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JSA Prism | Dispute Resolution | March 2026

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Supreme Court of India clarifies the contours for the grant of unconditional stay of arbitral awards is permissible only in exceptional circumstances

The Supreme Court of India (“Supreme Court”), in Popular Caterers vs. Ameet Mehta and Ors.[1], set aside an order passed by the Bombay High Court (“Bombay HC”) granting an unconditional stay on the execution of an arbitral award. The Supreme Court held that courts may grant such stay only in ‘exceptional circumstances’ and must not allow interim proceedings to assume the character of a substantive adjudication under Section 34 of the Arbitration and Conciliation Act, 1996[2] (“Arbitration Act”). It was clarified that while the second proviso to Section 36(3) of the Arbitration Act, mandates an unconditional stay in cases of fraud or corruption, unconditional stay outside those circumstances is permissible only in rare and exceptional cases. In the absence of such exceptional circumstances, courts must ordinarily impose conditions such as deposit or security.

Brief facts

Popular Caterers (“Appellant”), a partnership firm engaged in catering services, executed a Memorandum of Understanding dated May 25, 2017 (“MoU”) with Maple Leaf Enterprises LLP (“Respondent No. 6”), to provide catering for events proposed at the Tulip Star Hotel, Mumbai.
Under the MoU, the Appellant agreed to pay an adjustable, interest-free security deposit of INR 8,00,00,000 (Indian Rupees eight crore), out of which the Appellant admittedly paid INR 4,00,00,000 (Indian Rupees four crore).
Within days of signing the MoU, the Mumbai Suburban Collector issued directions restraining the Tulip Star Hotel from hosting events. Consequently, the performance of the arrangement became commercially unviable, and disputes arose between the parties.
The Appellant invoked arbitration, and the Bombay HC appointed a sole arbitrator. By an award dated November 28, 2022 (read with corrigendum dated December 19, 2022) (“Award”), the arbitrator directed respondent nos. 1 to 5 to jointly and severally refund INR 4,00,00,000 (Indian Rupees four crore) with interest at 9% per annum. The arbitrator rejected the counterclaim filed by Respondent No. 6 and awarded costs in favour of the Appellant.
The respondents filed petitions under Section 34 of the Arbitration Act before the Bombay HC and by way of interim applications therein, sought a stay on execution of the Award. The Bombay HC granted an unconditional stay of the Award. Aggrieved by this order, the Appellant preferred the present appeals before the Supreme Court.

Issue

Whether an unconditional stay of a money arbitral award under Section 36(3) of the Arbitration Act can be granted outside the statutory category of fraud or corruption, and if so, what constitutes the ‘exceptional circumstances’ that justify such relief?

Findings and analysis

The Supreme Court allowed the appeals and set aside the Bombay HC’s order, holding that the unconditional stay on the execution of the arbitral award was legally unsustainable. The Supreme Court reasoned as follows:

the Supreme Court reaffirmed the post-2015 framework under Section 36 of the Arbitration Act and reiterated that the filing of a petition under Section 34 of the Arbitration Act does not render an arbitral award unenforceable. It emphasised that the power to grant stay is discretionary and must be exercised in a manner that prevents the re-emergence of an automatic stay regime;
the Supreme Court examined the scope of the second proviso to Section 36(3) of the Arbitration Act, which mandates an unconditional stay where a prima facie case of fraud or corruption in the making of the award is established. It clarified that while this proviso creates a statutory category for unconditional stay, it does not exhaust the court’s discretion under the main provision;
relying on its decision in Lifestyle Equities C.V. vs. Amazon Technologies Inc.[3], the Supreme Court held that even outside cases of fraud or corruption, an unconditional stay of a money award is permissible only in rare and exceptional circumstances. Such circumstances would arise where the award is egregiously perverse, patently illegal, facially untenable, or otherwise demonstrably unsustainable at a prima facie The Court emphasised that this threshold is stringent and that unconditional stay must remain the exception, not the rule;
the Supreme Court also reiterated that the requirement under the first proviso to Section 36(3) of the Arbitration Act to have ‘due regard’ to the principles governing stay of money decrees under the Code of Civil Procedure, 1908 is directory and serves as guidance. However, such guidance cannot be invoked to dilute the pro-enforcement framework of Section 36 of the Arbitration Act or to revive an automatic stay regime through expansive interim scrutiny; and
applying these principles, the Supreme Court found that the respondents had neither pleaded nor established any prima facie case of fraud or corruption in the making of the Award. They also failed to demonstrate any exceptional circumstances warranting an unconditional stay, even under general principles applicable to stay of money decrees under the Code of Civil Procedure, 1908. Consequently, the Supreme Court directed the respondents to deposit the principal award amount of INR 4,00,00,000 (Indian Rupees four crore) with the Bombay HC and clarified that the Section 34 petitions must be adjudicated independently, uninfluenced by the observations made in this judgment.

