a departmental enquiry cannot be equated with an admission under Section 58 of the Evidence Act – A departmental charge-sheet is not a plaint and denial of charges casts the burden of proof on the employer [Paras 13, 14, 17].

Service Rules – Regulation 85 of 1975 Regulations / Rule 84 of 1980 Service Rules – Mandatory Requirements – Regulation 85(i)(b) requires that an employee be given opportunity to produce witnesses in defence and to cross-examine witnesses examined against him – Even where enquiry is based solely on documentary evidence, unless the documents are admitted by the charged employee, a witness must be examined to prove those documents and tendered for cross-examination [Paras 15, 17].

De Novo Enquiry – Liberty Granted – Federation permitted to hold a de novo enquiry within six months from date of order – If de novo enquiry is not held, appellant entitled to reinstatement with continuity in service and arrears of salary after adjusting suspension allowance already paid – If de novo enquiry is held, appellant to be reinstated and placed under suspension with suspension allowance till completion of enquiry, and other service benefits to depend on outcome of enquiry [Para 18].

Decision: Appeal allowed – Impugned judgment of High Court set aside – Writ petition of appellant allowed – Order of dismissal and consequential recovery set aside – Federation at liberty to hold de novo enquiry within six months.

Criminal Law – Sanction for Prosecution – Section 197 Cr.P.C. – Police Officers – Subordinate Ranks – Appellants, subordinate rank police officers, were accused of murdering the complainant's husband allegedly at the instance of a senior officer (Sankaran Moitra) during election duty – This Court had earlier quashed proceedings against Sankaran Moitra for want of sanction under Section 197(1) – Magistrate extended that benefit to the appellants – High Court reversed, holding the earlier order applied only to Sankaran Moitra – Held: Appellants, being subordinate rank officers removable without Government sanction, were not entitled to protection of Section 197(1) – Benefit of decision in Sankaran Moitra not available to appellants [Paras 7, 10].

Section 197 Cr.P.C. – Scope – "Government" – Definition – Sub-section (1) protects only those public servants who are not removable from office save by or with the sanction of the Government – "Government" as defined under Section 17 IPC means the Central Government or State Government – If an authority lower than the Government can dismiss a public servant, sanction of the Government is not required for prosecution – Appellants being subordinate rank officers not falling in such protected category, Section 197(1) was inapplicable [Paras 8, 9, 10].

Section 197(3) Cr.P.C. – Subsequent Notification – Bar on Cognizance – Prospective Effect – State Government of West Bengal issued twin notifications dated 19.11.2010 extending protection of Section 197(2) to subordinate rank police officers charged with maintenance of public order – Bar under Section 197 applies at the stage of cognizance – A subsequent notification cannot nullify a valid cognizance order already taken – Since cognizance was taken in 2001, well before the 2010 notification, its benefit was unavailable to the appellants – Post-cognizance sanction cannot save proceedings [Paras 11, 12, 13, 14, 15].

Decision: Appeal dismissed – Interim order, if any, discharged – No opinion expressed on merits of allegations against the appellants.

Bail – Regular Bail – Prolonged Incarceration – Parity with Co-accused – Appellant in custody since 14.01.2023 in connection with FIR No. 219/2022, Police Station Wagle Estate, District Thane City, for offences under Sections 307, 326, 324, 323, 504, 506, 141, 143 and 149 IPC and Sections 4 and 25 of the Arms Act – Trial yet to commence with thirteen witnesses to be examined – Out of eight accused, five already released on bail, one absconding and only one other accused in custody – Held: Considering the length of incarceration, pendency of trial, and parity with co-accused released on bail, case for bail is made out – Appeal allowed – Appellant directed to be produced before the trial Court for release on bail subject to conditions as the Court deems fit.

Decision: Appeal allowed – Impugned order of the High Court of Judicature at Bombay dated 23.06.2025 in Bail Application No. 837/2025 set aside – Trial Court directed to release appellant on bail subject to such conditions as it may impose to ensure his presence – Appellant directed to cooperate fully in the trial and not misuse liberty – Liberty reserved to the State to seek cancellation of bail in case of any infraction or fresh offence.

Referred Cases:

Civil Law – Succession Certificate – Minor Legal Heir – Non-Impleadment – Order IX Rule 13 CPC – Appellant No. 1 was a minor aged about 12 years when respondents initiated proceedings for grant of Succession Certificate in respect of retiral benefits of their deceased father – A public notice was issued but did not specify that proceedings were initiated on account of the death of the deceased – Minor was never impleaded as a party, depriving him of opportunity to be heard – Respondents, despite knowledge of the minor's existence as a legal heir, took no steps to appoint a lawful guardian – Held: Minor was legally incapacitated from responding to public notice or initiating legal proceedings; finding of courts below that no prejudice was caused to the minor is unsustainable in law [Paras 8, 9].

