Partnership Law - Section 42 of the Indian Partnership Act - Partnership Continuation after Partner’s Death – Clause 18 of Partnership Deed – No Automatic Dissolution – Partnership Firm Continues - Upon the death of one partner in a three-partner firm, the Court held that the business did not automatically dissolve as the partnership deed specifically permitted continuation by surviving partners and induction of any competent heir – Section 42 of the Partnership Act applies only where not otherwise provided – IOCL could not treat the dealership as lapsed without formally terminating it [Paras 17-22].

Guideline Interpretation – Clause 1.5 of IOCL Guidelines – Reconstitution of Firm – Non-Mandatory Inclusion of All Heirs – Clause 1.5 does not mandate inclusion of all legal heirs after a partner’s death, it allows for reconstitution with willing heirs and surviving partners – Court held IOCL’s insistence on inclusion of all heirs or their 'No Objection Certificates' is contrary to its own guidelines and the partnership deed – IOCL misapplied its guidelines [Paras 25-26].

Statutory Corporation Conduct – Arbitrary Actions – Public Interest – Corporation Directed to Act Fairly – The Court emphasized IOCL, being a state instrumentality, must act justly and not create obstacles in legitimate business continuance – High-handed refusal to renew supply tokens without terminating dealership agreement was condemned as arbitrary [Paras 2, 27, 29].

Decision – Dismissal of SLP – High Court Judgment Upheld – The Supreme Court dismissed the Special Leave Petition, upheld High Court directions for continuance of supply to the existing firm, recognized rights under partnership deed and dealership agreement, and criticized IOCL for adopting a narrow technical approach [Paras 28-31].

Negotiable Instruments Act – Conviction under Section 138 – Presumption Properly Raised – Appeal Dismissed – The appellant challenged the High Court's reversal of acquittal and conviction under Section 138 NI Act, arguing that foundational facts were not proved and no presumption under Sections 118 and 139 should have been raised – Held: Respondent had proved foundational facts and appellant failed to rebut presumption – High Court rightly convicted appellant – No interference called for [Paras 5–9].

Compensation – Quantum of Fine – No Double Recovery – The appellant argued that compensation awarded was disproportionate as the respondent was granted the entire cheque amount of Rs.10,00,000/- in addition to a fine – Held: Fine imposed was Rs.10,10,000/- out of which Rs.10,00,000/- was to be paid as compensation under Section 357(1)(b) CrPC – There was no separate or excess compensation – Argument rejected [Paras 10–14].

Fine and Sentence – Justified in Facts – The Court held that the imposition of fine equivalent to the cheque amount was in consonance with the law laid down in R. Vijayan v. Baby, (2012) 1 SCC 260 – There was no illegality or excessiveness in sentencing – No reduction warranted [Paras 11–14].

Time to Pay Fine – Three Months Granted – On request of counsel for the appellant, the Court granted three months’ time to deposit the fine amount – In default, appellant to undergo simple imprisonment for six months – Amount to be paid to respondent upon deposit [Paras 15–16].

Decision – Appeal dismissed with modification regarding time to pay – Held: Conviction under Section 138 NI Act upheld – Appellant granted three months to deposit cheque amount; default will attract simple imprisonment for six months [Paras 14–16].

Civil Appeal – Tenancy Rights – Communidade Compromise – Dismissal of Appeal – The appellant, Communidade of Tivim, sought permission to enter into a compromise with tenants declaring bifurcation of land in a 60:40 ratio – Administrative Tribunal rejected the permission on grounds that it would effectively convert tenancy rights into full ownership rights, allowing non-agricultural use, thus violating the Goa Tenancy Act, 1964, and the Goa Land Use (Regulation) Act, 1991 – High Court upheld the Tribunal’s order – Supreme Court dismissed the appeal, holding the compromise illegal as it defeated the statutory framework protecting tenancy rights and agricultural land use [Paras 6-21].

Tenancy Rights – Permissible Modes of Termination – Section 9 of Tenancy Act – The Court held that tenancy under Section 9 of the Tenancy Act can only be terminated by surrender under Section 10, by landlord under Section 11 on limited grounds, or under other statutory provisions – The compromise sought by the Communidade bypassed these provisions and was therefore invalid [Para 16].