Conclusion

The Supreme Court’s decision reasserts the statutory discipline governing stays of arbitral awards under Section 36(3) of the Arbitration Act and reinforces the post-2015 shift away from automatic stays. The Supreme Court clarified that an unconditional stay is permissible only in narrowly confined circumstances, either where a prima facie case of fraud or corruption attracts the second proviso to Section 36(3) of the Arbitration Act, or where the award meets the stringent ‘exceptional case’ threshold articulated by the Supreme Court. By directing courts to avoid merits-based scrutiny at the interim stage, the judgment preserves the integrity of the arbitral process and maintains the separation between interim stay proceedings and final adjudication under Section 34 of the Arbitration Act.

The Supreme Court’s decision carries significant practical importance. It strengthens the enforceability of arbitral awards, curtails procedural delays employed by award-debtors, and enhances certainty for award-holders. It further advances the pro-enforcement objectives underlying the 2015 amendments and consolidates India’s developing jurisprudence that mandates minimal judicial interference with arbitral outcomes.

This Prism is prepared by:

Dheeraj Nair
Partner

Vishrutyi Sahni
Principal Associate

Muskaan Gupta
Associate

For more details, please contact [email protected].

[1] 2025 INSC 1354 (decided on November 18, 2025)

[2] Section 34 of the Arbitration Act provides a limited recourse to a court to set aside an arbitral award only on specified grounds, including incapacity of a party, invalidity of the arbitration agreement, breach of natural justice, excess of jurisdiction, patent illegality (in domestic awards), or conflict with the public policy of India. The provision does not permit a merits review or re-appreciation of evidence and is intended to ensure minimal judicial interference with arbitral awards.

[3] 2025 INSC 1190

Tags Arbitral Awards Enforcement, Arbitration and Conciliation Act, Arbitration Compliance, Arbitration Enforcement India, Arbitration Jurisprudence, Arbitration Law India, Arbitration Law Reform, Arbitration Litigation, Award Enforcement Framework, Commercial Arbitration India, Corruption In Arbitration, Dispute Resolution India, Fraud In Arbitration, Section 36 Arbitration, Supreme Court India

JSA Prism | Insolvency | March 2026

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Delhi High Court holds that the National Company Law Tribunal has exclusive jurisdiction to adjudicate if there is fraud or malicious initiation of insolvency proceedings

In Roseland Buildtech Private Limited vs. Vihaan 43 Realty Private Limited[1], the Delhi High Court (“Delhi HC”) held that disputes relating to the existence of debt, validity of assignment, and allegations of fraud, forgery, collusion and malicious initiation of insolvency proceedings fall squarely within the exclusive jurisdiction of the National Company Law Tribunal (“NCLT”) under the Insolvency and Bankruptcy Code, 2016 (“IBC”). The Delhi HC further held that civil courts are barred from entertaining such disputes by virtue of ouster clauses under Sections 63 and 231 of the IBC[2]. It dismissed the civil suit as an impermissible collateral challenge to pending proceedings under Section 7 of the IBC[3].

