Indian Judgements

Indian Judgements

“Pride” vs. “Pride”: A Battle of Brands 

This case concerns a trademark dispute between two alcoholic beverage manufacturers over alleged deceptive similarity in their whiskey brands. The appeal related to rejection of interim injunction by Commercial Court and High Court. Appellants fails to get interim injunction even in Supreme Court.

Appellants: Pernod Ricard India Private Limited & Another, producers of popular whiskey brands like ‘BLENDERS PRIDE’ and ‘IMPERIAL BLUE’. These brands have substantial annual sales exceeding INR 1,700 Crores and INR 2,700 Crores respectively, and are registered trademarks with a long history of use. The appellants also hold a registered trademark for ‘SEAGRAM’S’, which is embossed on their bottles.

Respondent: Karanveer Singh Chhabra, who began marketing whiskey under the mark ‘LONDON PRIDE’ in May 2019.

The Dispute: The appellants alleged that the respondent’s ‘LONDON PRIDE’ whiskey, including its packaging, label design, colour scheme, and overall trade dress, was deceptively similar to their ‘BLENDERS PRIDE’ product, leading to trademark infringement and passing off. They also noted the respondent’s use of an embossed ‘SEAGRAM’S’ mark.

Procedural Journey:

The Commercial Court initially rejected the appellants’ request for an interim injunction on November 26, 2020.

The High Court subsequently dismissed the appellants’ appeal on November 3, 2023, affirming the Commercial Court’s decision. The High Court stated there was no prima facie case of infringement or passing off. It found the respondent’s mark entirely dissimilar in name, appearance, and composition, despite noting visual and phonetic similarities earlier. The High Court also considered the word ‘PRIDE’ to be publici juris (common use) and thus not subject to exclusive rights.

Law Involved: The Trademark Compass

The judgment primarily draws upon the Trade Marks Act, 1999, and established legal principles concerning trademark protection and infringement. Key concepts include:

Definition of “Deceptively Similar”: A mark is deemed deceptively similar if it nearly resembles another mark as to be likely to deceive or cause confusion.

No Likelihood of Confusion: The foundational principle of trademark law is that there must be no likelihood of confusion in the mind of the average consumer.

Anti-Dissection Rule: Composite marks must be considered as a whole, not by dissecting individual elements.

Dominant Feature Test: Courts determine if a mark is deceptively similar by identifying its most distinctive, memorable, and influential feature in consumer perception.

Average Consumer Test and Imperfect Recollection: Similarity is assessed from the viewpoint of an average consumer with imperfect recollection, emphasizing overall impression rather than minute differences.

No Exclusive Right Over Common/Descriptive Terms: Generally, no exclusive right exists over common or descriptive terms unless they have acquired a secondary meaning.

Post-Sale Confusion Doctrine: A concept recognizing confusion that may occur after the point of sale, for example, when others see the purchased product and assume its origin.

Holding and Reasoning

It is a settled principle of trademark law that deceptive similarity does not necessitate exact imitation. What is material is the likelihood of confusion or association in the minds of consumers arising from an overall resemblance between the competing marks. The applicable standard is that of an average consumer with imperfect recollection.

While comparing rival marks, Courts must assess the marks in their entirety, rather than dissecting composite trademarks into isolated components.

The dominant feature of a mark may assist in crossing the preliminary threshold of analysis, but the ultimate inquiry must focus on the overall impression created by the mark – especially in the context of the relevant goods, trade channels, and target consumers. The proper test is not to place the two marks side by side to identify dissimilarities, but to determine whether the impugned mark, when viewed independently, is likely to create an impression of association or common origin in the mind of the average consumer. Even if a particular component of a mark lacks inherent distinctiveness, its imitation may still amount to infringement if it constitutes an essential and distinctive feature of the composite mark as a whole.

Section 17(1) of the Trade Marks Act, 1999 grants exclusive rights only in respect of the mark as registered. Section 17(2) excludes protection for common or non-distinctive elements unless such elements have acquired secondary meaning. Sections 27(2) and 29 preserve the right to institute passing off actions and define the contours of infringement, respectively. Notably, Section 29(3) presumes confusion only where identical marks are used for identical goods – a condition not met in the present case as the marks.

