Indian Judgements

Indian Judgements

Majority decision of the trustees is valid and binding—unanimity or total consonance is not required.

The primary dispute concerned rival claims of internal authority within three registered societies (Hindustan Medical Institution, Eastern India Educational Institution, and Belle Vue Clinic) regarding who was legally authorized to cast electronic votes on behalf of the societies’ corporate shares at the Annual General Meetings of Birla Corporation Limited (BCL).

The Supreme Court set aside the judgments of the Division Bench and Single Judge of the Calcutta High Court. It ruled that under the specific by-laws of these societies, a majority decision of the trustees is valid and binding—unanimity or total consonance is not required. Furthermore, the Court struck down the High Court’s direction that the “vote cast first” in point of time should automatically prevail, clarifying that statutory corporate voting laws demand verification of lawful authority rather than chronological speed.

1. Background and Context

The controversy arose among three societies registered under the West Bengal Societies Registration Act, 1961, all of which hold substantial shares in Birla Corporation Limited (BCL). Following the demise of Priyamvada Devi Birla in 2004, an Administrators Pendente Lite Committee (APL Committee) was established by the Calcutta High Court to preserve her estate during pending testamentary proceedings.

Subsequently, deep internal governance fractures developed within the three societies. Competing factions emerged, with each claiming the sole right to issue authorization letters and cast remote e-votes at BCL’s annual general meetings. In the 2021 meeting, the corporate scrutinizer invalidated the societies’ electronic votes due to these conflicting claims. Ahead of the September 27, 2022 Annual General Meeting, the societies filed suits on the Original Side of the Calcutta High Court seeking interim injunctions to ensure their designated proxies could vote without BCL interfering.

2. Lower Courts’ Rulings

  • Single Judge of the High Court: On September 16, 2022, the Single Judge refused to grant ad interim reliefs, stating that BCL had no business resolving the internal power struggles of the shareholder societies and that a scrutinizer cannot be forced at an interim stage to choose between rival authorizations.
  • Division Bench of the High Court: On appeal, the Division Bench affirmed the refusal of interim relief but introduced a significant legal caveat. Relying broadly on Section 48 of the Indian Trusts Act, 1882, the Bench concluded that trustees must act in total consonance; if even one trustee dissents, the decision fails. It then directed that whichever vote was cast first in point of time by a society (whether by the Board of Trustees or the Managing Committee) must be accepted by the scrutinizer, effectively ignoring any subsequent conflicting updates.

3. Key Legal Issues and Findings of the Supreme Court

Issue I: Requirement of Unanimity among Trustees

The Division Bench had ruled that the absence of absolute unanimity defeats any decision of a Board of Trustees. The Supreme Court textually analyzed Clause 24 of the societies’ constitutive by-laws, which explicitly allows delegation via written resolutions signed by a majority of the trustees.

The Court highlighted that Section 48 of the Indian Trusts Act explicitly accommodates exceptions “where the instrument of trust otherwise provides.” Because the societies’ own internal by-laws explicitly permitted majority-backed authorizations, the High Court erred by forcing a general rule of total consensus, which stripped the express text of Clause 24 of its functional utility. A majority-backed decision is legally effective despite a lack of total unanimity.

Issue II: Authority of the Board of Trustees vs. Managing Committee

The High Court’s directive had treated the Board of Trustees and the Managing Committee as normatively interchangeable entities for the purpose of voting.

The Supreme Court rejected this alignment by looking at the Memorandums of Association, which dictate a strict two-tier governance structure: all movable and immovable properties (including corporate shares) vest securely in the trustees. The Managing Committee is merely a subordinate, delegated administrative branch possessing only the specific operational powers delegated to it by the trustees. Therefore, the High Court was wrong to treat the two bodies as interchangeable categories standing on the same plane.

Issue III: The “Vote Cast First” Chronological Rule

The core operational issue was whether the High Court could create a rule prioritizing whichever vote hit the electronic system first.

The Supreme Court held that neither Section 108 of the Companies Act, 2013, nor Rule 20 of the Companies (Management and Administration) Rules, 2014, treats chronology as a stamp of validity. Corporate e-voting laws protect a vote against duplication only if it is fundamentally a lawful vote of that juristic member. For non-individual shareholders (like societies), scrutiny rules mandate that the corporate scrutinizer verify actual board resolutions and authorization letters. The High Court impermissibly substituted “chronology for authority,” creating a race to vote that is completely alien to statutory corporate frameworks. An unauthorized vote cannot be validated simply because it was submitted fast.