Brief facts

Roseland Buildtech Private Limited (“Plaintiff”) availed a term loan of INR 80,00,00,000 (Indian Rupees eighty crore) in 2006 from defendant no. 2 (then Sonata Investments Ltd. Limited) under a loan agreement, the repayment period of which was subsequently extended.
In 2020, the debt was allegedly assigned in favour of defendant no. 1 (Vihaan 43 Realty Private Limited) under a Business Transfer Agreement (“BTA”).
In 2024, pursuant to a broader shareholding and control restructuring transaction, the Plaintiff made payments which it claimed resulted in full discharge of the loan liability.
Despite this, defendant no. 1 initiated proceedings under Section 7 of the IBC before the NCLT alleging default, relying on the BTA as the basis of its status as financial creditor.
Contending that the loan stood discharged and that the BTA was forged, fabricated and void ab initio, the Plaintiff instituted a commercial civil suit before the Delhi HC seeking declarations negating the debt and assignment, along with an injunction restraining the insolvency proceedings.

Issues

The judgment deals with the following relevant issues:

whether the civil suit instituted by the Plaintiff was barred under Sections 63 and 231 of the IBC; and
whether disputes relating to the existence of debt, discharge of liability, validity of assignment, and allegations of fraud, forgery and fabrication fall within the jurisdiction of the NCLT under Sections 65, 75 and 60(5)(c) of the IBC[4].

Findings and analysis

Re: Ouster of civil court jurisdiction under Section 63 and 231 of the IBC

The Delhi HC observed that Sections 63 and 231 of the IBC act as classic ouster clauses commonly found in specialised legislations. It held that these provisions operate to exclude civil court jurisdiction in respect of matters which the NCLT or National Company Law Appellate Tribunal is empowered to adjudicate under the IBC.
The Delhi HC observed that once it is demonstrated that the subject matter of the suit falls within the statutory remit of the NCLT, the civil court is denuded of jurisdiction at the threshold and must decline to entertain the suit.

Re: Jurisdiction of the NCLT to adjudicate fraudulent initiation of insolvency proceeding

The Delhi HC held that the statutory scheme of the IBC expressly empowers the NCLT to examine allegations of fraud, forgery and malicious initiation of insolvency proceedings. As regards Section 65 of the IBC, the Delhi HC held that adjudication of fraudulent or malicious initiation of proceedings necessarily involves fact-finding, examination of documents and evaluation of evidence.
Section 75 of the IBC prescribes penalties for furnishing false information or suppression of material facts in a Section 7 application. The Delhi HC held that the NCLT is also vested with the authority to test the veracity of pleadings and documents forming the foundation of the insolvency proceedings.
The Delhi HC further described Section 60(5)(c) of the IBC as a residuary provision conferring wide jurisdiction on the NCLT to determine any question of law or fact arising out of or in relation to insolvency proceedings. Reliance was placed on Embassy Property Developments Private Limited vs. State of Karnataka[5] and Essar Steel India Private Limited Satish Kumar Gupta[6] to hold that the NCLT is also competent to adjudicate seriously disputed questions of fact where such issues bear a direct nexus with the insolvency proceedings.
While Embassy Property (supra) authoritatively settled that the NCLT has jurisdiction to inquire into fraudulent initiation of Corporate Insolvency Resolution Process (“CIRP”) under Section 65 of the IBC, the Delhi HC extended this reasoning to Section 75 of the IBC. It articulated that the power to penalise false information necessarily presupposes a substantive adjudicatory power to test the veracity, genuineness and legal validity of the documents forming the foundation of the Section 7 application. The Delhi HC made a nuanced yet significant move and treats Sections 65 and 75 of the IBC not as isolated penal provisions operating post-admission, but as institutional safeguards embedded within the insolvency framework to prevent abuse at the threshold stage itself.
Further, by reading these provisions in conjunction with the residuary jurisdiction under Section 60(5)(c) of the IBC, the Delhi HC clarified that the NCLT is not confined to summary scrutiny under Section 7 of the IBC. It affirmed that the NCLT is institutionally equipped to adjudicate complex and disputed questions involving fraud, forgery, collusion and validity of assignment deeds. The judgment thus reinforces the idea that ouster of civil court jurisdiction is not merely textual under Sections 63 and 231 of the IBC but structurally compelled by the breadth of adjudicatory competence vested in the NCLT. This competence following Embassy Property (supra), now clearly extends to the examination of foundational fraud affecting the very basis of the insolvency process.

