Indian Judgements

Indian Judgements

Security deposits carry no interest, is a valid term: But delay in refund will carry interest

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Supreme Court held that Clause 19 of the contract, which stipulates that security deposits carry no interest, is a valid and binding commercial term. However, the Court further clarified that while the State is not liable to pay interest on the security deposit during the currency of the contract, it is obligated to refund the deposit within three months of the contract’s determination. If the State retains the security deposit beyond this three-month period, the contractor becomes entitled to interest on that amount.

Background The dispute originated from a mining contract between the State of Haryana (Appellant) and M/s. Jai Durgaa Finvest P. Ltd. (Respondent). Following the Respondent’s failure to pay contract installments, the State terminated the contract on March 9, 2000, and forfeited the security deposit in accordance with the agreement. The Respondent challenged this, specifically disputing the validity of Clause 19 of the agreement, which stated that security deposits would not carry interest.

Procedural History

  • High Court: The learned Single Judge initially upheld Clause 19. However, upon remand by the Supreme Court, the High Court later declared Clause 19 “unsustainable in law” and against public policy, directing the State to refund the security deposit with interest at 9% per annum. This decision was upheld by the Division Bench.
  • Supreme Court: The State appealed the High Court’s decision, arguing that the Court should not rewrite unambiguous commercial terms agreed upon by parties in an open tender.

Court’s Observations

  • Contractual Sanctity: The Supreme Court emphasized that it is not the function of the Court to rewrite or substitute terms in a commercial contract between parties on equal footing.
  • Validity of Clause 19: The Court rejected the High Court’s view that Clause 19 was against public policy. It affirmed that as a commercial entity, the Respondent voluntarily accepted the terms of the agreement, including the non-interest-bearing nature of the security deposit.
  • Interpretation of Clause 19: The Court held that Clause 19 consists of two interdependent parts: the security carries no interest, and it must be refunded within three months of the contract’s expiry or determination. The State cannot retain the money indefinitely.

Final Order The Supreme Court allowed the appeals and set aside the High Court’s finding that Clause 19 was unsustainable. The Court ordered:

  • The security deposit shall carry no interest from the date of deposit until the expiration of three months following the termination of the contract (i.e., until June 9, 2000).
  • The Respondent is entitled to simple interest at 9% per annum on the security deposit for the period starting June 9, 2000, until the date the amount was either appropriated toward dues or refunded.
  • No order as to costs was made.

2026 INSC 678

State of Haryana & Ors. vs. M/s. Jai Durgaa Finvest P. Ltd. (D.O.J. 13.07.2026)

2026 INSC 678 click here to view full text of judgment

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MACT: Apportionment of enhanced compensation

July 15, 2026 No Comments

In M. Sabitha and Ors. v. Brahma Swamulu and Anr. (2026 INSC 704), the Supreme Court allowed a Miscellaneous Application to rectify an omission in its previous judgment regarding the apportionment of enhanced compensation among the claimants. The Court clarified the distribution of the enhanced award amount following the death of the 4th appellant (the mother of the deceased) and ordered the full disbursement of funds to the surviving claimants, noting that the children of the deceased have now attained the age of majority.

Summary of Judgment

Background The Court addressed a Miscellaneous Application regarding a previously enhanced compensation award of Rs. 36,38,750/-, which lacked specific apportionment among the claimants. Additionally, the 4th appellant had passed away during the pendency of the appeal, necessitating a redistribution of her share among her legal heirs (four sons and a daughter).

Apportionment of Enhanced Compensation The Court apportioned the total award of Rs. 36,38,750/- as follows:

  • Appellant No. 1: 15,58,750/-
  • Appellant No. 2: 8,20,000/-
  • Appellant No. 3: 8,20,000/-
  • Appellant No. 4: 4,40,000/-

Distribution of the 4th Appellant’s Estate Since the 4th appellant had already withdrawn the Rs. 2,00,000/- granted by the High Court during her lifetime, the remaining enhanced portion of Rs. 2,40,000/- was distributed as follows:

  • Appellant Nos. 2 & 3: Entitled to a combined share of Rs. 40,000/- (as children of a deceased son of the 4th appellant), resulting in an enhancement of Rs. 20,000/- each to their respective award amounts.
  • Other Legal Heirs: The remaining Rs. 2,00,000/- is to be divided equally among the five remaining legal representatives (sons and daughter) of the 4th appellant, amounting to Rs. 40,000/- each.

Directives

  • Disbursement: Given that the children of the deceased have attained the age of majority, the Court ordered that the entire amounts be disbursed to Appellant Nos. 1–3 and the legal representatives of Appellant No. 4.