Ownership Rights – Deemed Purchase under Section 18A – Procedure under Tenancy Act Mandatory – The Supreme Court reiterated that tenants can only be deemed to have purchased land through the process outlined in Chapter IIA of the Tenancy Act, involving Mamlatdar’s approval and determination of purchase price – The compromise arrangement illegally sought to grant full ownership without following these statutory safeguards [Paras 17-18].

Land Use Restrictions – Violation of Land Use Act – The Court emphasized Section 2 of the Land Use Act, which prohibits non-agricultural use of land vested in tenants – The proposed compromise allowed parties to use land for non-agricultural purposes, in direct contravention of statutory prohibitions, thus rendering it illegal [Para 18].

Communidade Code – Scope of Article 30(4)(g) – Limited Power – The Supreme Court clarified that while the Communidade may deliberate on compromise proposals under Article 30(4)(g), final approval vests with the Administrative Tribunal under Article 154(3), and such approval cannot be granted in violation of tenancy or land use laws [Para 20].

Final Decision – Appeal Dismissed – The Supreme Court dismissed the appeal, upheld the High Court and Tribunal's findings, and clarified that it expressed no view on merits of tenancy claims pending before the Appellate Court, which must be decided in accordance with law [Paras 22-23].

Motor Accident Compensation – Negligence – Section 166 of the Motor Vehicles Act – Negligence of Truck Driver Affirmed – The Tribunal and High Court found the truck driver negligent based on FIR and earlier claim petition judgments – The Supreme Court upheld these findings, rejecting the Insurance Company's argument that the car driver was responsible – Held: Tribunal and High Court correctly relied on evidence fixing liability on the truck driver [Paras 2-4].

Income Calculation – Exchange Rate – Section 166 of the Motor Vehicles Act – High Court Correctly Recalculated Exchange Rate – The High Court rightly adjusted the exchange rate from ₹54.26 to ₹52.35 per Pound reflecting 1995-96 rates, thereby recalculating the deceased’s monthly income and reducing the award amount – Held: Adjustment justified and does not call for interference [Paras 4-5].

Effect of Remarriage on Compensation – Section 166 of the Motor Vehicles Act – Multiplier Maintained – The Insurance Company argued that the remarriage of the widow claimant in 2002 necessitated reduction of the multiplier to 7 years – Supreme Court held that remarriage of wife does not affect minor children’s entitlement to compensation based on the full multiplier of 13 years – Held: Tribunal and High Court correctly computed loss of dependency considering children’s rights [Paras 5-6].

Interest on Compensation – Delay in Proceedings – Interest from Date of Filing Justified – Insurance Company challenged the interest awarded from date of filing citing delay by claimants – Supreme Court found no conclusive evidence attributing delay solely to claimants – Held: Interest rightly awarded from the date of claim petition filing until payment [Paras 7].

Rate of Interest – Section 166 of the Motor Vehicles Act – 9% Interest Rate Upheld – Tribunal’s award of 9% interest sustained considering prevailing rates, delay in disposal, and inflation trends – Held: Given long pendency since 1995, 9% simple interest is fair and reasonable [Paras 8].

Interest on Future Prospects – Permissibility Confirmed – Insurance Company objected to awarding interest on future prospects – Supreme Court rejected the argument noting delays deprived claimants of timely compensation – Held: Future prospects component must also attract interest to ensure fair recompense [Paras 9-11].

Decision of the Judgment – Special Leave Petitions Dismissed – Tribunal and High Court's judgments affirmed, including total compensation of ₹76,63,508/- with 9% interest from filing date until payment – Non-payment within three months will attract 12% interest from date of default – Held: Claims fully justified with no interference warranted [Paras 12-13].

Civil Law - Order VII Rule 11 CPC – Scope of Rejection of Plaint – Rejection of Plaint on Ground of Res Judicata Set Aside – The appellant challenged the orders of the Trial Court and High Court which allowed rejection of plaint under Order VII Rule 11 CPC on the ground of res judicata due to an earlier ex parte decree – Supreme Court held that adjudication on res judicata involves an analysis of previous pleadings, judgments, and facts which cannot be undertaken merely on averments in an Order VII Rule 11 application – Held: Res judicata must be decided at trial, particularly when fraud and collusion are alleged, and plaint contains specific pleadings regarding invalidity of earlier decree – Appeal allowed, suit restored [Paras 3-12].