Conclusion

This decision significantly strengthens the exclusivity of the insolvency framework under the IBC. The Delhi HC has clarified that challenges relating to the existence of debt, discharge of liability, validity of assignment instruments or allegations of fraud and fabrication forming the basis of a Section 7 application fall within the jurisdiction of the NCLT. Such issues, the Delhi HC has held, cannot be pursued through parallel civil proceedings.

Upon a conjoint reading of Sections 65 and 75 of the IBC with the wide residuary jurisdiction under Section 60(5)(c) of the IBC, the Delhi HC has affirmed that the NCLT is institutionally equipped to examine complex and seriously disputed questions of fraud, forgery and malicious initiation at the threshold stage. Civil courts cannot be invoked to stall or dilute insolvency proceedings through declaratory or injunctive relief framed as independent causes of action.

For stakeholders, the judgment underscores 2 (two) practical implications:

For financial creditors: Section 7 of the IBC triggers are unlikely to be derailed through collateral civil litigation once insolvency proceedings are initiated.
For corporate debtors: All jurisdictional, factual and fraud-based allegations must be consolidated before the NCLT and strategic parallel suits are likely to be rejected at the threshold (unless such allegations are not linked to initiation of insolvency proceedings).

Overall, the decision furthers the IBC’s objective of centralised, time-bound insolvency adjudication and signals judicial intolerance for forum shopping or ‘anti-tribunal’ litigation designed to derail or delay CIRP.

This Prism has been prepared by:

Sidharth Sethi
Partner

Shreya Sircar
Partner

Kunal Saini
Associate

For more details, please contact [email protected].

[1] 2026 SCC OnLine Del 7 (decided on January 5, 2026)

[2] Sections 63 and 231 of the IBC deal are in the nature of ouster clauses which limit the jurisdiction of the civil courts to entertain any suit or proceed in respect of any matter wherein the NCLT or the National Company Law Appellate Tribunal has jurisdiction.

[3] Section 7 of the IBC provides for the initiation of corporate insolvency resolution process by any financial creditor against the borrower/corporate debtor.

[4] Section 60(5) of the IBC confers wide residuary jurisdiction on the NCLT to adjudicate any question of law or fact arising out of or in relation to the insolvency resolution or liquidation of a corporate debtor

[5] (2020) 13 SCC 308

[6] (2020) 8 SCC 531

Tags Commercial Litigation India, Corporate Insolvency India, Corporate Restructuring India, Debt Recovery India, Delhi High Court, Fraud Allegations India, IBC India, Insolvency Law India, Insolvency Litigation India, Insolvency Proceedings India, Insolvency Resolution India, JSA Publications, Judicial Developments India, NCLAT India, NCLT India

JSA Prism | Dispute Resolution | March 2026

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Supreme Court of India rules on unconditional stay of money decree

In a significant decision, the Hon’ble Supreme Court of India (“Supreme Court”), in Lifestyle Equities C.V. vs. Amazon Technologies Inc.[1], examined whether a court could grant an unconditional stay on execution of a money decree without requiring deposit or security under Order XLI Rules 1(3), 5(3) and 5(5) of the Civil Procedure Code, 1908 (“CPC”). The Supreme Court held that making a monetary deposit is not mandatory for stay of execution of the decree. The Supreme Court further held that an arbitral award can be unconditionally stayed not just on the grounds of fraud or corruption but also if a compelling and exceptional case is shown to exist.