Payment Timeline: The amounts are to be deposited with the Tribunal within two months, bearing interest at the rate of 7% per annum as previously directed by the High Court.

2026 INSC 704

M. Sabitha and Ors. v. Brahma Swamulu and Anr. (D.O.J. 14.07.2026)

2026 INSC 704 click here to view full text of judgment

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Evidence Act, Section 68: Registered Sale deed do not require compulsury attestation

July 15, 2026 No Comments

The Supreme Court of India set aside the High Court of Kerala’s judgment in a Second Appeal, ruling that the High Court failed to fulfill the mandatory statutory requirement under Section 100 of the Code of Civil Procedure (CPC) to formulate and answer substantial questions of law. The Supreme Court further clarified that the High Court erred in its interpretation of the proviso to Section 68 of the Indian Evidence Act, 1872, noting that Section 68—which pertains to documents required by law to be attested—is inapplicable to registered sale deeds, as they do not require compulsory attestation. The matter has been remitted to the High Court for de novo consideration.

Background

  • Original Suit: The respondents (original plaintiffs) filed a suit for declaration of title, recovery of possession of the “B” Schedule property, and cancellation of a 1996 sale deed executed by defendant no. 3 in favor of the appellants.
  • Lower Court Rulings:
    • The Trial Court allowed the suit, declaring the plaintiffs as the owners and the 1996 sale deed as null and void.
    • The First Appellate Court reversed the Trial Court’s decision, finding that the plaintiffs failed to prove the execution of their own reliance document (a 1978 sale deed).
  • High Court Intervention: The High Court allowed the plaintiffs’ Second Appeal, holding that under the proviso to Section 68 of the Evidence Act, a mere bald denial of a document in a written statement is insufficient; it requires a specific denial in a separate suit or proceeding initiated by the person who allegedly executed the document.

Key Findings of the Supreme Court

  • Mandatory Formulation of Questions of Law: The Supreme Court emphasized that under Section 100 CPC, the High Court is strictly obligated to formulate substantial questions of law at the time of admission and decide the appeal based on those questions. Failure to do so vitiates the judgment.
  • Inapplicability of Section 68 to Sale Deeds: The Court clarified that Section 68 of the Evidence Act only applies to documents required by law to be attested (e.g., Wills or Gift deeds). A registered sale deed does not require attestation under the Transfer of Property Act, 1882, and thus Section 68 and its proviso are irrelevant to the proof of such documents.
  • Misinterpretation of the Proviso: The Court held that the High Court’s interpretation—requiring a separate suit to challenge the execution of a document—incorrectly added requirements not provided for in the statute. A proviso must be interpreted strictly in relation to the main provision and cannot expand the scope of the substantive law.

Conclusion

  • Order: The Supreme Court allowed the appeal, set aside the High Court’s judgment, and remitted the matter for de novo
  • Directions: The High Court is directed to hear the Second Appeal afresh, formulate substantial questions of law, and dispose of the matter within three months.

Would you like to explore the specific legal distinctions between documents that require mandatory attestation and those that do not, as clarified in this judgment?

2026 INSC 703

R.Veronica & Anr. v. Rudrayani Devaki (D) Thr. LRs & Ors. (D.O.J. 14.07.2026)

2026 INSC 703 click here to view full text of judgment

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PMLA: Case transfered to Delhi: Concealment of “proceeds of crime” occurred in Delhi

July 15, 2026 No Comments

The Supreme Court of India ordered the transfer of a Prevention of Money Laundering Act (PMLA) prosecution from the Special Judge in Gurugram, Haryana, to the Special Judge (PMLA), Saket Court Complex, Delhi. While rejecting the petitioner’s request to quash the prosecution, the Court held that because part of the offence—specifically the concealment of “proceeds of crime”—occurred in Delhi and the related scheduled offence had already been transferred to Delhi, it was expedient for the ends of justice to consolidate the proceedings in the same jurisdiction.

  • Case Origin: The petitioner, a promoter of M/s Krrish Realtech Pvt. Ltd., faced a prosecution complaint related to alleged money laundering involving the “Krrish World” real estate project in Gurugram.
  • Initial Request: The petitioner initially sought to quash the Prosecution Complaint (COMA/16/2025) and the underlying ECIR, but later restricted his plea to transferring the case to Delhi.
  • Scheduled Offences: The Directorate of Enforcement alleged that homebuyers were defrauded of ₹503 Crore, with funds siphoned off through shell companies and diverted to Sri Lanka. A scheduled offence (FIR No. 439/2024, Gurugram) had previously been clubbed with an earlier case (FIR No. 30/2019, Delhi) and transferred to Delhi by a Coordinate Bench.

