Banking Law – Leasehold Plot – Validity of mortgage and e-auction sale of leasehold property allotted by DDA – Mortgage without prior permission of Lieutenant Governor held void – DDA’s rights of pre-emption and unearned increase ignored – Recovery Officer and Bank failed to disclose material encumbrances in auction proclamation – E-auction notice dated 27.09.2012 and sale held on 09.11.2012 declared illegal for violation of Rule 53 Second Schedule, Income-tax Act and Rule 16 of 1962 Rules – High Court erred in applying res judicata – Fresh cause of action arose when auction violated lease terms – Auction purchaser found bona fide and entitled to restitution – Bank directed to refund full deposit with 9% interest – Appeal allowed; auction and sale certificate quashed [Paras 18-27, 28-32].

Mortgage – Leasehold property allotted by statutory authority – Mortgage created without written consent of Lieutenant Governor – Held: Mortgage void ab initio; Bank cannot claim lawful security interest [Paras 5, 18-19].

Debt Recovery – Auction under RDDBFI Act – Recovery Officer bound to disclose encumbrances and statutory dues in proclamation – Failure to mention DDA’s unearned increase claim vitiates sale [Paras 23-27].

Res Judicata – Earlier writ petition withdrawn on Bank’s undertaking that auction would be subject to lease conditions – Not decided on merits – Fresh cause of action arose upon breach of undertaking – High Court erred in dismissing subsequent writ as barred [Paras 28-29].

Restitution – Innocent auction purchaser caught in illegal sale – Restitution a moral imperative – Bank, having auctioned what it never lawfully possessed, must refund money with interest [Paras 30-32].

Decision – Appeal allowed – High Court order dated 11.08.2014, e-auction notice dated 27.09.2012, auction dated 09.11.2012, and confirmation/sale certificate dated 08.07.2013 and 12.07.2013 quashed – Bank directed to refund entire deposit with 9% interest to auction purchaser within one month [Para 32-33].

Civil Procedure – Summary Suit – Leave to Defend – High Court allowed defendant to file reply to summons for judgment without prior leave to defend under Order XXXVII Rule 3(5) CPC – Held: Permitting reply without prior leave undermines the summary nature of Order XXXVII proceedings – Order suffers from serious procedural defect and is unsustainable – Impugned order set aside [Paras 6, 7, 9].

Civil Procedure – Order XXXVII CPC – Procedure Mandate – Summary suits under Order XXXVII require strict compliance with sequence of steps – Entry of appearance, filing of summons for judgment, and leave to defend must precede filing of written statement or reply – Deviation from mandated procedure strikes at the root of Order XXXVII scheme [Paras 6, 7].

Delay – Condonation of Delay in Filing Leave to Defend – Application for condonation of delay in seeking leave to defend pending before High Court – Supreme Court held that mere pendency or wrong provision invoked cannot justify bypassing procedural compliance – No opinion expressed on merits of delay or entitlement to decree [Paras 8, 9].

Procedural Law – Distinction Between Regular and Summary Suit – Allowing reply in summary suit without leave equates it with ordinary suit, thereby nullifying the purpose of Order XXXVII – Procedural safeguard is integral to summary disposal – Order set aside while preserving rights of both parties to pursue appropriate remedies [Paras 9, 10].

Service Law – Lecturer Appointment – Rule Applicability – Appellant selected as Lecturer in History in 2006 under Assam Government Aided Junior College Management Rules, 2001 – Age condonation granted by Government for 2 years 7 months – Appointment approved and 18 years of continuous service rendered – High Court Division Bench wrongly applied Rule 19(iv) of Assam Secondary Education (Provincialisation) Service Rules, 2003 to aided post, quashing appointment – Held: 2003 Rules not applicable to aided colleges at the time of advertisement – Appointment validly made under 2001 Rules – Orders of Division Bench and Review dismissed as illegal – Appellant entitled to reinstatement with continuity but no back wages [Paras 2, 3, 5, 6, 7].

Education Law – Distinction Between Aided and Provincialised Institutions – 2001 Rules governed appointments in aided junior colleges pre-provincialisation – 2003 Rules under 1977 Act apply only post-provincialisation and cannot retrospectively invalidate appointments in aided institutions – High Court erred in conflating rules applicable to distinct statutory regimes [Paras 2, 3, 6].

Reinstatement – Break in Service – Appellant removed after review dismissal – Supreme Court directs reinstatement within 4 weeks without treating intervening period as break in service – Continuity of service for all purposes except back wages allowed [Para 7].

Consumer Law – Builder-Buyer Dispute – Refund with Interest – NCDRC’s 9% interest enhanced to 18% – Developer charged buyer at 18% for delay; equity demands same rate for refund – Appeal partly allowed.

