Newsletter September Disputes
Date: 08 September 2026
Case Name: National Skill Development Corporation v. Surya Wires Private Limited & Ors., Civil Appeal No.12526 of 2026 (arising out of S.L.P. (C) No. 10030 of 2026)
Forum: Supreme Court
The appellant challenged the impugned order passed by the Hon’ble High Court u/s 37(2)(a) of the Arbitration and Conciliation Act, 1996 (“Act”) whereby the High Court affirmed the order dated 23.10.2024 passed by the Ld. Sole Arbitrator directing the deletion of respondent nos. 2, 3, 5 and 7 from the array of parties to the arbitral proceedings, on the finding that they were non-signatories to the agreements in their personal capacities.
Appellant, a company that extends financial assistance to companies and organizations which provide skill training, was the implementing agency for establishing Model Training Centers in every district of the country under Pradhan Mantri Kaushal Kendra. The appellant allotted districts to respondent no. 1 and respondent no. 4 for jointly setting up such centres. On 20.12.2016, the parties executed a cluster of instruments, namely Service Level Agreement, First Loan Agreement, and ancillary Facility Agreements including a Deed of Assignment, Deed of Hypothecation, Irrevocable Power of Attorney, Undertaking-cum-Declaration, and a Personal Guarantee dated 27.12.2016 executed by respondent no. 2-the Managing Director of the respondent no.1. A materially identical second set of agreements, including a second Personal Guarantee by respondent No. 2, was executed on 18.08.2017 for a further loan. Upon default, the appellant initiated arbitral proceedings before the Indian Council of Arbitration. Respondent nos. 2, 3, 5 and 7, preferred an application under section 16 of the Act contending that they were not signatories to the Loan Agreements in their personal capacities and could not be bound by the arbitration clause. The Ld. Sole Arbitrator vide order dated 23.10.2024, allowed the application and directed their deletion from the array of parties. Aggrieved by the aforesaid order, the appellant preferred an appeal before the Hon’ble High Court, confined to deletion of respondent No.2. The Hon’ble High Court affirmed the order dated 23.10.2024 passed by the Ld. Sole Arbitrator.
Issue:
Where parties structure a single, interconnected transaction through several instruments, whether an arbitration clause contained in one instrument, namely the Loan Agreement, can bind a party through another instrument, namely a Personal Guarantee expressly integrated with it but not itself containing an arbitration clause, within the meaning of Section 7(5) of the Act?
Submission of the Parties:
The appellant submitted that a conjoint reading of clause 11.2 of the Loan Agreements, together with the definition clauses and Schedules thereto, demonstrated that the arbitration clause stood incorporated into the Personal Guarantees. which were mandatory pre-disbursement conditions contractually defined as "Facility Agreements" and deemed integral and inseparable parts of the Loan Agreements. It was further submitted that Personal Guarantees executed by respondent no. 2 were not independent or collateral instruments, but mandatory pre-disbursement conditions under the Loan Agreements, contractually defined as “Facility Agreements” and deemed to form an integral and inseparable part thereof.
Respondent no. 2 submitted that of the seven instruments executed between the parties, only four contained arbitration clauses, and that the arbitration clause in the Loan Agreements had, at no stage, been incorporated into the Personal Guarantees.
Observations of the Court:
The Hon’ble Supreme Court relied upon its own previous judgements to expound upon the scope and ambit of section 7(5) of the Act. The Bench inter alia replying upon Cox and Kings v. SAP India Pvt. Ltd., (2024) 4 SCC 1 observed that the definition of "parties" under Section 2(1)(h) read with Section 7 of the 1996 Act includes non-signatories, whose conduct may indicate consent to be bound by the arbitration agreement.
The Hon’ble Court relied upon its judgement in Ajay Madhusudan Patel and Others v. Jyotrindra S. Patel and Others, (2025) 2 SCC 147 wherein it was observed that the intention of the parties to be bound by an arbitration agreement can be gauged from the circumstances that surround the participation of the non-signatory party in the negotiation, performance and termination of the underlying contract containing such an agreement.
