Subvention Schemes and Finality: Supreme Court Restricts Post-2002 Subvention Payments to Medical Colleges

Judgments Online

August 6, 2026
11:24 am

This civil appeal challenged the judgment of the Division Bench of the High Court of Karnataka, which had upheld a Single Bench’s order directing the Government of India to pay subvention amounts to Sri Devraj Urs Medical College for students admitted up to the academic year 2002–03 for the entirety of their 5-year course. The subvention scheme was originally established via an interim order dated August 11, 1995, during the proceedings of T.M.A. Pai Foundation v. State of Karnataka, but the scheme was effectively nullified when the 11-Judge Bench delivered its final judgment on October 31, 2002. The Supreme Court partly allowed the appeal, holding that the subvention scheme died its own death upon the 2002 judgment and that the college failed to plead or place on record any data showing that its revenues fell short of expenses, making payments beyond the academic year 2002–03 legally impermissible.

Nature of Proceedings: Civil appeal arising from a writ appeal judgment of the High Court of Karnataka.
Background of the Dispute:
- An interim order dated August 11, 1995, in M.A. Pai Foundation v. State of Karnataka introduced a subvention scheme where the Central Government provided financial subvention (Rs. 5,000 per annum per student) to eliminate capitation fees.
- On October 31, 2002, the 11-Judge Bench in M.A. Pai Foundation finally overruled the prior Unni Krishnan scheme and declared it unconstitutional.
- The respondent-college sought subvention payments for students admitted in the 2002–03 academic year for their full 5-year duration, which the High Court previously granted.
Key Legal Principles Established by the Supreme Court:
- Retrospectivity of Judgments: Unless a judgment of the Apex Court explicitly states it is prospective, all declarations of law are retrospective in application (V. George v. State of Kerala).
- Demise of Interim Schemes: An interim scheme or executive instruction formulated during pending litigation expires or “dies its own death” when the final substantive judgment is rendered declaring the framework unconstitutional.
- Pleading Financial Hardship: Under the principles in Bharat Singh v. State of Haryana, a party seeking relief based on economic factors or profiteering must strictly plead and prove facts with supporting evidence in its writ petition or counter-affidavit; in the absence of data showing revenue shortfalls, claims for financial subventions cannot be sustained.
Final Outcome: The Supreme Court partly allowed the appeal, setting aside the lower court orders to the extent that they directed the payment of subvention amounts for the entire 5-year duration for students admitted in the 2002–03 academic year.

2026 INSC 799

Government of India & Anr. v. Sri Devraj Urs Medical College (D.O.J. 04.08.2026)

2026 INSC 799 click here to view full text of judgment

Arbitration: Unraveling Non-Signatory Arbitration: The Enforceability of Settlement Clauses

August 6, 2026 No Comments

The present civil appeal addressed the narrow question of whether a non-signatory to a Memorandum of Settlement (MoS), who was nevertheless listed in its schedules and had executed a consequential Share Purchase Agreement (SPA), can be bound by the arbitration clause contained within the MoS under the “group of companies” or “veritable parties” doctrine. The Supreme Court set aside the Delhi High Court’s finding which had insulated Respondent No. 1 (Ashiesh Shukla) from arbitration based on a misinterpretation of an exclusivity clause in his SPA. Applying the principles established in Cox and Kings Limited, the Supreme Court held that Shukla’s active participation, receipt of a proportionate settlement amount, and identical contractual positioning to other management and consultant shareholders rendered him a veritable party bound to resolve disputes through arbitration.