Consumer Protection – Real Estate Delay – Interest on Refund – Builder failed to deliver possession of plot booked by appellant in 2006 despite full payment – NCDRC awarded refund of principal with 9% simple interest – Supreme Court enhanced interest rate to 18% considering inordinate delay, harassment, and builder’s own clause imposing 18% interest on buyer's delay – Held: Interest of 9% inadequate in facts; builder must face same rigours imposed on buyer for delay [Paras 1, 3, 13, 14, 19, 20, 21]

Agreement Clauses – Unilateral Modification – Clause 7 of Agreement allowed change in plot only if required by statutory authority – Respondent invoked clause and allotted different plot in 2011 without showing statutory requirement – Held: Respondent failed to justify invocation of clause 7; mere lack of objection from appellant is irrelevant [Paras 15, 16]

Delay in Possession – Alternative Plot Offered after 7 Years – Appellant booked plot in 2006, alternative allotted in 2011, possession offered only in 2018 – Delay unexplained and unjustified – Respondent’s conduct held deficient and oppressive [Paras 14, 17, 19]

Interest on Refund – Parity in Rate – Though not a rule, Court held that parity in interest rate (18%) was justified in this case given builder’s conduct and long delay – Equity and fairness demand builder be subjected to same rate it imposed on buyer [Paras 11, 12, 19, 20]

Consumer Protection Act – Compensation – Proof of Actual Loss – Reiterated that compensation requires proof of actual loss – However, in this case, Court clarified it was only deciding appropriate interest rate on refund, not compensation for loss [Para 18]

Decision: Appeal partly allowed – NCDRC’s direction for refund upheld – Interest rate enhanced from 9% to 18% per annum – Refund to be made within two months [Para 21, 22]

Section 482 Cr.P.C. – Quashing – Bhajan Lal applied – Civil loan/cheque dispute dressed up as cheating/forgery – Multiple retaliatory FIRs – Proceedings quashed – Parties relegated to civil remedies.

Section 482 Cr.P.C. – Quashing – Bhajan Lal principles – Civil dispute given criminal colour – Proceedings Quashed – Allegations pertain to a loan/cheque dispute; multiple FIRs in quick succession after appellant initiated lawful proceedings; ingredients of cheating/forgery not prima facie made out – Held, case falls within Bhajan Lal categories (1) and (7); continuation of prosecution would be abuse of process – FIR No. 47/2003 and chargesheet dated 16.04.2003 quashed [Paras 12-16, 20-22].

Section 482 Cr.P.C. – Scope and self-restraint – High Court must prevent abuse yet avoid “mini-trials” – The settled law reiterates that inherent powers are wide but controlled by self-imposed restraints; court examines whether FIR/material disclose ingredients of offence; no sufficiency-of-evidence weighing at 482 stage – Exception for unimpeachable defence material of sterling quality – Principles restated [Para 11–11.5].

Criminal vs Civil – Commercial/contractual disputes – Criminal law not debt-recovery tool – Money/contractual disagreements cannot be criminalised absent foundational mens rea; tendency to convert civil disputes into criminal cases deprecated – Followed: Indian Oil v. NEPC; Inder Mohan Goswami; Ganga Dhar Kalita; Shailesh Kumar Singh – Guidance applied to present facts [Paras 17-19].

Malice / Counterblast – Multiple FIRs in one week; prior NI Act complaints and earlier FIR by appellant – High Court noted hurried filing of chargesheets during pending transfer writ – Circumstances fortify inference of mala fides; present FIR a retaliatory counterblast – Supports Bhajan Lal category (7) [Paras 5-7, 13-15].

Cheating/forgery – Ingredients not prima facie disclosed – Even accepting allegations entirely, the dispute is civil (loan of ₹2,00,000; agreement to sell; cheque dishonour) – No material showing initial fraudulent intent; no case to proceed for IPC 420/467/468 at threshold [Paras 13, 20].

High Court error – Failure to apply Bhajan Lal; directing matters to proceed despite civil nature – Supreme Court intervenes to prevent misuse of criminal process [Paras 21-22].

Decision:

Appeal allowed – Allahabad High Court judgment dated 22.10.2019 set aside – FIR No. 47/2003 (05.02.2003) and chargesheet dated 16.04.2003 quashed – Parties at liberty to pursue civil remedies [Para 22-23].

Land Grants – Portuguese ‘Alvaras’ – Lex Specialis – Organisation Agraria (1919) governs emphyteutic concessions in Dadra & Nagar Haveli – 1917 Law is general; OA is special and self-contained – Article 12 OA permits rescission for non-cultivation “without any formal procedure” – Held: OA applies; recourse to 1917 Law Art. 307 foreclosed; no casus omissus to invoke Art. 146 OA [Paras 26–31].

