Constitutional Law - Manifest Arbitrariness - Article 14 - Legislative Action - Impugned Act enacted by Bihar Legislature in 2015 providing for complete takeover of Smt. Radhika Sinha Institute and Sachchidanand Sinha Library, established in 1924 by Shri Sachchidanand Sinha as a private trust - Section 3 of Act vested all rights, title and interest of the Institute and Library in the State Government - Section 4(2) dissolved the Deed of Trust, Agreement, Lease of Land and all committees thereunder - High Court upheld validity of Act - On appeal, Held: Manifest arbitrariness is a well-settled ground available to Courts to strike down legislation under Article 14 - A law which proceeds on unreasoned assumptions, adopts excessive means, or operates without adequate determining principles attracts constitutional censure - Complete vesting of property, dissolution of century-old trust arrangements, absence of any finding of necessity or mismanagement, provision for illusory compensation, and lack of guiding principles or safeguards, cumulatively render the Act manifestly arbitrary - Impugned Act struck down as unconstitutional [Paras 23, 36-48, 50].

Manifest Arbitrariness - Doctrine - Evolution - No Prior Inquiry or Mismanagement - Proportionality - Examination of original records summoned by this Court revealed not a single communication from the State Government to the Trust bringing to their notice any allegation of mismanagement, financial irregularity or neglect - No inquiry preceded the enactment - State Librarian, functioning as ex-officio Chief Librarian under day-to-day supervisory responsibility, was never subjected to any inquiry regarding mismanagement - State cannot rely on mismanagement as justification for total legislative takeover when its own appointee bore supervisory responsibility and no action was ever taken against him - Further, State's post-takeover investment of Rs. 72 crores demonstrates that the objective of development could have been achieved through grant-in-aid, conditional funding, statutory audit and supervisory oversight, without resorting to outright acquisition - Legislature chose the most extreme measure when less invasive alternatives were plainly available - This itself constitutes manifest arbitrariness [Paras 39-42, 47-48].

Article 300A - Deprivation of Property - Illusory Compensation - Confiscatory Nature - Section 7 of impugned Act authorised State Government to pay compensation up to a maximum of one rupee, without prescribing any principles, criteria or procedural safeguards - While Article 300A permits deprivation of property by authority of law, such law must be just, fair and reasonable and not arbitrary or confiscatory in effect - Statutory provision reducing compensation to a token amount lacks basic attributes of fairness - Held: Confiscatory nature of vesting under the Act further reinforces conclusion of manifest arbitrariness [Paras 44-45, 51].

Private Trust - Public Trust - High Court's Finding - Issue Not Pleaded - High Court suo motu found the Trust to be a public trust, contrary to the common position taken by both parties before it - Held: Fact that an institution is intended to serve a public purpose or is open to public use does not, by itself, conclusively determine that the trust is a public trust in law - Legal character of a trust depends on manner of dedication, structure, nature of control and management, and rights reserved by Settlor - Neither party pleaded or argued that Trust was a public trust - High Court could not have decided the case on an entirely different basis without affording an opportunity to address that issue - In any event, whether Trust is public or private is not determinative of validity of the impugned Act, as any legislative measure resulting in compulsory acquisition must independently satisfy Article 14 [Paras 18-22].

Legislative History - Re-enactment of Failed Ordinance - Relevant Consideration - Earlier attempt by State to take over the Institute and Library through ordinances in 1983 was set aside by this Court in 1996 upon their lapse - Impugned Act of 2015 sought to achieve substantially the same outcome without any intervening change in circumstances or fresh material justifying acquisition - Held: When a legislature re-enacts substantially the same measure that has previously failed without placing any cogent new material on record, legislative history becomes a relevant consideration reinforcing findings of manifest arbitrariness [Para 46].

Decision: Appeal allowed - Judgment and order dated 29.02.2024 of the Patna High Court set aside - Srimati Radhika Sinha Institute and Sachchidanand Sinha Library (Requisition & Management) Act, 2015 declared unconstitutional and struck down - Trust governing the Institute and Library, together with its rights of management and administration, restored to its pre-existing legal position - State Government not precluded from providing financial assistance, administrative support or regulatory oversight in accordance with law - Pending applications disposed of [Paras 52-55].