Applying the settled legal standards – including the anti-dissection rule, the overall similarity test, and the perspective of an average consumer – we prima facie find no deceptive similarity between the competing marks that would give rise to confusion.

In the present case, the marks – ‘BLENDERS PRIDE’ and ‘LONDON PRIDE’ – are clearly not identical. Though the products are similar, the branding, packaging, and trade dress of each are materially distinct. The Commercial Court and High Court have rightly held that the term ‘PRIDE’ is publici juris, and commonly used in the liquor industry. The dominant components – ‘BLENDERS’, ‘IMPERIAL BLUE’, and ‘LONDON’ – are entirely different both visually and phonetically, producing distinct overall impressions.

The courts below also correctly observed that the products in question are premium and ultra-premium whiskies, targeted at a discerning consumer base. Such consumers are likely to exercise greater care in their purchase decisions. The distinct trade dress and packaging reduce any likelihood of confusion. The shared use of the laudatory word ‘PRIDE’, in isolation, cannot form the basis for injunctive relief.

Though the appellants heavily rely on the anti-dissection principle, they themselves seek to dissect their composite marks and claim exclusive rights over isolated elements such as ‘PRIDE’ and the use of the colour blue. Their claim, in essence, appears to be based on brand association with the Seagram’s or Pernod Richard portfolio, rather than any legally cognizable infringement.

The allegation regarding the embossing of “Seagram Quality” on the respondent’s bottle was rightly rejected by the Commercial Court. The bottle produced as evidence by the appellants lacked such embossing, and this finding remains unchallenged. The appellants themselves admitted that they failed to furnish any invoice or produce a witness to support their claim, thereby rendering the allegation unreliable and lacking in bona fides.

In the liquor industry, where advertising is highly restricted, brand recognition rests predominantly on packaging and consumer loyalty. Unless the imitation is deliberate and intended to mislead, the chance of confusion is minimal. The allegation of counterfeiting in the present case appears to be speculative and unsupported by credible evidence.

The appellants’ attempt to combine elements from two distinct marks – ‘BLENDERS PRIDE’ and ‘IMPERIAL BLUE’ – to challenge the respondent’s mark ‘LONDON PRIDE’, constitutes a hybrid and untenable pleading. Each mark must be assessed independently, and cherry-picking generic or unregistered features from multiple marks to fabricate a composite case of infringement is not legally sustainable.

It is not in dispute that the word “PRIDE” is not registered as a standalone mark. Nor can the appellants claim exclusivity over common elements like bottle shape or color schemes that are generic and widely used in the industry. While the composite marks ‘BLENDERS PRIDE’ and ‘IMPERIAL BLUE’ are protected, their individual elements – lacking distinctiveness – are not independently enforceable.

The piece-meal approach adopted by the appellants – seeking to combine unrelated features from their own marks – has undermined their claim. Apart from the shared use of a common term, there is no meaningful similarity between the marks. Key elements such as packaging, typography, bottle design, and label layout are materially distinct. In a market segment, where consumers are more discerning, the likelihood of confusion is negligible.

The appellants’ contention that the Commercial Court dissected the marks mechanically is belied by the High Court’s holistic analysis. The High Court correctly noted that ‘BLENDERS PRIDE’ uses a round bottle, whereas ‘LONDON PRIDE’ adopts a cylindrical form. The labels, cartons, and design motifs are entirely different. These variations eliminate the possibility of confusion.

The comparison between ‘IMPERIAL BLUE’ and ‘LONDON PRIDE’ reveals even greater divergence. The marks differ in word arrangement, label structure, and packaging. No similarity exists – visual, phonetic, or structural – that can support a claim for infringement or passing off. Since resemblance is a sine qua non for both causes of action, the appellants’ claim must fail.