The Hon’ble Court after perusing the relevant clauses of the Loan Agreement observed that a conjoint and harmonious reading of the relevant provisions leaves little room for doubt that the Personal Guarantees formed an integral and inseparable part of the Loan Agreements. The Personal Guarantees are expressly included within the ambit of the “Facility Agreements” under Schedule IV, while Clause 1.1 defines the “Agreement” to include all Schedules forming part thereof. Further, Clause 12.1 of Article XII provides that the Facility Agreements shall be deemed to be part of the Agreement “as if the provisions thereof were set out herein in extension”. By virtue of this contractual deeming fiction, the Personal Guarantees are incorporated into the same contractual and arbitral framework as the Loan Agreements and cannot be treated as standalone instruments.
The Hon’ble Court stated that the above observation was reinforced by Clause 1 of Schedule I of the Loan Agreements which stipulates the execution of the Loan Agreement and other facility agreements as a pre-disbursement condition. The Bench also observed the contemporaneity in the execution of the Personal Guarantees and Loan Agreements supports the finding that the parties intended the entire cluster of documents to constitute a single, composite transaction.
The Court observed that, when read together, the definition clauses under Article I, Article XII, and the Schedules unequivocally establish that the Loan Agreements and Personal Guarantees were intended to operate as constituent parts of a single, integrated commercial transaction, and not as separate or self-contained contracts. The Court further observed that respondent no. 2's non-signature to the Loan Agreements in his personal capacity was not decisive in the present factual matrix.
Held:
The Court held that the arbitration clause contained in Clause 11.2 of the Loan Agreements stood incorporated into the Personal Guarantees within the meaning of Section 7(5) of the Act. Consequently, respondent no. 2, having executed the Personal Guarantees, was bound to submit to arbitration in respect of disputes arising therefrom. The High Court's judgment dated 28.01.2026 and the Sole Arbitrator's order dated 23.10.2024, insofar as they upheld respondent No. 2's objection to arbitral jurisdiction under Section 16 of the Act, were accordingly set aside.
The judgment reaffirms the approach adopted in Cox and Kings (Supra); emphasizing a commercial and purposive interpretation of arbitration agreements in composite transactions, and holding that personal guarantees forming an integral part of the lending framework may be bound by the arbitration clause in the principal loan agreement.
Date: 18 September 2026
Case Name: Union of India & Ors. v. Hariom Projects Pvt. Ltd. Civil Appeal No. 13136 of 2026 (arising out of SLP (Civil) No. 33087 of 2026)
Forum: Supreme Court
The Respondent i.e., Hariom Projects Pvt. Ltd. was awarded a contract by the Union of India for construction of Administrative and Training Infrastructure at NDA, Khadakwasla. Disputes arose concerning contractual payments, escalation calculations and quality of work. The Respondent first obtained constitution of a Dispute Resolution Board, which rejected its claims, and subsequently invoked arbitration. Pending proceedings under Sections 9, 11 and 37 of the Arbitration and Conciliation Act, 1996 (“Act”), the Union of India terminated the contract, which was temporarily stayed by the High Court. The High Court thereafter appointed a Sole Arbitrator and directed that the pending Section 37 proceedings be remitted to the Arbitral Tribunal and treated as an application under Section 17 of the Act. The Union of India challenged this direction before the Supreme Court of India.
Issue:
Whether a High Court, while exercising appellate jurisdiction under Section 37(1)(b) of the Act against an order passed under Section 9, can remit the pending appellate proceedings to a subsequently constituted Arbitral Tribunal and direct the Tribunal to treat such proceedings as an application under Section 17 of the Act?
Submission of the Parties:
The Appellant i.e., the Union of India submitted that appellate jurisdiction under Section 37 is statutorily vested in the Court and cannot be exercised by an Arbitral Tribunal under Section 17. It was contended that the distinct nature and source of the powers under Sections 17 and 37 could not be interchanged, even by consent of the parties, and that such remittance would amount to an impermissible delegation of the High Court’s appellate jurisdiction
The Respondent fairly conceded that treating the Section 37 proceedings as a Section 17 application was impermissible, but submitted that the constitution of the Arbitral Tribunal should remain undisturbed, particularly as the Tribunal had commenced proceedings and the parties had subsequently entered into a Supplementary Agreement.