Civil Law – Declaration of Title – Ancestral Land – Ex Parte Decree Not Binding on Non-Party – Appellant-plaintiffs claimed ownership of land bearing Survey No. 2029, Murar, Gwalior as ancestral property held for over fifty years – Trial Court decreed the suit holding title and possession in favour of appellant-plaintiffs and finding that respondent-defendants failed to establish any title – High Court reversed the decree holding that the earlier ex parte decree obtained by the predecessors-in-interest of the plaintiffs against the State of Madhya Pradesh was not binding on the Union of India, which had not been impleaded as a party – Consequently, entries in revenue records made on the strength of such decree were of no legal sanctity – Once this foundational finding was set aside, the entire claim of ownership fell and the burden shifted to the plaintiffs to independently establish title, which they failed to discharge – Appeals dismissed [Paras 9–11.14].

Additional Evidence – Order XLI Rule 27 CPC – Conditions Precedent – Not a Matter of Right – Application by appellant-plaintiffs to produce certified copies of General Land Register at appellate stage under Order XLI Rule 27 CPC not adjudicated by the High Court in its judgment dated 12th August 2009 – Application dismissed by High Court subsequently in review – Held: Order XLI Rule 27 CPC is couched in negative terms; parties to an appeal are not entitled as of right to adduce additional evidence – Permission may be granted only in three contingencies: (i) where evidence was wrongly refused by the trial court; (ii) where despite due diligence the evidence was not within the party's knowledge or could not be produced at trial; (iii) where the appellate court itself requires the evidence to pronounce judgment – Admission of additional evidence is a matter of judicial discretion to be exercised sparingly – Where the appellate court can pronounce a satisfactory judgment on the record already available, the provision has no application – Sub-rule (2) mandates recording of reasons where additional evidence is admitted, and omission to do so is a serious defect, though the provision is directory and not mandatory [Paras 11.2–11.7].

Additional Evidence – Cannot Cure Inherent Defects in Pleadings – Appellant-plaintiffs were fully aware from the outset that the Union of India had not been impleaded in the earlier suit – Their claim was founded on an ex parte decree which was non-est against the respondents – Introduction of entries in the General Land Register at the appellate stage to show the land as private land was impermissible in the absence of foundational pleadings – No plea of adverse possession was raised against the respondent-defendants – A suit for declaration of title requires adduction of best and complete evidence at trial where such evidence could be produced as of right – Attempt to fill gaps in the case at the appellate stage wholly impermissible – Even if the GLR entries had been admitted, the same would have had no impact on the findings of the High Court [Paras 11.10–11.15].

Title of Union of India – Vesting by Gazette Notification – Respondent-defendants traced their title to the decision of the Union of India dated 17th July 1953, under which the suit land vested in the Union with title, ownership and possession – This was fortified by the Gazette Notification dated 4th November 1954 issued by the erstwhile State of Madhya Bharat – Appellant-plaintiffs were characterised as rank trespassers and encroachers – Proximity between the ex parte decree and the subsequent expeditious mutation of revenue entries in favour of the appellant-plaintiffs, combined with the fact that appellant-plaintiff No. 1 was employed in the Commissioner's office, cast a shadow over the bona fides of the proceedings – Unscrupulous conduct disapproved [Paras 11.13–11.16].

Decision: Appeals dismissed – Judgments of the High Court of Madhya Pradesh at Gwalior dated 12th August 2009 in First Appeal No. 80 of 1996 and 15th March 2011 in Review Petition No. 300 of 2009 affirmed – No infirmity found in the impugned judgments.