Fraud Allegations – Collusive Ex Parte Decree – Prima Facie Bar of Res Judicata Inapplicable – Appellant pleaded fraud and collusion in obtaining ex parte decree in prior partition suit, alleged suppression of material facts during purchase of property – Supreme Court held that whether prior decree binds appellant requires detailed inquiry into facts and circumstances, and such issues cannot be summarily decided at preliminary stage – Held: Fraud allegations require trial stage determination, not rejection under Order VII Rule 11 CPC [Paras 4-10].

Res Judicata – Principles Clarified – Examination at Trial Stage Required – Referring to Srihari Hanumandas Totala v. Hemant Vithal Kamat & Ors. and Keshav Sood v. Kirti Pradeep Sood, Supreme Court reiterated that res judicata can only be decided upon full appreciation of prior proceedings, pleadings, and judgments, not solely on plaint averments – Held: Courts below erred in rejecting plaint without trial; appeal allowed and suit restored [Paras 8-9].

Decision – Rejection of Plaint Set Aside – Suit Restored – Supreme Court set aside the orders of the Trial Court and High Court, restored the suit to original number and directed expeditious disposal considering pendency since 2009 – Clarified no opinion on merits; all defences including res judicata to remain open for trial determination [Paras 13-15].

Criminal Law – Appeal Against Quashing - Criminal Conspiracy and Cheating – Prima Facie Offence Established – Quashing of Criminal Proceedings Set Aside – Appellant, a daughter deprived of share in ancestral property, alleged fraudulent exclusion from compensation awarded on land acquisition – High Court quashed criminal proceedings based on Sub-Registrar’s statement and pending civil suit – Supreme Court held prima facie case exists under Sections 120B, 415, 420 IPC – Held: Quashing unjustified; fraudulent family tree and partition deed used to siphon public compensation warrants criminal trial [Paras 2-18].

Bar of Civil Suit – No Bar on Criminal Prosecution – Distinct Remedies – Supreme Court reiterated that pendency of civil suits for partition and declaration does not preclude criminal proceedings – Referring to K. Jagadish v. Udaya Kumar G.S. and Pratibha Rani v. Suraj Kumar, Court clarified that civil and criminal remedies are coextensive and prosecution is maintainable where criminal intent is alleged – Held: Coexistence of civil proceedings does not shield accused from criminal liability when ingredients of cheating and criminal conspiracy are satisfied [Paras 19-23].

Fraudulent Family Tree and Partition Deed – Material Disputes Require Trial – High Court erred in relying solely on Sub-Registrar’s untested statements – Supreme Court observed that fabrication of family tree excluding daughters and forged partition deed involving huge compensation amount are serious allegations needing thorough trial – Held: Genuineness of documents cannot be concluded in writ jurisdiction; criminal prosecution to proceed [Paras 17-18].

Decision – Criminal Proceedings Restored – Appeal Allowed – Supreme Court allowed the appeal, set aside High Court order quashing proceedings, and directed continuation of criminal trial against respondent Nos. 1 and 2 as per law – Emphasized necessity of trial for adjudication of serious allegations involving property rights and criminal misconduct [Paras 24-25].

Cheque Dishonour – Liability under Section 138 of Negotiable Instruments Act – Quashing of Complaint Set Aside – The High Court had quashed the complaint filed by the appellant on grounds of non-issuance of statutory notice to the partnership firm and failure to arraign the firm as an accused – Supreme Court held that under Section 141 of the Act, a firm is merely a compendious expression for its partners, who are personally, jointly, and severally liable for its acts – Held: Complaint maintainable even without arraigning the firm as accused or serving statutory notice to the firm, provided partners are issued notice and made parties – Permission granted to implead partnership firm as an accused – Impugned order quashing complaint set aside and matter restored to trial court for disposal on merits [Paras 2-12].

Company vs. Partnership Firm – Distinction in Liability – Partnership Firm Not a Separate Juristic Entity – Unlike a company which enjoys distinct legal personality and creates vicarious liability for directors, a partnership firm lacks separate legal existence from its partners – Held: Partners of a firm are personally liable and bound by joint and several liability for actions done in the firm’s name – Notice to partners equals notice to firm – Omission to implead firm is curable and does not invalidate proceedings under Section 138 of the Act [Paras 6.1-7.24].