4. Conclusion and Directions

The Supreme Court set aside the judgments of both the Division Bench and the Single Judge of the Calcutta High Court. The Court legally established that:

  1. Written actions backed by a majority of the trustees constitute valid authorization under Clause 24 of these by-laws.
  2. Voting validity must firmly rest on lawful authority traceable to governing documents and company law, rather than chronological priority.

The Court expressly noted that it did not pass judgment on the ultimate factual validity of the underlying resolutions, appointments, or removals within the societies. The suits and interlocutory applications were restored to the file of the Calcutta High Court for fresh consideration on their merits by the Single Judge.

2026 INSC 554

Hindustan Medical Institution  V. Birla Corporation Limited & Ors. (D.O.J. 26.05.2026)

2026 INSC 554 click here to view full text of judgment

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Arbitration: Withdrawal of Petition Following Bank Guarantee Expiry

This commercial miscellaneous petition (O.M.P.(I) (COMM.) 319/2026) was filed under the Arbitration and Conciliation Act, 1996, by the petitioner, D C Ajmera, against the National Highways and Infrastructure Development Corporation Limited (NHIDCL) and the Bank of Maharashtra. During the proceedings, counsel for the respondent bank explicitly stated that the original bank guarantee had expired without being invoked within the stipulated period and therefore could not be encashed. In light of this submission, the petitioner sought and was granted leave to withdraw the petition, resulting in the matter being dismissed as withdrawn by the High Court of Delhi.

  • Procedural Context: The matter came up for hearing before the High Court of Delhi on August 12, 2026, under the coram of Hon’ble Mr. Justice Om Prakash Shukla.
  • Bank’s Submission: Respondent No. 2 (Bank of Maharashtra), through its counsel Mr. Santosh Kumar Rout, informed the court that the original bank guarantee in question was never invoked within its stipulated validity period and had since expired, rendering its encashment legally impossible.
  • Petitioner’s Stance: Acknowledging the submission made by the bank regarding the expiration and un-invoked status of the guarantee, the Senior Counsel for the petitioner sought permission from the court to withdraw the present petition.
  • Final Order: Accepting the petitioner’s request, the High Court dismissed the petition as withdrawn, along with the accompanying interlocutory applications (I.A. 20903/2026 and I.A. 20904/2026).

2026 DHC 6570

D C Ajmera v. National Highways and Infrastructure Development Corporation Limited & Anr. (D.O.J. 12.08.2026)

2026 DHC 6570 click here to view full text of judgment

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Grant of Regular Bail to Alleged Drug Syndicate Kingpin Due to Lack of Direct Evidence and Protracted Delay

This regular bail application was filed under the NDPS Act by the applicant, who was arrested on July 24, 2025, at Cochin Airport via a Look Out Circular (LoC) and accused by the Narcotics Control Bureau (NCB) of being the kingpin of an international drug cartel. The High Court of Delhi allowed the bail application, noting that no contraband was recovered from the applicant, the primary evidence against him consisted of co-accused disclosure statements, telephonic records lacked intercepted proof, and bank transactions were consistent with a legitimate spice business. Furthermore, the court considered the fact that charges had not even been framed yet and co-accused individuals had already been released on bail.

  • Factual Background:
    • Following a 2021 raid where the NCB recovered charas and methamphetamine from a parcel service and various co-accused residences, the applicant was implicated based on disclosure statements alleging he directed the booking as a cartel kingpin.
    • An LoC was issued, and he was apprehended at Cochin Airport on July 24, 2025.
  • Arguments of the Applicant:
    • The applicant maintained his innocence, stating he had been in custody since July 2025 without legally admissible evidence.
    • It was explained that his financial transactions with co-accused individuals were related to his legitimate spice trade business, and the original 2021 complaint did not implicate him.
  • Arguments of the Respondent (NCB):
    • The NCB contended that the applicant was an absconder against whom an LoC had to be executed.
    • They argued that apart from disclosure statements, there was evidence of telephonic connectivity and money transactions between the applicant and co-accused parties.
  • High Court’s Analysis and Findings:
    • Weakness of Evidence: The court observed that no incriminating substances were recovered from the applicant. Furthermore, simple call detail records without intercepted conversations do not prove criminal complicity, and minor bank transfers do not inherently suggest contraband financing.
    • Delayed Action by Authorities: The court noted that although the initial complaint was filed in 2021, little was done to formally summon or investigate the applicant until the LoC was issued in July 2025.
    • Parity and Trial Status: Given that charges were still pending framing and co-accused persons (such as Paschal) had already been granted bail, the court found no justification to continue the applicant’s incarceration.
  • Final Directions:
    • The bail application was allowed.
    • The applicant was ordered to be released on regular bail upon furnishing a personal bond of Rs. 1,00,000/- with one surety in the like amount to the satisfaction of the trial court.