Factual Background:
- Appellant No. 1 (KKH Finvest Pvt. Ltd.) entered into a Memorandum of Settlement (MoS) dated May 9, 2022, to take over Appellant No. 2 (Sensorise Digital Services Private Limited) and its sister concern for a total settlement amount of ₹8 crores.
- Respondent No. 1, Ashiesh Shukla, was not a direct signatory to the MoS, but was explicitly listed as a consultant/employee shareholder holding 1,480 shares under Schedule 2 of the MoS. He subsequently executed a Share Purchase Agreement (SPA) to transfer his shares.
High Court Proceedings:
- The Delhi High Court referred other members of the management team (arrayed under Schedule 1A) to arbitration, holding that their transactions were composite and interwoven with the MoS.
- However, the High Court carved out an exception for Ashiesh Shukla, relying on Clause 16 of his SPA—which stated that the transfer of shares was “conclusive, independent, mutually exclusive and in no way connected with any of the remaining clauses” of the SPA and the MoS. The High Court concluded this showed an intention not to be bound by the MoS.
Supreme Court’s Observations & Analysis:
- Misinterpretation of Contractual Clauses: The Supreme Court observed that the High Court misread Clause 16 of Shukla’s SPA while ignoring the explicit recitals (Recitals F, G, and H) within the very same SPA, which explicitly tied the transfer of his 1,480 shares to the overarching MoS and acknowledged his receipt of a proportionate share of the ₹8 crore settlement amount.
- Application of the “Veritable Parties” Doctrine: Citing the precedent in Cox and Kings Limited, the Supreme Court reiterated that non-signatories can be bound by an arbitration agreement if their legal relationship, involvement in the performance of the underlying contract, and conduct indicate a clear intention to be bound.
- Parity with Other Shareholders: The Court noted there was no real point of distinction between Ashiesh Shukla and the other management team members (Ajay Nandy, Abhishek Batra, Prasun Nigam, and Achin Jain) whose SPAs contained identical structures. Isolating Shukla was legally unsustainable given that all parties partook in the single composite objective of transitioning complete control of Appellant No. 2 to Appellant No. 1.
Final Relief and Directions:
- The appeal was allowed, and the Delhi High Court’s judgment dated October 21, 2024, was set aside to the extent it relieved Ashiesh Shukla from arbitration.
- Ashiesh Shukla was declared a veritable party to the MoS.
- The disputes concerning Shukla were referred to the same sole arbitrator already seized of the matters involving the other co-shareholders—Hon’ble Mr. Justice T.S. Thakur (Retired), Former Chief Justice of India.

2026 INSC 803

KKH Finvest Pvt. Ltd. and another v. Ashiesh Shukla and others(D.O.J. 05.08.2026)

2026 INSC 803 click here to view full text of judgment

Justice Delayed, Justice Denied: Supreme Court Acquits Man After 22 Years in Prison Due to Unreliable Eyewitness Evidence

August 6, 2026 No Comments

This criminal appeal arose from a Special Leave Petition challenging the rejection of an application seeking to condone a massive delay of 3,157 days (subsequently noted as 3,703 days) and the consequential dismissal of a ‘Jail Memo of Appeal’ by the High Court. The appellant had been convicted under Section 302 of the IPC for murder and sentenced to life imprisonment, having already suffered incarceration for 22 years by the time the matter reached the Supreme Court. A Bench comprising Justice J.B. Pardiwala and Justice K. Vinod Chandran expressed deep dismay over how marginalized individuals are denied timely access to justice, condoned the delay, examined the merits of the case, and ultimately set aside the conviction and acquitted the appellant due to highly improbable, inconsistent, and shaky eyewitness testimony.

