Indian Judgements

Indian Judgements

Supreme Court’s Verdict on Yes Bank’s AT-1 Bonds Write-Down

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This batch of civil appeals—filed by Yes Bank, the Reserve Bank of India (RBI), and the Union of India—challenged the Bombay High Court’s judgment dated January 20, 2023, which had set aside the Administrator’s March 14, 2020 decision to permanently write down Basel III compliant Additional Tier 1 (AT-1) Bonds worth over ₹8,400 crores. The Supreme Court dismissed the appeals, holding that the Administrator’s action was ultra vires the Master Circular, the Information Memoranda, and the final Yes Bank Limited Reconstruction Scheme, 2020. The Court ruled that once the Central Government consciously deleted the write-down clause from the final Reconstruction Scheme during the deliberative process, the Administrator lacked the authority to unilaterally dismantle that decision and write down the bonds. Furthermore, the power to activate the Point of Non-Viability (PONV) write-down vested solely with the RBI under the statutory framework, which the Administrator could not independently assume.

  • Background and Reconstruction Process: Following Yes Bank’s severe financial decline and the imposition of a moratorium under Section 45 of the Banking Regulation Act, 1949, a Draft Scheme of reconstruction was published. While the Draft Scheme contained a clause mandating the permanent write-down of AT-1 bonds, this provision was deliberately dropped in the final Yes Bank Limited Reconstruction Scheme, 2020 notified on March 13, 2020, following stakeholder objections and alternative conversion proposals.
  • Administrator’s Unauthorized Action: Despite the deliberate omission of the write-down clause in the final published Scheme, the appointed Administrator went ahead on March 14, 2020, and ordered the complete write-down and extinguishment of the AT-1 bonds. The Supreme Court held this act to be impermissible and ultra vires, noting that the Administrator could not override a conscious legislative/executive omission in the final Scheme.
  • Interpretation of RBI’s Master Circular (Clause 2.15 of Annex 16): The Court interpreted the phrase “before reconstitution” in the Master Circular to mean that any required write-down activated by a scheme of reconstruction must occur before the scheme takes legal effect, rather than serving as an open-ended residual power exercisable by an administrator at any point during the execution of the scheme.
  • Statutory Authority for PONV Triggers: The Information Memoranda and Master Circular dictate that while the pre-specified trigger is optional for the bank, a Point of Non-Viability (PONV) write-down must be evaluated and triggered specifically by the RBI. The Administrator, whose powers under Section 36ACA of the BR Act are restricted to running the bank in place of the Board of Directors, could not usurp the regulatory role of the RBI to execute a write-down.
  • Regulatory Lapses and Retail Investors: The Court expressed concern regarding Yes Bank’s conduct in actively and improperly marketing high-risk AT-1 securities to retail and individual investors in violation of regulatory intent, leaving them vulnerable to administrative oversights.
  • Final Relief and Directions:
    • The appeals filed by Yes Bank, the RBI, and the Union of India were dismissed, and the High Court’s judgment setting aside the write-down was affirmed.
    • The payment of annual coupon rates must continue to be honored in terms of the Information Memoranda.

2026 INSC 1132

Yes Bank Limited & Anr. v. Axis Trustee Services Limited & Ors. (D.O.J. 15.10.2026)

2026 INSC 1132 click here to view full text of judgment

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Supreme Court Decides Refund Mechanics in Delayed Construction Projects

October 17, 2026 No Comments

These three cross-appeals arose from orders of the National Consumer Disputes Redressal Commission (NCDRC) regarding a consumer complaint filed by a homebuyer (Borrower) who sought a refund for a delayed residential apartment project (“Lodha Bellezza” in Hyderabad) funded partly by his own savings and partly through a tripartite housing loan from Housing Development Finance Corporation Limited (HDFC Bank). The Supreme Court modified the NCDRC’s order to prevent unjust enrichment, holding that the Borrower is only entitled in his own right to a refund of the exact amount he paid out of his pocket (along with contractual interest at 12% per annum and ₹15 Lakhs as composite compensation), while the remaining loan-disbursed funds deposited by the builder must be preserved pending the outcome of the Bank’s recovery appeal before the High Court.