2026 DHC 6565

Nafi Nazar v. Narcotics Control Bureau (D.O.J. 12.08.2026)

2026 DHC 6565 click here to view full text of judgment

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Grant of Regular Bail to Foreign National Under NDPS Act Due to Protracted Trial Delay

This criminal bail application was filed under the NDPS Act seeking regular bail by a foreign national detained since December 8, 2021, for alleged possession of intermediate and commercial quantities of narcotics (60 grams of cocaine and 55 grams of methamphetamine). The High Court of Delhi allowed the application and granted regular bail primarily on the ground of inordinate trial delay, noting that only 8 out of 22 prosecution witnesses had been examined over a prolonged period and the end of the trial was nowhere in sight. To address concerns regarding his status as a foreign national with an expired visa, the court directed that his custody be handed over directly to the Foreigners Regional Registration Office (FRRO) upon release.

  • Factual and Procedural Background:
    • The applicant/accused sought regular bail in connection with a complaint case registered by PS NCB Delhi for offenses under Sections 8(c), 20(b), 21(b), 22(c), 23, 25, and 29 of the NDPS Act.
    • The applicant had been incarcerated since December 8, 2021. An earlier bail application (Bail Application No. 1950/2025) was dismissed by the bench on May 20, 2025.
  • Core Grounds for Bail:
    • The primary ground pressed by the applicant’s counsel was the severe delay in the progress of the trial.
    • It was pointed out that when the previous bail application was dismissed, 7 out of 22 prosecution witnesses had been examined, and even after more than a year, only 1 additional witness had been examined, bringing the total to just 8 out of 22 witnesses examined.
  • Respondent NCB’s Stance:
    • The NCB did not dispute the slow pace of the trial.
    • However, opposing the bail, the NCB requested that the trial court instead be directed to expedite the trial, highlighting the added risk because the applicant is a foreign national.
  • High Court’s Observations and Findings:
    • Prolonged Incarceration: The court observed that despite diligence by the trial court, the reality remained that the applicant had been in custody for over four and a half years and the trial’s conclusion was not in sight.
    • Addressing Flight Risk of Foreign Nationals: To mitigate the NCB’s apprehension regarding his foreign nationality and expired visa, the court structured the bail release conditional upon transferring his custody directly to the FRRO.
  • Final Directions:
    • The bail application was allowed.
    • The applicant was ordered to be released on regular bail upon furnishing a personal bond of Rs. 1,00,000/- with one surety in the like amount to the satisfaction of the trial court, subject to his immediate custody handover to the FRRO.

2026 DHC 6561

Paschal Obinna Nwagbaoso v. Narcotic Control Bureau (D.O.J. 12.08.2026)

2026 DHC 6561 click here to view full text of judgment

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Grant of Regular Bail on Grounds of Parity in Money Laundering Case

This judgment resolves two regular bail applications (BAIL APPLN. 2363/2026 and BAIL APPLN. 2382/2026) filed under the Prevention of Money Laundering Act (PMLA) arising from case ECIR/DLZO-II/03/2024. The High Court of Delhi accepted the Directorate of Enforcement’s concession that co-accused persons had already been granted bail and that the said orders remained unchallenged, thereby extending regular bail to the petitioners Tushar Chauhan and Akshay Kumar on grounds of parity.

  • Factual Background: The applicants, Tushar Chauhan and Akshay Kumar, sought regular bail in connection with an ECIR registered by the Directorate of Enforcement (DoE) under Sections 3 and 4 of the Prevention of Money Laundering Act, 2002.
  • Respondent’s Stance: At the very outset of the hearing, the counsel appearing for the Directorate of Enforcement conceded that several co-accused persons—namely Pravez Khan, Suraj Shat, Neeraj Chauhan, Rajesh Kumar, and Lovee Narula—had already been granted bail by the High Court, and that those orders had not been challenged by the DoE. Consequently, the DoE submitted that the present applicants could also be granted regular bail on the principle of parity.
  • High Court’s Directions and Conditions:
    • Considering the factual and legal matrix established in the prior bail orders of the co-accused, the High Court allowed both bail applications.
    • The applicants were directed to be released on regular bail upon furnishing a personal bond of Rs. 1,00,000/- each, along with one surety in the like amount to the satisfaction of the trial court.
    • A specific condition was imposed restricting the applicants from leaving India without prior permission from the trial court.
    • A copy of the order was ordered to be transmitted immediately to the concerned Jail Superintendent for execution.

2026 DHC 6560

Tushar Chauhan v. Directorate of Enforcement (D.O.J. 12.08.2026)

2026 DHC 6560 click here to view full text of judgment

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