Brief facts

Lifestyle Equities C.V. (“Petitioner”) instituted a civil suit against Amazon Technologies Inc. (“Respondent”), before the Delhi High Court (“Delhi HC”) seeking permanent injunction and damages for alleged infringement of their registered trademark.
The suit was proceeded ex -parte against the Respondent and subsequently came to be decreed in favour of the Petitioner by way of a judgment passed by the learned Single Judge.
The Respondent challenged the judgment before the Division Bench of the Delhi HC (“Division Bench”) and filed an application under Order XLI Rule 5(1) and Rule 5(3) of the CPC, seeking stay of the operation of judgment and money decree.
The Division Bench of the Delhi HC passed an order allowing the application (“Impugned Order”) and stayed the operation of the judgment and money decree without insisting for the deposit of the decretal amount.
The Petitioner, being dissatisfied with the Impugned Order, filed a special leave petition before the Supreme Court, alleging violation of the mandatory provisions of Order XLI Rules 1(3) and 5(3) of the CPC.

Issues

The Supreme Court dealt with the issues set out below:

whether the provisions of Order XLI Rules 1(3) and 5(5) of the CPC are mandatory in nature?
whether the Division Bench of the Delhi HC erred in granting an unconditional stay on execution of a money decree?
whether extending the analogy of Section 36 of the Arbitration and Conciliation Act, 1996 (“Arbitration Act”) to the present case or rather to the provisions of Order XLI Rule 3 and 5 of the CPC, is inappropriate?

Findings and analysis

While affirming the Impugned Order, the Supreme Court made the following observations:

Re: Interpretation of Order XLI Rules 1(3) and 5(5) of the CPC

The Supreme Court observed that while interpreting a statute, the intention of the legislature must be gathered from the language used. Consequently, a construction which results in rejection of words as meaningless, must be avoided.

The Supreme Court referred to Mithilesh Singh vs. Union of India[2] to highlight that the legislature is deemed not to waste its words, or to say anything in vain. Further, if the language is plain and unambiguous, there is no necessity of external aid for gathering the real intention of the legislature.

Applying the aforesaid principles, the Supreme Court interpreted Order XLI Rule 1 sub-rule (3) of the CPC and noted that: (a) the clear intention of the legislature in the said provision is that deposit of the decretal amount, or giving security thereof is not a condition precedent for maintaining a money appeal; (b) the court is vested with the discretion to grant time for depositing such amount and giving security before disposal of the appeal; and (c) at the same time, the appellate court also has the power to extend the time by taking aid of Section 148 of the CPC. On the other hand, a less grave consequence for non-compliance of such condition was envisaged, namely, to disentitle the appellant to the benefit of stay of execution of the decree as provided in Rule 5(5) of Order XLI of the CPC.

Thus, the Supreme Court arrived at the conclusion that the deposit of the decretal amount or giving security thereof is not a condition precedent for maintaining an appeal against a decree. However, the consequence may be disentitlement to the benefit of stay on the execution of the decree.

In arriving at the above conclusion, the Supreme Court also relied on Malwa Strips Private Limited vs. Jyoti Limited[3] and Kayamuddin Shamsuddin Khan vs. State Bank of India[4] and held that the obligation under Order XLI Rule 1(3) of the CPC is not mandatory but directory in nature.

Re: Meaning and import of ‘sufficient cause’ under Order XLI Rule 5 of the CPC

Order XLI Rule 5 of the CPC confers jurisdiction upon the appellate court to order stay of execution of a decree on ‘sufficient cause’ being shown. The Supreme Court observed that the power of the appellate court to order stay of execution of a decree is not fettered if there is ‘sufficient cause’ for passing such an order.