  • Core Legal Question: The appeals addressed how refunds should be apportioned in triangular arrangements (Builder-Borrower-Bank) when a housing project is delayed, and whether returning the entire bulk amount directly to the borrower constitutes unjust enrichment when the bank loan remains outstanding.
  • Doctrine of Unjust Enrichment: The Supreme Court invoked the principle of restitution (nemo debet locupletari ex aliena jactura), noting that allowing the Borrower to withdraw funds he never paid—while a separate recovery suit/appeal by the Bank is pending—would result in an unjust windfall. The Borrower’s direct out-of-pocket contribution was computed at ₹1,27,34,726/-.
  • Rate of Interest: In terms of Clause 24 of the Agreement for Sale, which expressly stipulates 12% per annum simple interest upon termination for delayed delivery, the Court awarded interest at 12% per annum from the date of each respective deposit.
  • Rejection of Double Compensation (Rent): The Court disallowed the Borrower’s enhanced claims for monthly rent made via rejoinder, clarifying that awarding both the cost of alternative housing (rent) and the full return of money with high interest would amount to double compensation for the same default. Instead, a composite compensation of ₹15,00,000/- was awarded toward rent, mental agony, and litigation expenses.
  • Bank’s Deficiency in Service: The Court upheld the NCDRC’s finding that the Bank was deficient in service by releasing loan tranches without verifying the actual physical progress of construction as mandated by its own sanction terms.
  • Directions Issued:
    • The NCDRC is directed to release ₹1,27,34,726/- plus 12% per annum interest to the Borrower.
    • A further sum of ₹15,00,000/- shall be released to the Borrower as compensation.
    • The remaining balance from the builder’s deposit must be held in an interest-bearing account pending the final adjudication of the Bank’s appeal by the High Court.

2026 INSC 1131

Madhu Kudapa (formerly known as K. Madhusudhan Rao) v. M/s Lodha Healthy Constructions and Developer Private Limited (LHCPL) & Anr. (D.O.J. 15.10.2026)

2026 INSC 1131 click here to view full text of judgment

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Balancing Parental Comity and Child Welfare: Inter-Country Child Custody and Repatriation

October 17, 2026 No Comments

This appeal arose from a judgment of the High Court of Karnataka which had dismissed a habeas corpus petition filed by the appellant-father (a US citizen) seeking the production and repatriation of his minor daughter to the USA. The mother had removed the child from the USA to India in violation of joint custody and restraining orders issued by the Superior Court of California. The Supreme Court allowed the appeal, holding that while the paramount consideration is the welfare of the child, the comity of courts and the principle that a wrongdoer should not benefit from their own wrong strongly support returning the child to her native jurisdiction, especially when the child is a US citizen and the mother agreed to accompany her back under binding financial and residential safeguards provided by the father.

  • Core Legal Principles in Child Custody: The Supreme Court reiterated that in inter-country parental child abduction disputes, the primary focus shifts from a strict evaluation of “illegal detention” under a habeas corpus writ to the overarching principle of the welfare and best interests of the child.
  • Role of Foreign Court Orders: A court in India cannot act merely as an executing court for a foreign judgment. However, the comity of courts requires that a foreign order passed on merits after hearing both parties must be given grave consideration.
  • Rejection of Mother’s Unauthorized Removal: The Court observed that the mother brought the child to India in clear breach of a 50:50 joint custody and shared parenting order passed by the Superior Court of California, without any grave or frightening circumstances justifying the flight.
  • Welfare Analysis and Child’s Citizenship: Although the child had spent nearly four years in India, the Court noted that she is a US citizen entitled to benefits and education there, and nothing on record suggested that an upbringing in the USA would hamper her progress.
  • Directions and Safeguards:
    • The mother agreed to accompany the minor child to the United States on or before December 31, 2026.
    • The father’s comprehensive undertakings—including providing separate accommodation, restoring the mother’s Green Card, paying monthly financial assistance of USD 3,200, and halting legal steps regarding the initial custody violation—were formally recorded and bound by affidavit.
    • As an abundant measure of caution, the father was directed to furnish security of Rs. 1,00,00,000/- (Rupees One Crore) via an auto-renewable fixed deposit with the Supreme Court registry.

2026 INSC 1130

Vayu Kishore v. State of Karnataka & Ors. (D.O.J. 08.10.2026)

2026 INSC 1130 click here to view full text of judgment

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Can Conversion Bridge Backward Class Reservation

October 17, 2026 No Comments

This appeal addressed whether an individual belonging to a Backward Class, Most Backward Class, Denotified Community, or Scheduled Caste prior to converting from Hinduism to Islam can automatically claim the status and reservation benefits of a Backward Class Muslim. The Supreme Court upheld the Madras High Court’s decision, which declared unconstitutional the Government of Tamil Nadu’s G.O.(Ms.) No. 31 dated March 9, 2024, enabling such seamless transfers of backward status upon religious conversion. The Court ruled that conversion to Islam establishes religious affiliation but does not automatically confer membership into a historically or socially distinct notified Muslim backward community. Consequently, the State cannot use executive fiat to bridge pre-conversion social disadvantages into post-conversion community-based reservations without an independent, legally valid foundation.