Pleadings – New Grounds on Appeal – Appellants’ reliance on 1917 Law Art. 307 and Decree 27:135 (1936) first raised before Supreme Court – No foundation in pleadings or issues below; no case made under O.XLI R.27 CPC – Held: Fresh pleas impermissible; even arguendo they fail on merits [Paras 16–24, 25, 29–31, 32–38].

Decree No. 27:135 (1936) – Inalienability vs. Rescission – Article 2 renders properties inalienable except for public utility expropriation or Art. 7(3) OA (non-payment of canon) – “Inalienability” restricts voluntary transfers; does not displace statutory rescission for breach under Art. 12 OA – Decree modifies but does not supplant OA – Held: Collector’s Art. 12 power intact [Paras 32–38].

Second Appeal – Section 100 CPC – Interference with Concurrent Findings – High Court may interfere where findings are perverse, based on no/irrelevant evidence, or misapplication of law – High Court rightly corrected erroneous reliance on waiver/acquiescence and misreading of material – No jurisdictional error in interference [Paras 39–46].

Waiver & Acquiescence – Public Interest Grants – Conditions of cultivation under Art. 12 OA are mandatory and rooted in public policy; cannot be waived or defeated by inaction – Mere delay does not amount to acquiescence; no clear intentional relinquishment shown – No estoppel against Government in exercise of sovereign functions [Paras 51–59, 60–62].

Reasonable Time – Overseas Council of Lisbon Decision – Foreign administrative decision only of persuasive value; misread by courts below – Does not fix seven-year limit for rescission; at best indicates rescission could follow non-fulfilment within that period – Delay alone insufficient; prejudice not shown [Paras 63–70].

Impossibility & Condonation – Burden on grantee not discharged – Collector excluded genuinely uncultivable parcels; found no bona fide attempts to cultivate; no proof of express condonation – Pleas rejected [Paras 71–75, 73].

1971 Land Reforms Regulation – Repeal & Savings – Section 57 saves pending investigations/legal proceedings and prior actions – Collector’s action commenced in 1969; High Court’s remand in 1973 – Proceedings protected; Regulation inapplicable to undo OA-based action – Show-cause and rescission not vitiated [Paras 81–88].

Collector’s Order – Validity – Detailed, reasoned, compliant with natural justice post-remand; uncultivable lands excluded; cultivated 5/8th parcels spared; findings anchored in inspection and statutory mandate – No mala fides; not timed to deprive statutory benefits [Paras 89–93].

Decision: Appeals dismissed – High Court’s judgment affirmed – Status quo order dated 24.02.2006 vacated – No costs [Paras 96–97].

Directions – Liberty to Appellants to apply to Collector for occupancy rights under 1971 Regulation within six weeks; such applications to be entertained notwithstanding limitation and decided per law – NHAI acquisition-related IAs disposed of with liberty to pursue remedies [Paras 98–100].

Arbitration – Enforcement of Arbitral Award – Claim for Compound Interest – Arbitral Tribunal awarded Rs. 15.5 crores with 21% p.a. interest from date of advance till repayment – Respondent filed execution seeking compound interest under Section 31(7)(b) of Arbitration and Conciliation Act, 1996 – Executing Court rejected claim for compound interest and closed execution on payment of Rs. 44.42 crores by appellant – High Court reversed, remanded for reconsideration – Held: Arbitral tribunal awarded composite simple interest in terms of contract (MoU) till repayment – No post-award interest or compound interest awarded – No power to modify award at execution stage – High Court erred in remanding matter – Appeal allowed [Paras 6, 7, 11, 22, 29–34]

Interest – Interpretation of Section 31(7)(a) and (b), Arbitration and Conciliation Act, 1996 – Clause (a) subject to party agreement; clause (b) applies only if award is silent – Arbitral tribunal followed MoU specifying 21% interest from date of advance till repayment – Hence, Section 31(7)(b) inapplicable – Respondent’s claim for compound interest contrary to terms of award – Execution court cannot expand scope of award – Reliance on Hyder Consulting misplaced – Law clarified in Morgan Securities and Delhi Airport Metro cases [Paras 17–20, 24–26, 30]

Contractual Terms – Party Autonomy – MoU dated 09.04.2014 explicitly provided for 21% simple interest from date of disbursement till repayment on termination – Tribunal enforced this clause – Tribunal's discretion under Section 31(7)(a) excluded once parties agreed on interest terms – Tribunal awarded interest till date of repayment – No scope for additional or compound interest [Paras 21, 22, 28–31]

Decision: Appeal allowed – Judgment of High Court dated 22.04.2024 set aside – Order of Executing Court dated 02.11.2023 restored – Respondent not entitled to compound interest or further amounts beyond Rs. 44.42 crores already paid [Paras 32–34].

Criminal Law – Sections 406 & 420 IPC – Failure to perform contract – Civil breach dressed up as criminal case – FIR after 8 years held mala fide – Quashed under Bhajan Lal.