The court has to determine ‘sufficient cause’ as per Order XLI Rule 5(3) of the CPC where the court has to see:

whether there will be substantial loss to the party applying for stay;
whether the application has been made without unreasonable delay; and
whether security has been given by the applicant for due performance of the decree.

The Supreme Court further observed that in most cases where money decree is passed, the court does not grant stay unless the appellant deposits the amount in court, but that is a rule of prudence and not a principle of law of universal application. While execution should ordinarily require deposit/security, exceptional cases may justify an unconditional stay.[5]

It was held that the benefit of unconditional stay of execution of a money decree may be granted by an appellate court if it:

is egregiously perverse;
is riddled with patent illegalities;
is facially untenable; and
such other exceptional causes similar in nature.

Re: Reading of Section 36 of the Arbitration Act vis-à-vis Order XLI Rules 3 and 5 of the CPC

An argument was raised before the Supreme Court that, under the second proviso to Section 36(3) of the Arbitration Act, the only ground for grant of an unconditional stay of a money award is to show that the award was induced or effected by fraud or corruption. It was thus argued that the same interpretation must also be given to the provisions of the CPC. The Supreme Court rejected this argument and clarified that the analogy of Section 36 of the Arbitration Act cannot be drawn into the provisions of Order XLI Rules 3 and 5 of the CPC. Having clarified that, the Supreme Court also held that in any case, under the amended Sections 36(2) and (3) of the Arbitration Act, the court has the power and the discretion to pass an order to unconditionally stay the operation of a money award (if the facts and circumstances of the case so warrant).

In other words, the Supreme Court held that unconditional stays can be granted even in cases falling outside the second proviso to Section 36(3) of the Arbitration Act.

Conclusion

The decision of the Supreme Court authoritatively clarifies that the requirement of deposit or furnishing security under Order XLI Rules 1(3), 5(3) and 5(5) of the CPC is not mandatory but directory, and that non-compliance does not automatically bar the grant of a stay.

The Supreme Court has also significantly re-affirmed that the power to grant stay is rooted in judicial discretion, to be exercised on the touchstone of ‘sufficient cause’. However, in exceptional circumstances where the decree is prima facie unsustainable or results from serious irregularities such as lack of proper service, an unconditional stay may be justified.

The judgment has further settled and put to rest the conflicting decisions being made by the Bombay and Calcutta High Courts on the circumstances under which a money award can be stayed. While the Calcutta High Court has been taking a view that an award cannot be unconditionally stayed unless it is shown that the making of the award was induced or effected by fraud or corruption, the Delhi and Bombay High Courts have granted unconditional stays on awards even in cases where compelling and exceptional circumstances have been shown to exist. With this judgment, this confusion concerning applicability of the second proviso to Section 36(3) of the Arbitration Act has been removed.

Lastly, the Supreme Court’s express direction to circulate the judgment to all High Courts further underlines its authoritative and binding character. It ensures uniform application of these principles and providing clear guidance for adjudication of stay applications.

This Prism is prepared by:

Sidharth Sethi
Partner

Shreya Sircar
Partner

Deepank Anand
Associate

Shivangi Pathak
Associate

For more details, please contact [email protected].

[1] 2025 INSC 1190

[2] (2003) 3 SCC 309

[3] (2009) 2 SCC 426

[4] (1998) 8 SCC 676

[5] Central Bank of India vs. State of Gujarat (1987) 4 SCC 407

Tags Arbitration, Arbitration Law, Civil Procedure Code, Dispute Resolution, Indian law, JSA, Leading Law Firm, Leading Lawyers, Legal Update, Litigation Update, Money Decree, Supreme Court

JSA Prism | Dispute Resolution | March 2026

Please click here to download the Prism as a PDF.

