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Supreme Court Quashes Criminal Proceedings Arising Out of a Real Estate Development Agreement

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The Supreme Court allowed a criminal appeal filed by land owners seeking to quash criminal proceedings and a chargesheet initiated against them under Sections 406 and 420 read with Sections 109 and 34 of the Indian Penal Code, 1860 (IPC). The dispute stemmed from an unfulfilled Joint Development Agreement for property development where planning permission was rejected because the land formed part of an unapproved layout. The Court held that the dispute was purely civil in nature arising out of a contractual breach, that the essential ingredients of cheating and criminal breach of trust were completely absent from the inception, and that utilizing criminal prosecution as a tool to exert pressure in a civil dispute amounts to an abuse of the judicial process.

  • Background and Facts:
    • The appellants (landowners) and respondent No. 2 (construction company represented by its Joint Managing Director) entered into an unregistered Joint Development Agreement on May 23, 2012, along with a General Power of Attorney (GPA).
    • The construction company paid a refundable security deposit of Rs. 3,00,00,000 to the appellants.
    • The Chennai Metropolitan Development Authority rejected the planning permission application on August 26, 2013, noting that the property formed part of an unapproved layout.
    • On January 5, 2018, the appellants unilaterally cancelled the GPA and sold the property to a third party (Smt. Banumathi), subsequently issuing a legal notice to the complainant to return the original title deeds and receive back the refundable security deposit.
    • Following closed police complaints and an order under Section 156(3) of the CrPC, an FIR was registered, leading to a chargesheet and committal of C.C. No. 2776 of 2023 before the trial court.
    • The Madras High Court refused to quash the criminal proceedings, prompting the appellants to approach the Supreme Court.
  • Key Legal Principles and Findings by the Supreme Court:
    • Absence of Initial Dishonest Intention: A mere breach of contract or non-refunding of an advance amount does not constitute the offence of cheating unless a fraudulent or dishonest intention is proven right at the inception of the transaction. Both parties initially acted in furtherance of the contract, and failure to secure planning permission cannot invite criminal prosecution against the landowners.
    • Nature of Entrustment and Breach of Trust: The payment of a refundable security deposit as consideration for executing a GPA does not automatically constitute “entrustment” under Section 405 of the IPC. Furthermore, the mere retention of money in a commercial transaction does not satisfy the requirements of criminal breach of trust without proof of dishonest misappropriation.
    • Mutual Exclusivity of Cheating and Criminal Breach of Trust: Offences of cheating (which require dishonest inducement from inception) and criminal breach of trust (which require lawful entrustment followed by misappropriation) cannot co-exist simultaneously on the exact same set of allegations.
    • Parallel Civil Remedies and Arbitration: The parties had already invoked arbitration, resulting in an arbitral award dated April 12, 2023, which was further challenged under Section 34 of the Arbitration and Conciliation Act, 1996. Initiating criminal proceedings while actively pursuing civil remedies is an attempt to give a criminal flavor to a civil dispute.
    • Application of Bhajan Lal Guidelines: Categories (1), (3), (5), and (7) from the landmark State of Haryana v. Bhajan Lal judgment squarely applied, making it a fit case to exercise extraordinary powers to prevent the abuse of the process of law.
  • Final Outcome:
    • The Supreme Court set aside the Madras High Court’s judgment dated March 28, 2025.
    • Criminal proceedings, including FIR No. 181 of 2021, the chargesheet dated March 23, 2023, and C.C. No. 2776 of 2023 pending before the Metropolitan Magistrate, Chennai, were quashed.
    • The Court clarified that its observations would not prejudice either party from pursuing their respective civil remedies in accordance with the law.