Although the appellants hold registrations for the composite marks, no evidence was adduced to demonstrate that any particular element – such as bottle shape, color scheme, or the word “PRIDE” – had acquired distinctiveness or secondary meaning. Trademark protection extends only to distinctive identifiers. Descriptive or commonplace elements fall outside the ambit of protection unless distinctiveness is proved.

Significantly, the appellants’ earlier challenge to United Spirits’ use of the term ‘PRIDE’ in the mark “Royal Challenger American Pride” was unsuccessful. The Punjab and Haryana High Court held that the appellants did not possess an independent registration for the word ‘Pride’, but only for the composite mark ‘Blenders Pride’. Accordingly, they could not claim any exclusive or enforceable rights over the standalone word ‘Pride’. The Court further observed that having failed to object to the registration of the impugned mark before the Trade Marks Registry, the appellants were estopped from asserting such rights subsequently. This decision was upheld by this Court in SLP (C) No. 17674/2023 dismissed on 06.09.2023. Therefore, the appellants’ present attempt is contrary to law and settled principles of equity.

In view of the foregoing analysis, Supreme Court found no ground to interfere with the concurrent findings of the Commercial Court and the High Court. The appellants have failed to establish a prima facie case of deceptive similarity that could justify the grant of interim injunction.

PERNOD RICARD INDIA PRIVATE LIMITED V. KARANVEER SINGH CHHABRA

Supreme Court: 2025 INSC 981(DoJ 14-08-2025) 

2025 INSC 981Download Supreme Court Judgment

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Justice Prevails: Apex Court Quashes Tax Evasion Prosecution After Settlement Commission’s Immunity Grant

The appellant invoked the High Court’s jurisdiction to quash criminal proceedings initiated by the Revenue under Section 276C(1) of the Income Tax Act, 1961 (IT Act), for the assessment year 2017-2018, alleging a willful attempt to evade tax. The High Court dismissed the appellant’s quashing petition and a subsequent writ appeal.

A search was conducted on 24.04.2016 under Section 132 of the IT Act, leading to the seizure of unaccounted cash. A show-cause notice followed on 31.10.2017.

The Revenue filed a complaint against the appellant on 11.08.2018.

The appellant filed an application with the Settlement Commission under Section 245C of the IT Act on 07.12.2018, disclosing additional income and seeking immunity from penalty and prosecution.The Settlement Commission, on 26.11.2019, allowed the application, granting immunity from levy of penalty and prosecution.

The total undisclosed income for the assessment year 2017-2018 was Rs. 61,50,000/-, resulting in a tax liability of less than Rs. 25 lakhs.

Law Involved

Section 276C(1) of the IT Act, 1961: Deals with willful attempts to evade tax, penalties, or interest chargeable.

Section 245C of the IT Act: Pertains to applications for settlement before the Settlement Commission.

Section 245D(4) & 245I of the IT Act: Relate to the Settlement Commission’s order and its conclusiveness.

Section 245H(1) of the IT Act: Grants the Settlement Commission power to provide immunity from prosecution and penalty.

Proviso to Section 245H(1): States that immunity cannot be granted if prosecution was initiated prior to the settlement application.

Section 279(1) of the IT Act: Requires sanction for prosecution by specified authorities (e.g., Principal Chief Commissioner or Commissioner).

Government of India Guidelines/Circulars:

2008 Circular (dated 24.04.2008): Streamlines procedure for prosecution, including thresholds for penalty exceeding Rs. 50,000/-.

2019 Circular (dated 09.09.2019): For tax liability below Rs. 25 lakhs, prosecution requires previous administrative approval of the Collegium of CCIT/DGIT rank officers.

Recommendations of the Wanchhoo Committee (1971): Advocated for a “Settlement Machinery” to compromise with errant taxpayers and reduce litigation.

Reasoning

The Supreme Court’s reasoning highlighted several critical points:

Conclusiveness of Settlement Commission’s Order: The Court emphasized that an order passed by the Settlement Commission under Section 245D(4) is conclusive regarding the matters stated therein. The Settlement Commission had granted immunity to the appellant from both penalty and prosecution.