  • Core Legal Question: The controversy centered on the legal consequences of religious conversion from Hinduism to Islam and whether pre-existing reservation entitlements under Articles 15(4) and 16(4) of the Constitution can travel along with the convert into a non-Hindu social structure.
  • Theological vs. Social Reality: The Court acknowledged that while foundational Islamic theology emphasizes human equality and rejects birth-based hierarchies, Indian Muslim society has historically developed forms of social stratification (such as occupational groups and biradaris). However, these distinct communities cannot be treated as uniform or universal equivalents to a pre-conversion caste.
  • Invalidity of the Government Order (G.O.): The Supreme Court held that G.O.(Ms.) No. 31 (dated March 9, 2024) created an artificial route by allowing proselytes from various backward or scheduled categories to be automatically certified under one of the seven notified Backward Class Muslim communities. A community certificate is a recognition of present status, not a transferable personal entitlement.
  • Scheduled Caste Status and Paragraph 3: Reaffirming statutory limitations, the Court noted that under Paragraph 3 of the Constitution (Scheduled Castes) Order, 1950, a person professing a religion other than Hinduism, Sikhism, or Buddhism cannot be deemed a Scheduled Caste, and conversion results in an immediate loss of that status.
  • Prohibition on Abdication of Public Duty: The Court strongly disapproved of relying entirely on private religious bodies (like a local Jamath) to conclusively determine an individual’s statutory backward-class community status. The determination of public law entitlements must remain strictly with accountable public authorities through a verifiable process.
  • Final Ruling: The Supreme Court dismissed the State’s Special Leave Petition, affirming the High Court’s judgment that quashed the impugned G.O. and sustained the rejection of the respondent’s community certificate application.

2026 INSC 1129

The Secretary to Government v. Sameer Ahamed N. and Others (D.O.J. 15.10.2026)

2026 INSC 1129 click here to view full text of judgment

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Appealability of Contempt Orders and Intra-Court Appeal Scope

October 17, 2026 No Comments

The Supreme Court disposed of a civil appeal filed by an alleged contemnor against an interim order of a Single Judge of the Allahabad High Court (Lucknow Bench) passed in a contempt application, which had rejected a compliance affidavit and threatened personal appearance and framing of charges. The apex court held that an intra-court appeal (Special Appeal) is maintainable against an order passed by a Single Judge in contempt proceedings where the court oversteps its jurisdiction by adjudicating on the merits of the underlying dispute or determining substantive rights, rather than merely imposing a punishment for contempt. Expressing respectful disagreement with the 3-Judge Bench decision in Ram Kishan Fauji v. State of Haryana—which held that writ proceedings originating from criminal law constitute the exercise of “criminal jurisdiction” and bar intra-court appeals—the Court formulated specific questions and referred the matter to the Chief Justice of India for constitution of a larger bench to reconsider Ram Kishan Fauji. Consequently, the appeal was disposed of with liberty to the appellant to file a Special Appeal before the High Court, staying the contempt proceedings for two months.

  • Maintainability of Intra-Court Appeals in Contempt: Following the principles laid down in Midnapore Peoples’ Coop. Bank Ltd. v. Chunilal Nanda and Ajay Kumar Bhalla v. Prakash Kumar Dixit, an intra-court appeal is available against interlocutory or final orders passed on a contempt application if the Single Judge decides the merits of the underlying dispute, travels beyond the parent order, or determines substantive rights, provided the high court’s rules permit such an appeal.
  • Rejection of Blanket Criminal Categorization: Civil contempt proceedings are essentially moving to enforce personal rights and are not conducted in exercise of “criminal jurisdiction” in the ordinary sense; hence, routine pre-punishment interim orders that affect parties’ rights are not automatically barred from intra-court appeals under the guise of criminal proceedings.
  • Reference to a Larger Bench: The Supreme Court questioned the correctness of Ram Kishan Fauji v. State of Haryana, noting that treating any writ or proceeding with a criminal substratum as “criminal jurisdiction” improperly curtails intra-court appeals, restricts access to justice under Articles 14 and 21, and introduces an artificial division into the single, extraordinary constitutional jurisdiction conferred by Article 226.
  • Directions and Interim Relief: The Court granted the appellant liberty to file a Special Appeal before the High Court within a fortnight, stayed the pending contempt proceedings before the Single Judge for a period of two months, and directed the Registry to place the reference before the Chief Justice of India for appropriate administrative orders.

2026 INSC 1128

Sanjay Prasad v. Madhusudan Dwivedi & Ors. (D.O.J. 14.10.2026)

2026 INSC 1128 click here to view full text of judgment

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