2026 INSC 772

G. Saminathan & Another v. The State, represented by the Sub-Inspector of Police & Another (D.O.J. 31.07.2026)

2026 INSC 772 click here to view full text of judgment

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Supreme Court Judgment Summary 15th Sep, 2026

September 18, 2026 No Comments

Supreme Court Judgment Summary 15th Sep, 2026

A Definitive Review on Disability Pension Rights for Ex-Servicemen

This landmark batch of appeals brought by the Union of India challenged various orders passed by the Armed Forces Tribunal (AFT) and High Courts, which had granted the disability element of service pensions to ex-servicemen. These former personnel had been assessed by Release Medical Boards (RMB) as having disabilities that were “Neither Attributable Nor Aggravated” (NANA) by military service. The Supreme Court addressed the core tension between the protective, beneficial jurisprudence established in Dharamvir Singh v. Union of India (governed by the Entitlement Rules 1982) and the restrictive framework introduced by the subsequent Entitlement Rules 2008. Crucially, the Court undertook a deep constitutional and administrative review of the legitimacy of the 2008 rules, evaluating whether they possessed binding legal force and whether they could dilute established beneficial entitlements.

2026 INSC 993 : Union of India & Ors. v. Col. NC Isaac (Retd.) and Connected Appeals (D.O.J. 15.09.2026)

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Setting Aside Ineligible Selection to Protect Merit

September 18, 2026 No Comments

The Supreme Court of India dismissed the civil appeal filed by Sunita Lahu Panchpande, upholding the Bombay High Court’s judgment that had set aside her appointment as an Anganwadi Supervisor in Nashik District. The appellant, who originally served as an Anganwadi Sevika in Jalgaon District, applied for and was appointed to the post in Nashik despite an express restriction in the advertisement and the governing Government Resolution (G.R.) dated November 17, 2001, mandating that applicants must possess ten years of work experience specifically within Nashik District. Although the Divisional Commissioner had erroneously issued a clarification stating that experience from other districts was acceptable, the Supreme Court ruled that a subordinate administrative official cannot issue clarifications contrary to statutory G.R.s and recruitment advertisements. Citing the doctrine that appointments made in disregard of advertised qualifications amount to a fraud on the public, the Supreme Court affirmed the High Court’s order directing the appointment of the eligible wait-listed candidate (the sixth respondent) in her place, while acknowledging the compassionate observation permitting the appellant’s accommodation in her home district.

  • Core Issues Addressed: The Supreme Court evaluated whether a candidate lacking the mandatory territorial work experience stipulated in a recruitment advertisement and government resolution can retain public employment based on an erroneous administrative clarification.
  • Mandatory Territorial Eligibility: A conjoint reading of the 2001 Government Resolution and the specific conditions of the advertisement clearly established that applicants must have accumulated their ten years of qualifying experience as an Anganwadi Sevika within the same district (Nashik).
  • Incompetence of Administrative Clarifications: The Divisional Commissioner lacked the legal authority to issue a clarification that ran completely contrary to the explicit text of the 2001 G.R.; any genuine doubt ought to have been referred back to the State Government.
  • Fraud on Public Aspirants: Reaffirming the principle laid down in Tripura Sundari Devi, the Court emphasized that appointing ineligible candidates in violation of advertised terms without an express relaxation clause constitutes a fraud on public candidates who possessed better qualifications but refrained from applying.
  • Final Outcome: The appeal was dismissed, the High Court’s judgment was upheld, the sixth respondent was awarded the rightful appointment with benefits to be disbursed within two months, and the appellant was granted time until September 30, 2026, to transition out of the post.

2026 INSC 1002

Sunita Lahu Panchpande v. The District Collector & Ors. (D.O.J. 16.09.2026)

2026 INSC 1002 click here to view full text of judgment

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Acquittal Under NDPS Act Due to Flawed Sampling and Unproven Contraband

September 18, 2026 No Comments

The Supreme Court of India allowed the criminal appeals filed by the appellants Abdul Rajik and Govind, setting aside the concurrent judgments of the Trial Court and the High Court of Madhya Pradesh which had convicted them under Section 8 read with Section 20 of the Narcotic Drugs and Psychotropic Substances (NDPS) Act, 1985. The appellants had been sentenced to rigorous imprisonment for 10 years and 8 years respectively, following allegations that they were caught carrying charas. The Supreme Court held that the prosecution fundamentally failed to establish an unbroken chain of custody for the seized samples, pointing out severe lapses, including the total non-compliance with Section 52-A of the NDPS Act (drawing samples without a Magistrate), missing entries in the malkhana register regarding the exit of samples, a silent carrier constable, and an unexplained five-day delay before the samples reached the Forensic Science Laboratory (FSL). Consequently, the FSL report became untrustworthy, and with no other reliable scientific proof that the recovered material was actually charas, the Court granted the appellants the benefit of the doubt and acquitted them.