Criminal Law – Cheating and Criminal Breach of Trust – Quashment – Dispute arose out of a sale agreement executed in 2013 for property transfer – Complainant paid ₹20 lakhs as advance but title was not conveyed – FIR under Sections 406, 420, and 120B IPC filed after 8 years – Supreme Court held no prima facie case made out for cheating or criminal breach of trust – Dispute is civil in nature, criminal prosecution not justified [Paras 2, 4, 5, 18, 19, 20, 25, 27]

Criminal Intent – Absence of Mens Rea – No evidence that appellant had dishonest intention at the inception of agreement – No specific allegations or materials showing intentional deception or misappropriation – Delay in complaint casts doubt on complainant’s bona fides – Held: No dishonest inducement to deliver property or breach of trust shown [Paras 18, 19, 20, 22]

Section 420 IPC – Cheating – Scope and Ingredients – Mere failure to execute a sale agreement or refund money does not constitute cheating – Intention to deceive must exist at inception – Such intention not shown in this case – Offence under Section 420 IPC not made out [Paras 17, 18, 19]

Section 406 IPC – Criminal Breach of Trust – Entrustment and Misappropriation – Essential elements not pleaded – No averment or evidence of entrustment of property or its dishonest misappropriation – Hence, offence under Section 406 IPC also not made out [Para 20]

Mutual Exclusivity – Section 406 and 420 IPC – Held: Offences of criminal breach of trust and cheating are conceptually different and mutually exclusive – Cannot co-exist on same set of facts – Complaint alleging both without necessary ingredients is legally untenable [Para 21]

Delay and Abuse of Process – Complaint lodged after 8 years – No explanation for inordinate delay – Held: FIR appears to be mala fide, intended to harass the accused – Civil remedy available for contractual breach, criminal law cannot be misused [Paras 22, 23, 25]

Inherent Powers – Section 482 CrPC – Exercise of Jurisdiction – Supreme Court quashed FIR applying Bhajan Lal principles – FIR fails to disclose cognizable offence – Allegations vague, improbable, and mala fide – Continuing proceedings would amount to abuse of process [Paras 24, 25]

Judicial Caution – Misuse of Criminal Justice System – Reiterated that criminal law should not be used for private vendetta – Courts must prevent misuse of criminal process for oblique motives – Criminal proceedings in this case were found to lack substance and integrity [Paras 23, 26]

Decision: Appeal allowed – High Court’s order refusing quashment set aside – Complaint Case No.619/2021 and FIR No.18/2021 along with all consequential proceedings quashed [Para 27]

Tax Law – Constitutional Validity – Article 304(a) – Discriminatory Tax Exemption – Notification issued by State of Rajasthan under Section 8(3) of VAT Act exempting tax on sale of asbestos cement sheets and bricks containing 25% fly ash or more manufactured within the State – Appellants, who manufactured similar goods outside Rajasthan, challenged the notification as being discriminatory under Article 304(a) – Held: The notification was discriminatory since it exempted only goods manufactured within Rajasthan, with no justification or policy basis for such protectionist treatment – Discrimination not saved under principles laid down in Video Electronics and fails to satisfy test of non-hostile differentiation under Jindal Stainless – Quashed as violative of Article 304(a) [Paras 3.1, 12.17–12.19]

Freedom of Trade and Commerce – Article 301 – Interstate Trade – Court reaffirms that while tax is not per se a restriction under Article 301, any tax that discriminates between imported goods and locally manufactured goods violates Article 304(a) – Impugned notification created fiscal barrier by extending benefit only to manufacturers within Rajasthan without rational nexus or legitimate state interest – Not protected under Part XIII of Constitution [Paras 10.1–10.12, 12.14–12.18]

Judicial Review – Requirement of Reasoned Notification – Court reiterates that administrative or statutory orders must stand or fall on reasons stated in the order itself – Reasons for granting exemption not stated in impugned notification – Reliance on affidavit or external materials by State impermissible – Notification bereft of rational justification fails test of reasonableness under constitutional scrutiny [Paras 12.13–12.16]

Differentiation vs. Discrimination – Constitutional Interpretation – State failed to show that exemption was part of a targeted industrial policy or for a specific class or limited duration – Extension of benefit over 16 years (2000–2016) without concrete basis disqualifies it from protection under limited exception in Video Electronics – Blanket exemptions to all manufacturers within the State, regardless of whether fly ash was sourced locally, found to be protectionist [Paras 12.3–12.7, 12.17.1]

Remedy – Refund of Deposited Amounts – Direction issued to ascertain whether differential tax amount deposited with the Court was passed on to customers – If not, appellants entitled to refund with 6% interest [Para 12.20]

Decision: Appeals allowed – Impugned Notification dated 09.03.2007 quashed – Held to be violative of Article 304(a) of the Constitution – Matter posted for directions on refund issue.