Observations of the Court:
The Supreme Court held that the appellate jurisdiction under Section 37 is exclusively vested in the “Court” within the meaning of Section 2(1)(e) of the Act, whereas an Arbitral Tribunal exercising jurisdiction under Section 17 does not exercise appellate jurisdiction over a judicial order passed under Section 9. The Court emphasised that the nature and source of jurisdiction under Sections 17 and 37 are distinct and cannot be interchanged merely by transmitting or remitting proceedings to the Tribunal. The Court further observed that, upon constitution of the Tribunal, the High Court could, at the highest, have granted liberty to the Respondent to independently seek appropriate interim measures under Section 17 of the Act.
Held:
The Supreme Court partly allowed the appeal and set aside the High Court’s order to the limited extent that it remitted the Section 37 proceedings to the Arbitral Tribunal for treatment as a Section 17 application. However, the constitution of the Arbitral Tribunal was left undisturbed, and the Tribunal was permitted to adjudicate all remaining disputes between the parties, with liberty to both parties to raise all contentions permissible in law.
The judgment reinforces the jurisdictional distinction between Sections 17 and 37 of the Act, holding that statutory appellate jurisdiction vested in the Court cannot be transferred to or exercised by an Arbitral Tribunal, even with the consent of the parties. It thus underscores that parties cannot, by agreement, confer upon an arbitral tribunal a jurisdiction that the statutory framework reserves exclusively for the Courts.
Date: 18 September 2026
Case Name: S. Panchalingu & Ors. v People’s Education Trust (R) & Others, Civil Appeal Nos. 13001-13003 of 2026 (arising out of SLP(C) No. 25577-25579 of 2025)
Forum: Supreme Court
In a matter arising out of suit instituted under section 92 of the Code of Civil Procedure,1908 (“Code”), the appellants challenged the impugned order, whereby the order of the Ld. Trial Court constituting an ad hoc committee comprising the existing trustees to manage the day-to-day affairs of respondent no. 1, was set aside. The principal issue before the Hon’ble Supreme Court was whether a civil court, while seized of a plaint under section 92 of the Code along with an application seeking leave to institute the suit, is empowered to pass protective or preservatory interim orders pending adjudication of the leave application.
Issues:
Whether a Civil Court, seized of a plaint filed under section 92 of the Code, together with an application seeking leave to institute the suit, possesses the power to pass protective or preservatory interim orders during the pendency of the leave application?
Submissions of the Parties
The appellants inter alia contended that the court retains the power to appoint a receiver under Section 94, read with Order XL Rule 1 of the Code, even at the pre-leave phase. The appellants asserted that Rule 16-A of the Karnataka Civil Rules of Practice, 1967 treats an application seeking leave u/s 92 of the Code as an ‘independent and substantive application’ to be registered as a miscellaneous petition. Further, section 151 of the Code independently preserves the Court’s inherent power to issue interlocutory protective orders necessary to secure the ends of justice or prevent abuse of process of the Court.
The respondents inter alia contended that no rights of the parties can be adjudicated while the Court remains seized of the question of grant of leave under section 92 of CPC. It is further contended that the Order XL Rule 1(a) contemplates appointment of a receiver ‘before or after decree’ , which necessarily presupposes the existence of a pending suit.
Observations of the Court:
At the outset, the Hon’ble Court observed the divergence of opinions of the High Courts regarding the aforementioned issue.
The Hon’ble Court analyzed the provisions of the Code governing the institution of civil suits in general and suits u/s 92 of the Code. The Hon’ble Court stated that section 92 constitutes special provision contemplating a representative suit of a distinct character, inasmuch as the action is instituted not to vindicate private rights, but on behalf of public beneficiaries and in the larger public interest.
The Bench observed that section 92 permits two or more interested persons to seek the reliefs specified therein, while simultaneously protecting charitable and religious trusts from vexatious litigation and the consequent diversion of resources. It is for this reason that prior leave of the Court is mandated as a condition precedent to the institution of such suits.