  • Core Issues Addressed: The Supreme Court examined the validity of convictions under the NDPS Act concerning the integrity of link evidence, the absolute necessity of maintaining a secure chain of custody for seized contraband samples, and the legal consequences of failing to comply with Section 52-A of the NDPS Act.
  • Breach in Link Evidence and Custody: The prosecution failed to prove the safe transit of the samples from the malkhana to the FSL. Crucially, the forwarding letter from the Superintendent of Police was dated December 1, 2004, whereas the FSL recorded receipt on December 6, 2004, leaving an unexplained five-day gap with zero evidence as to whose custody the samples remained in during this period.
  • Non-Compliance with Section 52-A: The investigating officer completely omitted the mandatory statutory safeguard of drawing representative samples in the presence of an Executive or Judicial Magistrate, which severely dented the integrity of the seizure and sampling process.
  • Exclusion of the FSL Report: Due to the shattered chain of custody and procedural flaws, the FSL report (Exhibit P-46) lost its evidentiary value and had to be discarded. Furthermore, the informal spot-testing method (burning a small piece of the substance) was deemed unscientific and insufficient to prove the material was charas.
  • Final Outcome: The appeals were allowed, the judgments of conviction and sentences were set aside, and the appellants were acquitted of all charges with their bail bonds discharged.

2026 INSC 1001

Abdul Rajik v. State of M.P. (D.O.J. 16.09.2026)

2026 INSC 1001 click here to view full text of judgment

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The Finality of Tax Settlements: Barring Reassessment After ITSC Orders

September 18, 2026 No Comments

The Supreme Court of India dismissed the civil appeal filed by the Revenue (Income Tax Department), upholding the judgment of the Delhi High Court which had quashed a reassessment notice and order issued against the respondent-assessee, M/s. Omaxe Limited. The core controversy revolved around whether the Assessing Officer (AO) retained the jurisdiction to reopen a concluded assessment under Section 148 of the Income Tax Act, 1961, to disallow housing project deductions under Section 80IB(10) after the Income Tax Settlement Commission (ITSC) had already passed a final settlement order under Section 245D(4). The Supreme Court ruled that Chapter XIX-A of the Income Tax Act is a self-contained code. Once an application for settlement is admitted and a final order is issued, it attains absolute finality under Section 245-I, and the regular assessment machinery cannot be invoked to bypass this conclusiveness. The Court clarified that if the Revenue wishes to challenge a settlement order on grounds of fraud or misrepresentation, its sole exclusive remedy is to approach the ITSC directly under Section 245D(6)—not to initiate parallel reassessment proceedings.

  • Core Issue Addressed: The Supreme Court examined whether an Assessing Officer can independently issue a reassessment notice under Section 148 to disallow deductions (such as under Section 80IB(10)) that were part of the total income considerations during a concluded proceeding before the Settlement Commission.
  • Exclusive Jurisdiction of the ITSC: The Court reaffirmed that upon the admission of a settlement application, the ITSC assumes exclusive jurisdiction over the case for that assessment year, placing the regular assessment machinery under statutory abeyance pursuant to Section 245F(2).
  • Conclusiveness of Settlement Orders: Under Section 245-I, orders passed by the ITSC under Section 245D(4) are final and conclusive on the matters stated therein, barring the Revenue from splitting an assessment to re-litigate items through standard reassessment channels.
  • Exclusive Remedy for Fraud or Misrepresentation: If the Revenue discovers that a settlement order was obtained through misrepresentation or concealment, Section 245D(6) provides the exclusive statutory pathway to declare the settlement void by moving the ITSC directly, a route the Revenue unsuccessfully attempted and exhausted in this very case.
  • Final Outcome: The appeal filed by the Revenue was dismissed, confirming that the regular tax authorities cannot initiate parallel reassessments once an ITSC settlement order has attained finality.

2026 INSC 1000

Assistant Commissioner of Income Tax & Another v. M/s. Omaxe Limited (D.O.J. 16.09.2026)

2026 INSC 1000 click here to view full text of judgment

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