Criminal Law – Dowry Harassment – Quashing of Proceedings – Omnibus Allegations – Section 498A IPC – FIR registered against husband, father-in-law, mother-in-law, and sister-in-law of complainant under Sections 341, 323, 498A, 34 IPC and Sections 3 and 4 of the Dowry Prohibition Act – High Court quashed proceedings against sister-in-law holding allegations against her to be general and omnibus – Declined same relief to appellants (father-in-law and mother-in-law) – Held: Allegations against appellants and sister-in-law were, in all material particulars, identical – FIR assigned no specific overt act, date, place or individual role to the appellants – Lone additional allegation that they "would quarrel" does not constitute a criminal offence and cannot sustain cognizance – Same standard applied to quash proceedings against sister-in-law must apply equally to appellants – No principled basis for distinguishing between them – Criminal proceedings against appellants quashed [Paras 7, 10–11].

Counter-blast to Divorce Petition – Delay in Filing FIR – Marriage solemnised in July 2019 – Husband filed divorce petition in March 2021 – Criminal complaint lodged by complainant only in March 2022, nearly a year after the divorce petition – Delay alone held not sufficient to quash – However, when read conjunctively with the complete absence of any specific allegations attributable to the appellants, the delay lends credence to the contention that the criminal complaint was instituted as a counter-blast to the divorce proceedings – Material improvement in the complainant's version between the FIR and the subsequent complaint before the CJM (addition of Maruti car as dowry, absent in the FIR) further casts doubt on the credibility of the complaint – Continuation of criminal proceedings against appellants cannot be sustained [Para 8].

Parity Among Co-Accused – Consistent Application of Standard – High Court fell into error in applying different standards to persons standing on an identical footing as regards the nature of the allegations – Reasoning that led to quashing of proceedings against sister-in-law ought equally to have led to quashing of proceedings against appellants – Observations confined to maintainability of proceedings against appellants and not an expression of opinion on the merits of the case as a whole – Criminal proceedings against the husband to continue in accordance with law [Paras 9–10].

Decision: Appeal allowed – Impugned order of the Patna High Court dated 8th August 2023 set aside to the extent it declined to quash proceedings against the appellants – All proceedings arising out of L.N.M.U. P.S. Case No. 81 of 2022 quashed insofar as the present appellants are concerned – Criminal proceedings against the husband to continue.

Service Law – Regularisation of Employees – Academic Arrangement Appointments – Appellants appointed between 2011–2013 as paramedical staff under 2009 Rules on “academic arrangement basis” – State later initiated regular recruitment process for posts already occupied by appellants – Appellants sought regularisation under the Jammu and Kashmir Civil Services (Special Provisions) Act, 2010 – High Court rejected claim holding that such appointments were excluded under Section 3(b) of the Act – Held: Such exclusion creates arbitrary classification and violates equality principles – Appeals allowed [Paras 3–5, 12].

Constitutional Law – Article 14 – Reasonable Classification – Section 3(b) of the 2010 Act excluded employees appointed on academic arrangement basis from the benefit of regularisation – Court held that such exclusion lacks intelligible differentia and bears no rational nexus with the object of the Act, which is to regularise long-standing irregular appointments – Provision results in invidious discrimination and is unconstitutional [Para 12].

Service Jurisprudence – Nomenclature of Appointment – Constitutional Entitlement – Court held that nomenclature such as “academic arrangement”, “ad hoc”, “contractual” or “consolidated” cannot determine entitlement to regularisation when employees are similarly situated in terms of duties, tenure and conditions of service – Equal treatment cannot be denied solely on the basis of terminology used for appointment [Para 12(I)].

Regularisation – Determinative Factors – Section 5 of the 2010 Act – Eligibility for regularisation depends on fulfilment of statutory conditions prescribed under Section 5(i)–(v) – Once those conditions are satisfied, the nature of initial engagement becomes legally irrelevant for determining entitlement to regularisation [Para 12(III)].

Interpretation of Beneficial Statute – Purposive Interpretation – Second proviso to Section 5 of the 2010 Act held to be a beneficial provision intended to protect employees who subsequently complete the qualifying service period – Any interpretation defeating legislative intent would be constitutionally impermissible [Para 12(IV)].