Order IX Rule 13 CPC – Scope – Sufficient Cause – Distinction from Section 96 CPC – Primary requirements of an application under Order IX Rule XIII CPC are whether summons were duly served and whether there is sufficient cause for non-appearance – Scope of proceedings under Order IX Rule XIII CPC is wider than Section 96 CPC, enabling the applicant to demonstrate sufficient cause and seek setting aside of an ex parte decree – Observation by Additional District Judge that a minor could have impleaded himself upon publication of public notice held wholly erroneous and perverse [Paras 7, 8].

Indian Succession Act, 1925 – Section 383 – Revocation of Succession Certificate – Material Misstatements – Where an application for succession certificate is defective or material facts have been suppressed or misstated, the certificate is liable to be revoked – In the present case, the mother of the minor was incorrectly described in the application; no explanation was furnished for the serious misstatement – Such inaccuracies further vitiate the proceedings [Para 8].

Decision: Appeal allowed – Impugned orders of High Court, District Court and Trial Court quashed and set aside – Application under Order IX Rule XIII CPC allowed – Ex parte order granting Succession Certificate quashed – Matter restored to original number – Parties directed to appear before competent court – Court requested to decide the matter preferably within one year.

Service Law – Pay Commission – Non-Functional Upgradation – Junior Engineers, BRO – Para 7.4.13(iv)(b), Seventh Central Pay Commission – Civil Appeal Dismissed – Junior Engineers of BRO placed at Level 6 (Grade Pay Rs. 4,200/-) upon Sixth Pay Commission recommendations; reached Level 8 (Grade Pay Rs. 4,800/-) through MACP after 20 years of service – Claim for NFU to Level 9 (Grade Pay Rs. 5,400/-) rejected by BRO vide letter dated 19.02.2021 on the ground that entry-level Grade Pay of Junior Engineers was Rs. 4,200/- and not Rs. 4,800/- – Held: Plain reading of Para 7.4.13(iv)(b) stipulates only completion of four years in Level 8 on seniority-cum-suitability basis as the condition precedent for NFU; insistence on entry-level Grade Pay of Rs. 4,800/- adds a condition not found in the recommendation and amounts to denial of a rightful benefit [Paras 11–13].

Non-Functional Upgradation – Entry Level vs. Milestone Grade Pay – Whether entry to Grade Pay of Rs. 4,800/- is by promotion or direct recruitment or through MACP is immaterial – The only condition for grant of NFU to Level 9 is completion of four years in Level 8 – Denial of NFU to Junior Engineers while extending the same benefit to Senior Private Secretaries and Assistant Accounts Officers, who have identically completed four years in the milestone Grade Pay, is discriminatory and highly unacceptable – Pay Commission recommendations are advisory but once implemented, denial of benefit to an identically placed cadre without valid reason is unsustainable [Paras 9.2–9.5, 11–13].

Decision: Civil Appeal dismissed – Order of Delhi High Court directing grant of NFU (Grade Pay Rs. 5,400/-) to Junior Engineers upon completion of four years of service in Level 8 upheld – No order as to costs.

Building Bye-Laws — Unauthorised Construction — Municipal Corporation Liability — Collusion and Connivance — Petitioner constructed a G+1 floor building without any sanctioned plan — Municipal Corporation failed to notice construction and passed demolition order only after completion of structure — Court observes that an entire one-and-a-half-storied building getting constructed without detection indicates an alarming state of affairs which could not have occurred without collusion and connivance of Municipal Authorities — State Government directed to conduct thorough inquiry into why entire structures are completed without due sanction and without any corrective measures being taken — Commissioner of Greater Chennai Corporation directed to file personally affirmed affidavit — Respondent Corporation disclosed that the site was within limits of Madhavaram Municipality at the relevant time and outside Chennai Corporation jurisdiction [Paras 1–3].

Unauthorised Construction — State Government Order Granting Relief to Violators — Additional Secretary (Technical), Housing and Urban Development Department, Tamil Nadu, by order dated 22.03.2024, directed that no coercive action be taken against persons who had violated building norms — Court expresses inability to comprehend how such relief could have been granted when blatant violation was evident and High Court had directed strict compliance with law — State of Tamil Nadu directed to file affidavit disclosing identity of officer(s) responsible for passing said order and furnishing explanation for its issuance [Paras 4–5].

Building Bye-Laws — Pan-India Directions — Misuse of Residential Areas for Commercial Purposes — Court takes judicial notice of widespread and blatant violations of building bye-laws and land-use regulations across the country — Constructions frequently undertaken in prohibited areas and, upon completion, put to uses other than those for which sanction was granted — Residential colonies being converted into commercial areas by unauthorised use, causing prejudice to bona fide residents and serious environmental and civic consequences — Held: Issue requires examination on a pan-India basis — All Municipal Corporations and Municipalities of capital cities of all States and Union Territories impleaded as party respondents — Directed to conduct comprehensive inquiry within their entire jurisdictions, including residential colonies, group housing societies, and 'islands' falling within or surrounded by Corporation/Municipality areas — Detailed list of areas demarcated for residential use but misused for non-residential purposes to be filed by way of personally affirmed affidavits by Commissioners — State of Tamil Nadu through Chief Secretary also impleaded — Mr. Ajit Kumar Sinha, Senior Counsel, appointed as Amicus Curiae — Affidavits to be filed and served on Amicus Curiae by 15.05.2026 — Matter listed on 20.05.2026 [Paras 6–16].