Settlement Commission’s Finding on “Wilful Evasion”: Crucially, the Settlement Commission did not find any wilful evasion of tax by the appellant. This finding undermined the very basis of the prosecution under Section 276C(1), which requires a “wilful attempt to evade tax”.

Misinterpretation of Proviso to Section 245H(1): The Court noted that the High Court and the Revenue’s view, that immunity could not be granted because the complaint was filed before the settlement application, was incorrect. The power to grant immunity under Section 245H is an integral part of the settlement scheme.

Violation of Binding Circulars:

The tax liability in this case was less than Rs. 25 lakhs. According to the ‘2019 circular’, prosecution for tax liability below this threshold requires previous administrative approval from the Collegium of CCIT/DGIT rank officers. This approval was not obtained.

The Court reiterated that circulars issued by the Central Board of Direct Taxes (CBDT) are binding on the authorities administering the provisions of the IT Act.

Abuse of Process of Law: The Court strongly stated that the continued prosecution by the Revenue, despite the Settlement Commission’s findings and the non-compliance with binding circulars, amounted to an abuse of the process of law. The High Court’s approach was deemed “entirely misdirected”.

Competence of DDIT to Initiate Prosecution: The appellant had also challenged the competence of the Deputy Director of Income Tax (Investigation) to initiate prosecution under Section 279(1) of the IT Act.

Holding

The Supreme Court granted leave. The appeal was allowed.The order of the High Court was set aside.The criminal prosecution proceedings initiated by the Revenue against the appellant for the offence under Section 276C(1) of the IT Act for assessment year 2017-2018 were quashed.

Vijay Krishnaswami @ Krishnaswami Vijayakumar vs Deputy Director of Income Tax (Investigation) 

Supreme Court: 2025 INSC 1048 (DoJ 28-08-2025)

2025 INSC 1048Download Supreme Court File

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Upholding Integrity: Supreme Court on ‘Misbehaviour’ and Collective Responsibility in Public Service Commissions

The case concerns Ms. Mepung Tadar Bage (referred to as “Respondent”), a Member of the Arunachal Pradesh Public Service Commission (APPSC), appointed on August 13, 2021.

The core issue originated from the leakage of question papers for the Assistant Engineer (Civil) Mains Examination, conducted by the APPSC on August 26th and 27th, 2022.

Following a complaint, the APPSC cancelled the examinations and the matter was transferred to the Special Investigation Cell (Vigilance) (SIC) and later to the Central Bureau of Investigation (CBI).

A three-member High-level Inquiry Committee was constituted by the Government of Arunachal Pradesh to probe irregularities in the Mains Examination.

The Inquiry Committee submitted its report on October 06, 2022, pointing out lapses in the Standard Operating Procedure (SOP) and concluding that the SOP and the APPSC Conduct of Examination Guidelines, 2017 (“2017 Guidelines”), had not been followed by the APPSC.

The Chairman of APPSC resigned on moral grounds.

The Hon’ble Governor of Arunachal Pradesh requested the Hon’ble Chief Minister to place the matter before the Hon’ble President of India for making a reference under Article 317(1) for the removal of four APPSC members, including the Respondent.

The President of India made a reference to the Supreme Court for the removal of the Respondent on April 18, 2023.

The Respondent was suspended on June 15, 2023.

The reference focused on whether the Respondent’s conduct constituted “misbehaviour” under Article 317 of the Constitution.

Law Involved:

Article 317(1) of the Constitution of India governs the removal of the Chairman or any other member of a Public Service Commission (PSC) from office on the ground of “misbehaviour.” The process involves a reference by the President of India to the Supreme Court for an inquiry.

The Constitution Framers recognized the prominence of Civil Services and the need to safeguard PSC officers from political pressure and public expectations, leading to the establishment of autonomous and independent bodies.

The term “misbehaviour” in Article 317 has been subject to judicial interpretation, drawing from precedents under Article 124(4) which defines misbehaviour for Judges.