Key Findings of the Supreme Court

  • Jurisdictional Principles:
    • Under Section 44 of the PMLA and Section 178(d) of the Code of Criminal Procedure, when an offence consists of several acts committed in different local areas, any court having jurisdiction over those areas may try the offence.
    • The Court noted that PMLA prosecution can be instituted in any Special Court within whose territorial jurisdiction the “proceeds of crime” were derived, concealed, possessed, or used.
  • Concurrent Jurisdiction:
    • The Court found that while the project and original criminal activity occurred in Gurugram, part of the “proceeds of crime” (including cash, jewellery, and vehicles) were seized or attached in Delhi, establishing simultaneous jurisdiction in both Gurugram and Delhi.
  • Convenience and Statutory Intent:
    • To satisfy the statutory mandate under Section 44(1) of the PMLA—which requires both the money laundering offence and the connected scheduled offence to be tried by the same Special Court—the transfer to Delhi was deemed necessary, particularly since the related scheduled offence was already pending there.
    • The Court distinguished this case from KA Rauf Sherif v. Directorate of Enforcement, noting significant factual differences regarding the location of the attached proceeds of crime.

Conclusion

The Supreme Court allowed the transfer of the PMLA proceedings from Gurugram to the Special Judge (PMLA), Saket Court Complex, Delhi. The transferee court is directed to continue the prosecution from the stage currently reached in Gurugram.

2026 INSC 702

Summary of Judgment: Amit Katyal v. Union of India & Anr. (D.O.J. 14.07.2026)

2026 INSC 702 click here to view full text of judgment

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Arbitration Award : Jurisdictional objections should be addressed through the statutory remedy provided under Section 34

July 15, 2026 No Comments

The Supreme Court of India set aside the interim order dated 02.09.2025 and the order dated 28.01.2026 passed by the Gauhati High Court, ruling that a Revision Petition under Article 227 of the Constitution is not maintainable against an Arbitral Tribunal’s decision rejecting a jurisdictional challenge under Section 16 of the Arbitration and Conciliation Act, 1996. The Court reaffirmed that the Act mandates minimal judicial interference and that jurisdictional objections should be addressed through the statutory remedy provided under Section 34 of the Act following the final award, unless a “patent lack of inherent jurisdiction” is evident.

Background

  • Arbitration Genesis: Following a dispute over the management of a partnership firm (M/s Boloma Tea Company), the Supreme Court, in a prior consent order dated 21.11.2024, appointed a Sole Arbitrator to adjudicate disputes between the parties.
  • Procedural Challenge: Respondent Nos. 1 to 3 (non-signatories to the partnership deed) challenged their inclusion in the arbitral proceedings before the Tribunal. The Tribunal rejected their application for deletion, citing the Supreme Court’s previous consent order for reference to arbitration.
  • High Court Intervention: Respondent Nos. 1 to 3 filed a Revision Petition under Article 227 of the Constitution before the High Court, which stayed the arbitration notices and held the petition maintainable, claiming the Tribunal lacked inherent jurisdiction.

Key Findings of the Supreme Court

  • Minimal Judicial Intervention: The Court emphasized that the Arbitration and Conciliation Act, 1996 is a self-contained code that strictly limits judicial intervention. Invoking Article 227 against every interim order of an Arbitral Tribunal defeats the legislative objective of expeditious dispute resolution.
  • Doctrine of Kompetenz-Kompetenz: Under Section 16 of the Act, the Arbitral Tribunal is empowered to rule on its own jurisdiction. The Court clarified that the Tribunal must independently determine whether non-signatories are “veritable parties,” a complex factual inquiry not to be circumvented by preemptive writ petitions.
  • Standard for High Court Interference: High Courts should exercise extreme circumspection and only interfere under Article 227 if there is a “patent lack of inherent jurisdiction”—a perversity so stark that it “stares one in the face”. The High Court erred in the present case by failing to record specific findings of such perversity while entertaining the revision.
  • Litigation Conduct: The Court noted that Respondent Nos. 1 to 3 were served notice during the earlier Civil Appeal before the Supreme Court but failed to contest the matter at that time, and discouraged the subsequent “second round of litigation” that caused unnecessary delay.

Conclusion

  • Orders Set Aside: Both High Court orders (dated 02.09.2025 and 28.01.2026) were set aside, and the Revision Petition was dismissed.

Direction to Tribunal: The Supreme Court directed the Arbitral Tribunal to independently determine the status of Respondent Nos. 1 to 3 regarding their non-signatory status, uninfluenced by the previous Supreme Court consent order, and to complete the proceedings expeditiously.

2026 INSC 701

Manash Kamal Bezboruah v. M/s Bokahola Tea Company Private Limited & Ors. (D.O.J. 14.07.2026)

2026 INSC 701 click here to view full text of judgment

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