The Court held that an application seeking leave under section 92 is merely a threshold proceeding and does not attain the character of a substantive proceeding merely because, under Rule 16-A of the Karnataka Civil Rules of Practice, it is required to be registered as a separate petition. The substantive proceedings commence only upon the grant of leave and institution of the suit under section 92, whereafter interlocutory orders may be passed.
The Court held that consideration of leave is a 'threshold proceeding' and that, in the absence of a validly instituted suit, there exists no lis before the Court and consequently no jurisdiction to invoke 'supplemental proceedings' under Section 94, since such proceedings necessarily presuppose an underlying proceeding.
It further held that Section 141 only makes the procedure contained in the Code applicable to miscellaneous proceedings as far as it can be made applicable. The Hon’ble Court agreed with the view taken by the Full Bench of the Hon’ble Kerala High Court in Thresia vs. Xavier, 1976 SCC OnLine Ker 23 wherein it was held that Section 141 of the Code does not apply to provisions relating to substantive rights and applies only to procedural rights. The Bench observed that safeguards enshrined in section 92 of the Code, as well as the appointment of receiver are not mere procedural steps, but constitute and affect the substantive rights of the parties. The Bench further observed that the inherent powers of a Civil Court under section 151 of the Code cannot be relied upon in contravention of the express provisions of the Code
The Court held that appointment of a receiver over a public trust is not a mere preservatory measure, but an intrusive step that displaces the trust’s management. Consequently, appointing a receiver before grant of leave may prejudice the trust, particularly if leave is ultimately refused.
However, the Hon’ble Court recognized that, in cases of compelling urgency, leave under section 92 may be granted ex parte without prior notice to protect trust property. However, given the protective framework of section 92, Courts must exercise great caution and circumspection while granting such leave.
Held:
The Hon’ble Supreme Court held that a Civil Court, seized of a plaint under section 92 of the Code together with an application seeking leave to institute the suit, is not empowered to pass protective or preservatory interim orders pending disposal of the leave application. However, for compelling reasons to be recorded in writing like where facts disclose the necessity of urgent relief, notice prior to the grant of leave may be dispensed with. Accordingly, the appeals were dismissed by the Hon’ble Court.
The judgment resolves the conflicting High Court views by holding that leave under section 92 is a mandatory precondition to the institution of a suit concerning a public trust and that no interim relief can ordinarily be granted prior thereto. However, in cases of compelling urgency, ex parte leave may be granted to protect trust property, subject to strict judicial caution.
Date: 22 September 2026
Case Name: Antonetto J. D’Souza v. Aldila Braganza & Ors. Criminal Appeal No. 4092 of 2026 (arising out of SLP(Crl.) No. 125 of 2025)
Forum: Supreme Court
The Appellant-informant i.e., Antonetto J. D’Souza, and the first Respondent-accused i.e., Aldila Braganza, were neighbours. The Appellant alleged that the Respondent and her deceased father-in-law had relied upon an interpolated and forged building plan in connection with construction undertaken pursuant to a municipal licence. An FIR was registered under Sections 468, 471 and 420 read with Section 34 of Indian Penal Code, 1860 (“IPC”) followed by filing of a chargesheet. The Magistrate found prima facie material to frame charges, which was upheld by the Sessions Court. In a subsequent writ petition, however, the High Court under the inherent jurisdiction conferred upon it through Section 482 of the Code of Criminal Procedure, 1973 (“CrPC”) set aside the orders framing charge and discharged the Respondent, principally on the ground that the original plan alleged to have been forged had not been produced. The Appellant challenged the said order before the Supreme Court.
Issues:
The Supreme Court considered:
Submission of the Parties:
The Appellant submitted that the High Court had exceeded the limited scope of its jurisdiction by re-appreciating the prosecution material at the stage of charge. It was contended that the absence of the original plan was a matter for trial and that the prosecution had placed sufficient material, including the statement of the Engineer who prepared the plan, to establish a prima facie case.
Per Contra the Respondent, submitted that the original plan had never been produced despite the passage of several years and that, in its absence, the offence of forgery could not validly be charged.