“Misbehaviour” is defined as “ill conduct; improper or unlawful behaviour” or “a transgression of some established and definite rule of action, a forbidden act”. It denotes actions that would “destroy the faith in a public office”.

It requires specific, demonstrable acts or omissions that betray public trust and are “unimpeachable in the eyes of law”.

The Court highlighted that for a PSC member, expected standards of behaviour are natural and are elevated by the very nature of the institution they represent.

The concept of “collective responsibility” was also considered, primarily in the context of the Cabinet, where Ministers are jointly accountable for government policies and actions. The Court explored its applicability to a constitutional body like a PSC.

Reasoning:

The Court carefully examined the six charges leveled against the Respondent, based on the Inquiry Committee’s report and subsequent investigations.

Regarding the question paper leakage (Charge No. I): The Inquiry Committee report did not attribute any specific act or omission by the Respondent as constituting misbehaviour. While the Respondent was involved in paper setting and other examination processes, the evidence did not show her failure in preventing leakage or ensuring confidentiality. The Court found no evidence to prove her individual responsibility for the leakage.

Regarding previous leakages (Charge No. II): The Respondent joined APPSC after the alleged leakages in 2017. No specific allegation against her linked to these previous incidents after her joining was found.

Regarding the “2022 Guidelines” and the 2017 Guidelines (Charges No. III & V): These charges related to the draft “2022 Guidelines” and the keeping of “2017 Guidelines” in abeyance. The Court noted that the “2022 Guidelines” were kept in abeyance by “common consensus of the Chairman and Members of the APPSC”. The Inquiry Committee found no deliberative act by the Respondent. The Court emphasized that institutional failure cannot be attributed to an individual in an institutional setting if there is collective duty.

Regarding allocation of legal work and revision of guidelines (Charge No. IV): The Respondent was allocated legal work, which included the duty to revise the 2017 Guidelines. While she failed to perform this duty, the Court clarified that this was an institutional failure and not solely attributable to her individual capacity to initiate new guidelines. The Inquiry Committee did not find any specific act or omission by her constituting misbehaviour in this regard.

The Court elaborated on “collective responsibility”, noting that while PSCs are constitutional bodies with collective functions, it is distinct from the Cabinet’s collective responsibility. It held that an individual member cannot be held liable in their individual capacity for the entire Commission’s responsibilities, particularly for institutional failures or lack of clear guidelines for individual duties.

The Court found that no cogent material or evidence was presented to substantiate the allegations of misbehaviour against Ms. Mepung Tadar Bage. Her actions did not meet the high threshold of “misbehaviour” required for removal under Article 317(1).

Holding:

The Supreme Court concluded that the charges alleged against Ms. Mepung Tadar Bage were not proven and, therefore, her conduct did not constitute “misbehaviour” within the meaning of Article 317(1) of the Constitution of India.

The Court recommended that the Hon’ble President of India revoke her suspension forthwith.

Furthermore, it recommended that she be entitled to all consequential and monetary benefits.

Re: Mepung Tadar Bage, Member, Arunachal Pradesh Public Service Commission

Supreme Court: 2025 INSC 1047 (DoJ 28-08-2025)

2025 INSC 1047 Download Supreme Court File

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Proprietorship Concerns: Clarifying Legal Standing in Court

This judgment from the Supreme Court of India clarifies the legal standing of a proprietorship concern in a lawsuit, particularly regarding its ability to be sued and represented. The case stemmed from an eviction suit filed by the appellants against a lessee, Aditya Motors, a sole proprietorship concern of Pilla Durga Prasad (P.D. Prasad).

A registered lease deed dated 13th April, 2005, leased premises from the appellants to Aditya Motors. After the lease expired and the premises were not vacated, the appellants filed an eviction suit under Section 106 of the Transfer of Property Act, 1882.

Party Amendment: Initially, M/s. Associated Auto Services Pvt. Ltd. was impleaded as defendant no.1, with Pilla Durga Prasad as defendant no.2. An application was filed by the appellant to delete the original defendant no.1 (lessee-defendant no.1) and substitute Pilla Durga Prasad as the representative of the lessee, changing the cause title to Dogiparthi Venkata Satish and another Vs. Pilla Durga Prasad and others. This amendment was allowed on 28th March, 2018.