State as Model Employer – Equality in Public Employment – Court emphasised that the State cannot adopt artificial classifications to deny statutory benefits – Repackaging similar contractual engagements under different nomenclature to deny regularisation violates Articles 14 and 16 of the Constitution [Para 12(V)].

Decision: Appeals allowed – Judgments of the High Court dated 22.02.2023 and 27.12.2024 set aside – Section 3(b) of the Jammu and Kashmir Civil Services (Special Provisions) Act, 2010 declared unconstitutional to the extent it excludes employees appointed on academic arrangement basis – State directed to consider appellants’ cases for regularisation under Section 5 of the Act within four weeks – Benefit extended to all similarly situated employees.

Civil Procedure – Injunction Suit – Advocate Commissioner – Objections to Commissioner’s Report – Trial Court dismissed objections relying upon purported Supreme Court decisions later alleged to be non-existent – High Court recorded caution that citations were AI-generated/fake but still decided revision on merits and affirmed Trial Court – Supreme Court issues notice and stays Trial Court from proceeding on basis of Advocate Commissioner’s report pending SLP [Paras 2–6].

Administration of Justice – Integrity of Adjudicatory Process – AI-Generated Fake Judgments – Supreme Court takes cognizance of Trial Court deploying AI-generated non-existing/fake/synthetic alleged judgments – Held: Decision based on such non-existent and fake judgments is not mere “error” in decision-making but constitutes “misconduct” and legal consequences shall follow – Court to examine consequences and accountability [Para 7].

Institutional Accountability – Notice to Attorney General, Solicitor General and Bar Council of India – Court issues notice to AG, SG and BCI to assist in examining ramifications of AI-generated fake citations in judicial orders and to evolve safeguards/accountability framework [Para 8].

Amicus Curiae – Appointment – Mr. Shyam Divan, Senior Advocate appointed to assist Court – Liberty to nominate an Advocate-on-Record for assistance [Para 9].

Interim Directions: Notice issued returnable 10/03/2026 – Trial Court directed not to proceed on basis of Advocate Commissioner’s report pending disposal of SLP [Paras 5–6].

Decision: Notice issued – Interim restraint imposed – Wider institutional issue flagged – Amicus appointed.

Insolvency and Bankruptcy Code, 2016 – Resolution Plan – Scope of Appeal under Sections 61 and 62 – Appeal to NCLAT lies only on grounds specified in Section 61(3) – Appeal to Supreme Court lies only on question of law – Where no ground under Section 61(3) made out and no question of law arises, appeal not maintainable – Concurrent findings of NCLT and NCLAT not to be interfered with unless perverse or contrary to statute [Paras 7.1-8.3].

Material Irregularity – Meaning and Scope – Section 61(3)(ii) IBC – Clarifications sought by RP on instructions of CoC from all resolution applicants – RP merely communicated CoC’s queries and placed responses before CoC – Held: When RP acts strictly on instructions of CoC, no “material irregularity” can be attributed – To hold otherwise would indirectly subject commercial decisions of CoC to judicial review contrary to scheme of IBC [Paras 8-8.1].

Resolution Plan – Bank Guarantees – Alleged enhancement from Rs.103.39 crores to Rs.180.05 crores – Clause 6.3.14 of Resolution Plan provided that entire margin money of Rs.180.05 crores would be returned to Corporate Debtor and utilised for payment to secured financial creditors – Fresh infusion of Rs.103.39 crores related only to BGs proposed to be continued (Serial Nos.1-5) – Clarification regarding BGs at Serial Nos.6 and 7 (Rs.76.61 crores) only explained mechanism of release and interim replacement margin – Held: No enhancement of commercial offer – Payment to CoC remained Rs.180.05 crores before and after clarification [Paras 10.4-10.8].

Deferred Payment – Upfront Option – Clause 6.3.2(b) – NCDs of Rs.240 crores with 10% coupon aggregating to Rs.301.64 crores over three years – Option to CoC to take Rs.240 crores upfront as discounted NPV – Clarification that Rs.240 crores was already discounted value and no further discount applicable – Held: No conversion or enhancement of offer – No modification of commercial terms [Paras 11-11.3].