Nature of Proceedings: Criminal appeal by special leave against the rejection of a jail appeal delay condonation application and the underlying conviction order.
Factual & Procedural Background:
- The appellant was prosecuted for the murder of three women (Kamala, Sonbari, and Ratanai) who were bludgeoned to death with heavy blunt objects during the night.
- The trial court convicted the appellant for one of the murders based on the sole testimony of an alleged eyewitness (PW3), leading to a sentence of life imprisonment.
- After spending 12 years in prison, an appeal through jail was filed, which the High Court dismissed by refusing to condone the 3,157-day delay.
- Upon reaching the Supreme Court with the assistance of legal services, a Coordinate Bench condoned the delay, released the appellant on bail (noting his satisfactory 22-year prison conduct), and examined the merits.
Supreme Court’s Observations on Delay and Access to Justice:
- Constitutional Courts must adopt a proactive, liberal approach to condoning delay—no matter how large—when an imprisoned convict knocks on the door seeking protection of their most valuable fundamental right: liberty.
- Marginalized sections of society continue to face barriers in accessing justice through jail appeals.
Evidentiary Flaws and Flaws in Trial/High Court Evaluation:
- Shaky Eyewitness Testimony: The sole eyewitness (PW3) claimed to have witnessed only one murder through a gap in her door at midnight. Her testimony contained severe contradictions regarding whether she fled past the other two bodies without seeing them, and her timeline clashed with other witnesses.
- Inadmissible Confessions and Police Brutality: The Investigating Officer relied on a confession extracted via police torture (third-degree methods), which is entirely inadmissible under Section 25 of the Indian Evidence Act, 1872.
- Failed Recoveries: The recovery of weapons (stones and a brick) was rightly rejected by the trial court as they contained no visible or chemically detected bloodstains linking them to the crime, though police witnesses and mahazar witnesses contradicted each other regarding where the stones were found.
- Lack of Credibility: None of the co-inhabitants woke up despite three murders happening at night, and the prosecution failed to examine any family members or relatives of the deceased.
Final Outcome:
- The Supreme Court set aside the trial court’s judgment of conviction and acquitted the appellant, cancelling his bail bond.
- The Court remarked that 22 years of a person’s life had been erased without reliable evidence due to a failure of proper judicial evaluation.
- The District Legal Services Authority, Koraput, Odisha, along with the District Collector, was directed to assist in the rehabilitation and resettlement of the appellant.

2026 INSC 802

Arjun Jani Tuntun v. State of Orissa (D.O.J. 04.08.2026)

2026 INSC 802 click here to view full text of judgment

Service Law: Supreme Court Restores Retrospective Regularisation for Daily-Wage Watchman

August 6, 2026 No Comments

This civil appeal challenged the judgment and order of the Division Bench of the Madras High Court, which had set aside a Single Judge’s order directing the regularisation of the appellant’s service upon completion of ten years from his initial appointment. The appellant, who was originally appointed as a daily-wage watchman on August 26, 1992, through the employment exchange after a valid selection process, sought regularisation pursuant to G.O. No. 22 dated February 28, 2006, which mandated regularising daily-wage workers who had completed ten years of service as of January 1, 2006. Although the State delayed regularisation until 2010 under G.O. No. 187, the Supreme Court allowed the appeal, holding that the appellant’s legitimate front-door entry, combined with the clear terms of G.O. No. 22 and consistent treatment of similarly placed peers, entitled him to retrospective regularisation from the date he completed ten years of service.

Nature of Proceedings: Civil appeal by special leave challenging a Division Bench judgment of the Madras High Court that had reversed a Single Judge’s decision granting retrospective regularisation.
Factual & Service Background:
- The appellant’s name was sponsored by the local employment exchange, and after succeeding in the selection process, he was appointed as a daily-wages watchman on August 26, 1992.
- The Government of Tamil Nadu issued G.O. No. 22 on February 28, 2006, directing that daily-wage employees who completed 10 years of service as on January 1, 2006, be regularised.
- Instead of immediate regularisation, the State issued G.O. No. 187 on September 17, 2010, restricting regularisation from the date of the order.
Key Findings and Rationale of the Supreme Court:
- Distinction from “Backdoor Entries”: Full Bench precedents like Dhanasekaran deal with informal or illegal “backdoor entries,” whereas the appellant’s initial induction in 1992 was channelled through the employment exchange against a sanctioned process, making those precedents inapplicable.
- Non-Application of G.O. No. 74: Government Order No. 74 was issued after the writ petition was already filed and disposed of by the Single Judge, and it applied to employees yet to be regularised; hence, it could not curtail the appellant’s accrued rights.
- Arbitrary Discrimination: The State cannot pick and choose by granting retrospective regularisation to peers while denying the same to the appellant, thereby violating Article 14.
Final Outcome: The Supreme Court allowed the civil appeal, set aside the Division Bench’s judgment, and restored the Single Judge’s order directing the authorities to regularise the appellant’s service from the date he completed ten years of service with all consequential benefits and arrears of salary within three months.

2026 INSC 801

A.Velayutham v. The State of Tamil Nadu Rep. by its Principal Secretary to Government Labour and Employment (E2) Department and Ors. (D.O.J. 28.07.2026)

2026 INSC 801 click here to view full text of judgment