Rejection Application: The defendant (Pilla Durga Prasad) later applied under Order VII Rule 11 CPC to reject the plaint, arguing that Aditya Motors was a proprietorship concern and therefore not a “juristic person,” and thus, the original plaint against it should be rejected.

Trial Court Decision: The Trial Court rejected the application to reject the plaint.

High Court Decision: The High Court, in revision, set aside the Trial Court’s order, ruling that a proprietorship concern ought to have been made a party and could be sued.

Law Involved

The key legal provisions discussed in this judgment are:

Order VII Rule 11 of the Code of Civil Procedure (CPC), 1908: This rule pertains to the rejection of a plaint.

Order VI Rule 17 of the CPC: This rule relates to the amendment of pleadings.

Order XXX Rule 10 of the CPC: This is the central provision, dealing with suits against persons carrying on business in a name other than their own. It allows such a person to be sued in the business name or style as if it were a firm name, and applies other rules under Order XXX accordingly.

Order XXX Rule 1 CPC: Mentioned in context of partnership firms, enabling partners to sue or be sued in the firm’s name.

Reasoning

The Supreme Court’s reasoning centered on the legal nature of a proprietorship concern and the interpretation of Order XXX Rule 10 CPC:

Proprietorship is Not a Juristic Person: The Court unequivocally stated that a proprietorship concern is not a juristic person; it is merely a trade name for an individual carrying on business. Therefore, it cannot, in its own name, sue or be sued.

Representation of Proprietor: The Court emphasized that the proprietor is the real party in interest. If the proprietor is impleaded as a party representing the proprietorship, no prejudice is caused, and the interest of the proprietorship concern is well protected.

Misinterpretation by High Court: The Supreme Court found that the High Court committed a serious error by equating a proprietorship concern with a company or a partnership firm for the purpose of being sued. Order XXX specifically deals with partnership firms, not proprietorships.

Purpose of Order XXX Rule 10 CPC: This rule enables the proprietor of a proprietorship business to be sued in the business name. It clarifies that the real party being sued is the proprietor, and this provision does not convert a proprietorship business into a partnership firm. The phrase “insofar as the nature of such case permits” means that other provisions of Order XXX apply to a suit against a proprietary concern only to the extent possible given its nature.

Precedents: The Court referenced Ashok Transport Agency v. Awadhesh Kumar and another, which explained that a proprietorship concern is a business name and Order XXX Rule 10 enables the real party (the proprietor) to be sued. Similarly, Shankar Finance and Investments v. State of Andhra Pradesh and others affirmed that the proprietor remains the real party in interest, even if the representation is in the trade name or through an agent.

Trial Court’s Correctness: The Court concluded that the Trial Court was correct in rejecting the application under Order VII Rule 11 CPC, as the plaintiff had been amended and Aditya Motors (the proprietorship name) had been deleted, and Pilla Durga Prasad (the proprietor) was substituted in its place. The cause of action was actually against Pilla Durga Prasad, who was the signatory to the lease deed.

Holding

The appeal is allowed.

The impugned order of the High Court of Andhra Pradesh dated 19th October, 2023, is set aside.

The order passed by the Trial Court dated 2nd July, 2018, is set aside (This seems to be a slight contradiction with the reasoning which said Trial Court was correct, but given the final holding, the specific Trial Court order referenced in which was set aside by High Court, means the Supreme Court is overturning the High Court and restoring the Trial Court’s position).

The Trial Court is directed to proceed in accordance with law to decide the suit on its own merits.

Dogiparthi Venkata Satish v. Pilla Durga Prasad

Supreme Court: 2025 INSC 1046 (DoJ 26-08-2025)

2025 INSC 1046 Download Supreme Court File

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PF Dues Priority Dispute: Supreme Court Mandates Re-evaluation and Party Impleadment

M/s Acropetal Technologies Pvt. Ltd. (referred to as ‘the Establishment’) defaulted on provident fund (PF) payments since July 2013, leading to an inquiry under Section 7(A) of the PF Act. The Regional PF Commissioner II determined a liability of Rs. 1,28,90,486/- via an order dated June 8, 2015, and initiated recovery proceedings.