Decision: Miscellaneous Application disposed of with directions — State of Tamil Nadu directed to file affidavit explaining order dated 22.03.2024 within four weeks — All Municipal Corporations and Municipalities of capital cities of all States and Union Territories impleaded and directed to file comprehensive inquiry reports — Mr. Ajit Kumar Sinha appointed Amicus Curiae — Matter listed on 20.05.2026 [Paras 5, 9–16].

Taxation – Electricity Duty – Exemption – Withdrawal – Section 5A of Bombay Electricity Duty Act, 1958 – Captive Power Generators – State Government granted exemption from electricity duty to industries generating power through captive plants by notifications from 1994, which was modified and substantially withdrawn by notifications dated 01.04.2000 and 04.04.2001, citing budgetary constraints and augmentation of revenue – Exemption was restored from 01.05.2005 by notification dated 16.06.2005 – Respondents challenged the intervening withdrawal and the High Court quashed the notifications as arbitrary, discriminatory, and unsupported by reasons – Held: High Court orders quashed – Notifications upheld subject to one year transitional notice period [Paras 1–24].

Exemption – Nature – Defeasible Right – Power to Withdraw – An exemption granted under a fiscal statute is a concession by the State relieving the beneficiary from an obligation otherwise payable – The recipient has no legally enforceable right to insist upon continuation of exemption indefinitely – The right to enjoy exemption is a defeasible right in the sense that it may be taken away in exercise of the very power under which it was granted – The exemption from payment of electricity duty was neither prematurely withdrawn nor withdrawn with retrospective effect [Paras 13, 16–17].

Article 14 – Judicial Review – Fiscal Policy – Courts must defer to legislative and executive judgment in matters of social and economic policy and must not interfere unless the exercise of power appears to be palpably arbitrary, discriminatory, or actuated by extraneous considerations – Courts do not evaluate the wisdom, sufficiency, or effectiveness of economic policy – Augmentation of public revenue and addressing budgetary constraints constitute valid public interest grounds for withdrawal of exemption and cannot be regarded as extraneous or unreasonable – Respondents failed to demonstrate manifest arbitrariness or irrelevant consideration [Paras 13, 18–20].

Promissory Estoppel and Legitimate Expectation – Inapplicable – Where the government makes a representation through a notification, the beneficiary must know that such notification is liable to be amended or rescinded in public interest – Doctrine of promissory estoppel does not prevent the State from changing its stand where supervening public equity exists, provided the Court is satisfied that such public interest exists – Decision to withdraw and modify the exemption having been taken in public interest, doctrines of promissory estoppel and legitimate expectation have no application [Paras 14–15, 20].

Reasonable Notice Period – Transitional Protection – While the State possesses the power to withdraw or modify a statutory exemption, the manner of exercise of such power must satisfy reasonableness and fairness – Persons who have structured their commercial and industrial activities on the basis of a concession should not be subjected to abrupt policy reversals leaving them without reasonable time to adjust – Government should resile from its stand by giving reasonable notice where such course is feasible – Captive power generators had enjoyed exemption since 1994 and would have organised their financial and operational arrangements accordingly – Sudden withdrawal without transitional period imposes immediate additional fiscal burden – Held: A period of one year from the respective dates of the notifications constitutes reasonable notice, and the impugned notifications shall operate only after expiry of such period [Paras 21–23].

Decision: Appeals allowed – High Court judgments dated 05.10.2009 and 07.11.2009 quashed and set aside – State Government's power to withdraw or modify exemption under Section 5A upheld – Notifications dated 01.04.2000 and 04.04.2001 held operative only after expiry of one year from their respective dates – No order as to costs.

Constitutional Law — Legislative Competence — Tolls on National Highways — Entry 23 and Entry 96 List I vs. Entry 59 List II, Seventh Schedule — Pith and Substance Doctrine — Question arose whether toll collected for use of National Highways by the National Highways Authority of India falls within Entry 59 List II (State List) or within the Union List — Held: Applying the doctrine of pith and substance, any toll which is essentially a charge or fee collected for the use of a National Highway by the National Highways Authority of India is squarely covered within the Union List under Entry 23 read with Entry 96 of List I — Consequently, expression "Tolls" in Entry 59 List II must be restricted to those tolls or charges which are not collected by the Union Government in terms of List I — No interference warranted with the High Court's judgment — SLP dismissed [Order].

Decision: Delay condoned — Special Leave Petition dismissed — Pending applications disposed of.