Observations of the Court:
The Court held that the earlier order dated 31 October 2023, by which the High Court had rejected the challenge based on the non-production of the original plan, had attained finality. The Respondent could not, therefore, re-agitate the same issue through a subsequent petition under Section 482 CrPC. The Court further held that absence of the original document alleged to have been forged is not, by itself, fatal to a prosecution, and that forgery may, in an appropriate case, be established through other evidence. The Court also reiterated that, at the stage of framing of charge, the Court is not required to conduct a meticulous appreciation of evidence or undertake a roving inquiry into its probative value.
Held:
The Supreme Court allowed the appeal and set aside the High Court’s order discharging the Respondent. It held that the subsequent challenge was barred by issue estoppel, the earlier order having attained finality, and that the High Court had further erred on merits in treating the non-production of the original plan as fatal to the prosecution. The charge-framing proceedings were restored and the Magistrate was directed to proceed with the trial expeditiously, while leaving all contentions open for determination at trial.
The judgment reiterates the limited scope of judicial scrutiny at the stage of framing of charge and clarifies that the absence of the original document alleged to be forged does not, ipso facto, warrant discharge. It further underscores the principle of issue estoppel, holding that an issue conclusively determined between the parties cannot be repeatedly reagitated through successive proceedings under Section 482 CrPC.
Date: 28 September 2026
Case Name: M/s ASJ Finsolutions Pvt. Ltd. v. Vikram Bajaj, Civil Appeal No. 13023 of 2025
Forum: Supreme Court
The Appellant i.e., M/s ASJ Finsolutions Pvt. Ltd. was the successful bidder in an e-auction conducted during the liquidation of a Corporate Debtor under the Insolvency and Bankruptcy Code, 2016 (“IBC”). The subject property, having a reserve price of INR 25.56 crores, was sold on an “as is where is” basis, with the auction notice expressly disclosing a pending dispute concerning a portion of the property. The Appellant deposited 25% of the bid amount but failed to pay the balance sale consideration within the stipulated 30-day period or the extended 90-day period with interest. The Liquidator consequently forfeited the amount deposited. While the NCLT directed refund of the EMD, the NCLAT reversed the order and upheld the forfeiture, leading to the present appeal.
Issues:
The principal issues before the Supreme Court were:
Submission of the Parties:
The Appellant contended that Schedule I of the Liquidation Process Regulations capped the EMD at 10% and contained no provision permitting its forfeiture. It further relied on extensions allegedly granted to other bidders and submitted that the “Triple Test” stood satisfied. Alternatively, it contended that any forfeiture ought to be restricted to 10% of the reserve price. The Respondent submitted that the Appellant had bid with full knowledge of the disclosed title dispute and had accepted the express terms of the e-auction notice, which provided for forfeiture upon failure to pay the balance consideration.
Observations of the Court:
The Court held that although Schedule I did not expressly stipulate forfeiture, the specific terms of the e-auction notice independently governed the consequences of default. Having bid with knowledge of the disclosed title dispute and accepted the “as is where is” condition, the Appellant could not subsequently rely upon the same dispute to justify nonpayment.
On the Triple Test, the Court recorded its constituent limbs as applied by the NCLT, namely, whether the bidder (i) acted with a hidden agenda to rig the auction; (ii) was not a genuine bidder with adequate financial capacity; or (iii) was prevented by extraneous reasons from making full payment. The Court further held that the “Triple Test” had no application where the auction notice expressly provided for forfeiture upon default. Mere assurances regarding the ability to make payment were insufficient to establish financial capacity in the absence of supporting material.
Held:
The Supreme Court upheld the NCLAT’s order affirming forfeiture. It held that the e-auction notice expressly permitted forfeiture of the entire amount paid by the successful bidder, including the EMD, upon failure to pay the balance sale consideration in accordance with the terms of sale. Accordingly, the Appellant was not entitled to refund and the appeal was dismissed.
The judgment underscores that the express terms of an e-auction notice govern the consequences of default in liquidation sales, and that a bidder who participates with knowledge of the disclosed terms cannot subsequently resile from them. It further clarifies that, where the auction terms expressly provide for forfeiture of the entire amount deposited, such forfeiture is not confined to the statutory or regulatory cap applicable to the EMD.