The Establishment’s bank accounts were declared Non-Performing Assets (NPA) on June 29, 2015, prompting recovery processes by banks through property auctions. Axis Bank initiated the auction of the ‘Attibele property’ and claimed a first charge under Section 35 of the SARFAESI Act.

The Employees Provident Fund Organisation (EPFO) communicated with Axis Bank, asserting its priority under Section 11(2) of the PF Act for outstanding dues of Rs. 2,96,76,656/-.

Axis Bank subsequently sold the ‘Attibele property’ in March 2016 and informed EPFO that the proceeds were fully appropriated against its dues, leaving no amount for the Establishment’s outstanding PF dues.

Separately, another property (‘Kammanahalli’ or ‘Palya property’) was being auctioned by State Bank of Travancore (now taken over by SBI).

M/S Edelweiss Asset Reconstruction Limited (the Appellant-EARC) was involved in recovering dues and communicated with EPFO regarding the ‘Palya property’, eventually filing a writ petition challenging an attachment order and recovery certificate.

The Karnataka High Court dismissed the writ petition filed by the present appellant and directed the deposited amount be transmitted to the respondent.

The appellant challenged this High Court judgment, arguing that EPFO dues have a first charge and that Axis Bank, which had sold a property for approximately Rs. 12 crores, was not made a party-respondent before the High Court.

Law Involved

The Employees Provident Fund and Miscellaneous Provisions Act, 1952 (PF Act):

Section 7(A): For determining the liability for provident fund dues.

Section 11(2): Pertains to the priority of provident fund dues over other debts.

Sections 7(Q), 14(B), 8(B), 8(G): Related to interest, damages, and recovery procedures.

The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act):

Section 35: Under which Axis Bank claimed a first charge on the property.

Reasoning

The Supreme Court noted that the High Court’s judgment, dated February 1, 2024, which dismissed the appellant’s writ petition, failed to adequately address the critical issue of the priority of first charge among EPFO and the secured creditors.

A significant procedural oversight was identified: Axis Bank, which had initiated recovery proceedings and sold the ‘Attibele property’, was not impleaded as a party-respondent before the High Court during the writ petition hearing.

The Court highlighted the established legal position that EPFO dues typically hold first charge and priority over other government or local authority dues, as also seen in the Maharashtra State Co-operative Bank vs. Assistant PF, Commissioner case.

The Supreme Court found it essential for the High Court to thoroughly examine the inter-se priority of the first charge among the EPFO, Axis Bank, State Bank of India, and State Bank of Travancore (now SBI), considering the provisions of Section 11(2) of the PF Act and Section 35 of the SARFAESI Act.

The appellant’s argument that the balance amount due to EPFO could be recovered from Axis Bank, given the significant amount Axis Bank realized from the sale of the ‘Attibele property’, also warranted detailed consideration by the High Court.

Holding

The Supreme Court granted leave in the appeal.

The judgment and order of the Karnataka High Court dated February 1, 2024, were set aside.

The writ petition filed by the appellant (Writ Petition No. 2543 of 2023 (L-PF)) was restored to its original number before the High Court.

The High Court was directed to proceed and decide the writ petition afresh, specifically to:

Examine the priority of first charge amongst the EPFO and the secured creditors (Axis Bank, State Bank of India, and State Bank of Travancore/SBI) in view of Section 11(2) of the PF Act.

Ensure that Axis Bank is impleaded as a party-respondent to the writ petition for a comprehensive and lawful adjudication.

M/s Edelweiss Asset Reconstruction Limited v. Regional Pf Commissioner II And Recovery Officer, RO Bengaluru (Koramangala)

Supreme Court: 2025 INSC 1045 (DoJ 26-08-2025)

2025 INSC 1045 Download Supreme Court File

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