Commercial Wisdom of CoC – Paramountcy – Limited Judicial Review – Courts cannot re-evaluate comparative merits of bids or substitute their assessment for that of CoC – Highest bid need not be accepted – Judicial review confined to compliance under Section 30(2) and grounds under Section 61(3) – Excessive judicial interference defeats time-bound objective of IBC and erodes asset value – Strategic litigation by unsuccessful bidders deprecated [Paras 12-14.7].

Implementation of Resolution Plan – Resolution Plan already approved by NCLT and NCLAT and fully implemented – No scope for interference at belated stage – Finality and predictability essential to insolvency regime [Paras 13.1-15].

Decision: Appeals dismissed – Impugned judgment of NCLAT dated 01.10.2024 affirmed – No material irregularity established – No modification of Resolution Plan – Commercial wisdom of CoC upheld – No costs imposed.

Service Law – Promotion – Ph.D. Qualification – Rule 6A of Kerala Technical Education Service (Amendment) Rules, 2004 – Appellants earlier granted relief by Supreme Court holding their appointments/promotions not contrary to AICTE Regulations – Promotions granted retrospectively pursuant to Supreme Court order and contempt proceedings disposed of recording compliance – High Court in subsequent proceedings issued directions affecting service positions post 05-03-2010 – Appellants not parties before High Court – Held: High Court could not revisit or disturb finality attached to Supreme Court’s earlier order qua appellants – Nothing in impugned High Court judgment shall affect appellants’ career prospects in view of special facts – Appeal allowed to that limited extent [Paras 13-15].

Finality of Supreme Court Orders – Binding Effect – Once relief granted by Supreme Court and complied with by State, High Court cannot in collateral proceedings unsettle benefits conferred – Principle of judicial discipline and finality reiterated [Paras 14-15].

Non-Parties Affected by Judgment – Remedy – Persons aggrieved by judgment/order in proceedings to which they were not parties are not remediless – Such judgments in service matters may operate in rem – Aggrieved persons may seek review on limited grounds or approach appropriate forum/Tribunal under Section 19 of Administrative Tribunals Act for ventilating grievance – Review not equivalent to appeal – Public policy demands finality of litigation [Paras 16-18].

Review Jurisdiction – Scope – Right of review available only on limited grounds akin to Order XLVII CPC – Cannot reopen entire case – Review must be filed within limitation – Otherwise there would be no certainty of finality [Para 17].

Service Matters – Locus Standi of Non-Parties – Even if not impleaded in earlier proceedings, affected persons may approach Tribunal afresh to seek reconsideration where earlier decision prejudicially affects their service rights – Recognised in K. Ajit Babu and Rama Rao – Liberty granted to pursue appropriate remedy in accordance with law [Paras 18-20].

Decision: Civil Appeal arising out of SLP (C) No. 8737 of 2021 allowed – Impugned High Court judgment dated 03.12.2020 shall not affect appellants’ career prospects – Connected SLP (C) No. 18961 of 2022 and intervention applications disposed of with liberty to pursue appropriate remedy before appropriate forum in accordance with law [Paras 15, 20].

Contract of Guarantee – Discharge of Surety – Variance in Terms of Contract – Section 133, Indian Contract Act, 1872 – Principal borrower sanctioned cash-credit facility of Rs.4,00,000/- – Sureties guaranteed liability to said extent – Bank permitted borrower to overdraw amounts far exceeding sanctioned limit without consent of sureties – Held: Such overdrawal constitutes variance in terms of contract – Sureties discharged only in respect of transactions subsequent to variance – Liability continues to the extent of original sanctioned amount with applicable interest – High Court erred in holding that sureties must be liable either for entire amount or not at all – Statutory bifurcation under Section 133 mandated [Paras 7-7.4].