Date: 07 September 2026
Case Name: Sanofi India v. Central Bureau of Investigation, Criminal Appeal No. 4250 of 2026 (arising out of SLP(Crl.) No. 3597 of 2019)
Forum: Supreme Court
The Appellant i.e., Sanofi India Ltd. was arrayed as an accused in proceedings arising from an FIR concerning alleged irregularities in the procurement of pharmaceutical products for the Rare Materials Project of the Bhabha Atomic Research Centre (“BARC”). The prosecution alleged that Dr. P. Anand, a Scientific Officer at BARC, had conspired with pharmaceutical companies to procure medicines at inflated prices and in excess of requirements.
The chargesheet alleged that Dr. Anand, in concert with the Appellant, had manipulated the tender process, including by misclassifying products as proprietary, excluding competing bidders and failing to place orders with the lowest bidder. It was further alleged that Dr. Anand received illegal gratification from the Appellant. Notably, while the Appellant company was arraigned as an accused, no director, employee or officer of the Appellant was arraigned alongside it.
The Trial Court took cognizance, following which the Appellant approached the Karnataka High Court under Section 482 of the Code of Criminal Procedure, 1973 (“CrPC”) seeking quashing of the proceedings. The High Court declined to interfere, leading to the present appeal before the Supreme Court.
Issue:
The principal issue before the Supreme Court was:
Submissions of Parties
The Appellant contended that, where an offence requires proof of mens rea, the conduct and state of mind of the corporation’s “directing mind” must first be identified and attributed to the company. Relying, inter alia, on the identification principle and Tesco Supermarkets Ltd. v. Nattrass, it was submitted that absent identification and arraignment of the relevant alter ego or governing mind, the company could not be prosecuted for a mens rea offence.
The CBI contended that Iridium India Telecom Ltd. v. Motorola Inc. and Standard Chartered Bank v. Directorate of Enforcement permit prosecution of a company even where no employee is individually arraigned. It further submitted that the material on record disclosed sufficient evidence of undue favours, payment of illegal gratification and a prima facie conspiracy involving the Appellant.
Observations of the Court:
The Supreme Court distinguished between two questions concerning corporate criminal liability: (i) whether a corporation can incur liability for offences requiring mens rea; and (ii) how such mens rea is to be attributed to the corporation. While the first question stood settled in Indian law, the Court observed that the second had not been adequately addressed in prior decisions.
Drawing upon English jurisprudence, particularly Tesco Supermarkets Ltd. v. Nattrass and Meridian Global Funds Management Asia Ltd. v. Securities Commission, the Court formulated a three-stage framework for attribution of mens rea:
The Court clarified that the inquiry is transaction-specific and is not directed towards identifying a corporation’s “directing mind” in the abstract. Further, the framework applies to offences framed with natural persons in mind and requiring mens rea, and operates from the natural person to the corporation without determining the individual’s own criminal liability.
Held:
The Supreme Court rejected the proposition that identification and arraignment of a natural person constituting the corporation’s alter ego or directing mind is a general prerequisite for prosecuting a company for a mens rea offence.
Distinguishing Aneeta Hada v. Godfather Travels & Tours (P) Ltd. and Hindustan Unilever Ltd. v. State of M.P., the Court held that those decisions arose from statutory schemes imposing vicarious liability coupled with an express statutory condition precedent. They therefore could not be read as laying down a general rule applicable to all corporate prosecutions. At the stage of considering a petition under Section 482 CrPC, the Court held that allegations against a corporate accused must, at a minimum, prima facie disclose:
Applying this test, the Court found that the chargesheet disclosed natural persons acting on behalf of the Appellant and circumstances giving rise to a prima facie possibility of the requisite mens rea. The appeal was accordingly dismissed and the High Court’s refusal to quash the proceedings was upheld.
The judgment provides a structured, transaction-specific framework for attributing mens rea to corporate entities, clarifying that prosecution of a company for a mens rea offence does not, as a general rule, require the identification and arraignment of its “directing mind”. It further distinguishes direct corporate criminal liability from statutory vicarious liability, holding that the applicability of decisions such as Aneeta Hada depends upon the statutory scheme governing the offence, thereby marking a significant development in Indian corporate criminal jurisprudence.