Interpretation of Section 141 – Legal Fiction of ‘Company’ includes Firm – The term ‘company’ under Section 141 includes a partnership firm by legal fiction – Held: While in company matters directors can be liable vicariously, in partnership the partners are directly, jointly, and severally liable along with the firm – Even absent arraignment of firm as accused, complaint can proceed against partners under joint liability principle – Distinction in treatment of firms and companies upheld to prevent misuse of Section 141 by rigid procedural technicalities [Paras 9.1-9.11].

Decision – Complaint Restored – High Court Judgment Reversed – Supreme Court allowed the appeal, set aside the order of the Madras High Court which had quashed the complaint under Section 138 of the Act, permitted the appellant to implead the partnership firm as an accused, restored the complaint before the Judicial Magistrate and directed disposal in accordance with law [Paras 10-12].

Service Tax – Healthcare Services Exemption – Section 73 of Finance Act – Cord Blood Stem Cell Banking Covered Under Healthcare Services – Supreme Court held services of enrolment, collection, processing, and storage of umbilical cord blood stem cells fall within “Healthcare Services” under Notification No. 25/2012-ST – Held: Such services are preventive in nature, connected to diagnosis and treatment, and exempt from service tax during disputed period [Paras 10-12].

Clarificatory Notification – Notification No. 4/2014-ST – Clarificatory But Not Retrospective – Court held 2014 Notification introducing Entry 2A exempting cord blood services is clarificatory but not retrospective—applies to pending disputes but not concluded cases – Held: Clarification supports exemption from 01.07.2012 for pending matters [Paras 10-11].

Extended Limitation – Barred by Time – Show Cause Notice Invalid – Department aware of appellant’s activities since 2013; no fraud or suppression proved – Invocation of extended limitation under Section 73 unjustified – Held: SCN issued on 28.07.2017 for 2012-2014 period is time-barred and invalid [Paras 9-9.4].

Penalty and Interest – Not Sustainable in Bona Fide Dispute – Penalties under Sections 77 and 78 set aside – Appellant acted under bona fide belief supported by government clarifications and disclosed activities fully to authorities – Held: Imposition of penalties arbitrary and unsustainable [Paras 13-13.2].

Refund of Pre-Deposit – Direction for Refund – Court directed refund of ₹40,00,000 deposited during investigation within four weeks [Para 14].

Decision of the Judgment – Appeal Allowed – Impugned order set aside in entirety – SCN time-barred, services exempt under “Healthcare Services”, penalties quashed, refund ordered [Para 14].

Civil Law – Abatement of Appeal – Duty to Inform Death of Party – Order XXII Rule 10A CPC – High Court Order Set Aside - The Supreme Court set aside the High Court judgment which had dismissed the First Appellate Court’s decree on grounds of abatement for non-substitution of deceased respondents’ heirs—Held, defendants were under a legal duty under Order XXII Rule 10A CPC to inform the court and plaintiffs about the deaths during the First Appeal—Failure to disclose the death amounts to abuse of process and parties cannot derive advantage from their own omission—Remand directed for fresh hearing of the Second Appeal [Paras 1-79].

Doctrine of No Advantage from Own Wrong – Nullus Commodum Capere Potest de Injuria Sua Propria – Applicability to Civil Litigation – The Court distinguished between the legal maxims ‘ex injuria jus non oritur’ and ‘nullus commodum capere potest de injuria sua propria’—Held, Rule 10A CPC is intended to prevent parties from gaining advantage through suppression of death of a party—Observations made on ethical obligations of pleaders and equitable principles requiring courts to avoid legal technicalities defeating substantive justice—High Court failed to appreciate these principles [Paras 45-56].

Equitable Considerations – Remand for Fresh Adjudication – Importance of Rule 10A CPC – The Court observed that Rule 10A CPC, though procedural and lacking penal consequences, has substantial equitable impact—Failure to comply requires courts to assess abatement claims carefully, balancing justice over procedural lapse—Second Appeal restored to High Court for fresh adjudication—Directions issued to decide the matter on merits, considering decree’s nature (joint or divisible) and allowing opportunity to cure abatement if necessary [Paras 70-79].

Decision – Appeal Partly Allowed – Second Appeal Restored – The Supreme Court partly allowed the appeal, set aside the High Court judgment, restored Second Appeal No. 190 of 2008 to the High Court's file, and directed expeditious disposal within three months, emphasizing that courts must prevent abuse of process through suppression of material facts [Paras 73-79].