Surety’s Liability – Co-extensive Liability – Sections 126 and 128 – Liability of surety co-extensive with that of principal debtor unless contract provides otherwise – Creditor not bound to first exhaust remedies against principal debtor before proceeding against surety – Surety can be proceeded against directly – However, liability confined to terms of guarantee and cannot extend beyond contractual undertaking [Paras 4.1, 5.2, 5.3].

Discharge of Surety – Section 139, Indian Contract Act – Scope and Applicability – Section 139 applies where creditor’s act or omission is inconsistent with rights of surety and impairs surety’s eventual remedy against principal debtor – Mere overdrawal without consent, though affecting surety’s rights, does not impair eventual remedy against principal debtor – In absence of impairment of remedy, Section 139 not attracted – Section 139 is residuary in nature and distinct from Section 133 [Paras 4.8-4.10, 6.1, 7.1].

Material Alteration – Consent of Surety – Any material variance in contract without surety’s consent discharges surety as to subsequent transactions – Surety cannot be bound to obligations beyond terms of engagement – Discharge under Section 133 is not absolute but limited to transactions post-variance – Consent for variation must be proved by party seeking enforcement of guarantee [Paras 4.4-4.7, 7].

Decision: Appeal allowed – Impugned judgment of Gujarat High Court dated 25.06.2008 in Special Civil Application No.17125 of 2007 set aside – Sureties held liable to extent of Rs.4,00,000/- with applicable interest – Not liable for excess overdrawn amounts – Parties to bear respective costs [Paras 7.2-7.4].

Civil Law - Lease vs Licence – Construction of Registered Instrument – Unilateral Cancellation – Lis Pendens Purchasers – High Court reversed concurrent findings holding document to be licence and not lease – Supreme Court restored Trial Court and First Appellate Court decree – Held: Ext.1 created 99-year lease – Unilateral cancellation illegal – Sale by lessor could not defeat subsisting leasehold rights [Paras 14-23].

Lease or Licence – Test of Intention – Literal Rule of Construction – Document must be read as a whole – Substance prevails over form – Where instrument uses expressions “demise”, fixed term of 99 years, yearly rent, right to construction and binding successors clause – It clearly transfers interest in immovable property – Exclusive possession to be assessed qua demised portion – Mere retention of first floor by lessor does not convert lease into licence [Paras 15-21].

Interpretation of Deeds – Literal, Golden and Purposive Construction – Ex-post facto conduct not safest guide – Courts should rely on plain and ordinary meaning when language is clear – Resort to surrounding circumstances only when ambiguity exists – High Court erred in relying on post-execution conduct to infer licence despite clear language of deed [Paras 17-21].

Transfer of Property Act, 1882 – Section 105 – Lease Defined – Essential ingredients satisfied – Transfer of right to enjoy property for certain term in consideration of rent – Lessee entitled to possession to exclusion of lessor in respect of demised premises – Ext.1 satisfied statutory ingredients – Hence created leasehold interest [Paras 15, 20].

Unilateral Cancellation of Registered Lease – Absence of cancellation clause – No proof of determination under Section 111 TPA – Rights accrued under registered lease cannot be defeated by unilateral deed of cancellation – Such cancellation illegal and non-est – Disturbance of possession without bilateral agreement impermissible [Paras 10.2, 21].

Second Appeal – Section 100 CPC – Substantial Question of Law – High Court framed question whether sale could be effected during subsistence of lease – Having wrongly construed document as licence, High Court dismissed suit – Supreme Court held construction contrary to settled principles – Interference warranted [Paras 11, 12, 21].

Rights of Subsequent Purchasers – Sale during pendency of litigation – Purchasers stepped into shoes of lessor – Rights preserved subject to subsisting lease – Sale does not extinguish lessee’s 99-year interest – Vendees entitled only to lessor’s reversionary rights [Paras 10.3, 22].

Decision: Civil Appeal allowed – Judgment of High Court set aside – Judgment and decree of Trial Court and First Appellate Court restored – 99-year lease upheld – Unilateral cancellation declared illegal – No order as to costs – Pending applications disposed of [Paras 22-23].