Supreme Court of India clarifies that failure to issue notice under Section 21 of the Arbitration and Conciliation Act, 1996 is not fatal

The Supreme Court of India (“Supreme Court”), in Bhagheeratha Engineering Limited vs. State of Kerala[1], has clarified that Section 21 of the Arbitration and Conciliation Act, 1996 (“Arbitration Act”) is procedural in nature and serves only to determine the commencement of arbitral proceedings for the purpose of limitation. The Supreme Court has held that non-issuance of a separate notice under Section 21 of the Arbitration Act is not fatal where the disputes are otherwise arbitrable and validly placed before the Arbitral Tribunal (“Arbitral Tribunal”).

Brief facts

Bhagheeratha Engineering Limited (“Appellant”) was awarded 4 (four) road maintenance contracts under the Kerala State Transport Project for development of roads in Kerala.
The contracts contained an escalatory dispute resolution mechanism under the General Conditions of Contract (“GCC”), requiring disputes to be referred first to the engineer, then to the adjudicator, and thereafter to arbitration.
The Appellant quantified its claims and submitted them to the executive engineer. Upon failure of the engineer to decide the claims, the Appellant approached the adjudicator with 4 (four) disputes relating to price adjustment, escalation, interest on delayed payments, and related issues.
The adjudicator decided disputes 1 and 3 in favour of the Appellant and disputes 2 and 4 against the Appellant.
The respondent/the State of Kerala did not accept the adjudicator’s decision on dispute 1 and expressed its intention to refer the matter to arbitration. The Arbitral Tribunal was constituted on January 11, 2005. The Arbitral Tribunal held that the arbitration clause was wide enough to cover all disputes arising out of the contract.
By an award dated June 29, 2006, the Arbitral Tribunal allowed all 4 (four) claims in favour of the Appellant and awarded a sum of Rs. 1,99,90,777 (Indian Rupees one crore ninety-nine lakh ninety thousand seven hundred and seventy-seven) with post-award interest at 18% p.a.
The respondent challenged the award under Section 34 of the Arbitration Act. The District Judge set aside the award and restored the adjudicator’s decision.
The High Court of Kerala, in appeal under Section 37 of the Arbitration Act, upheld the order setting aside the arbitral award. It held that the arbitral reference was confined only to dispute 1 since the State had challenged only part of the adjudicator’s decision and no separate Section 21 notice was issued for disputes 2 to4. Therefore, the arbitral proceedings for those claims had not validly commenced. Accordingly, the Arbitral Tribunal lacked jurisdiction to decide disputes 2 to 4, and the restoration of the adjudicator’s decision was affirmed.
Aggrieved, the Appellant approached the Supreme Court.

Issues

The judgment deals with the following issues:

whether the High Court was justified in holding that the Arbitral Tribunal had jurisdiction only over dispute 1 and not disputes 2 to 4 (because a notice under Section 21 of the Arbitration Act was not issued for the latter)?
whether non-issuance of a notice under Section 21 of the Arbitration Act by the Appellant was fatal to its claims before the Arbitral Tribunal?

Findings and analysis

Re: Jurisdiction of the Arbitral Tribunal

The Supreme Court held that the High Court erred in concluding that the Arbitral Tribunal was constituted only to adjudicate dispute 1.
The arbitration clause under clause 25.3 of the GCC was found to be widely worded, covering “any dispute or difference arising out of or connected with the agreement”. The Supreme Court observed that the respondent itself sought a declaration before the Arbitral Tribunal that the adjudicator’s decision was null and void, thereby indicating its intention to reopen all 4 (four) disputes. Once the respondent reopened the entire controversy, it could not subsequently contend that the Arbitral Tribunal lacked jurisdiction to decide disputes 2 to 4.
Relying on the principle laid down in State of Goa vs. Praveen Enterprises[2], the Supreme Court reiterated that where an arbitration clause provides for reference of all disputes, the appointment of the Arbitral Tribunal itself constitutes an implied reference of all such disputes, unless the agreement expressly restricts the scope of reference.
The Supreme Court further held that, having regard to the conduct of the parties, the entire dispute stood thrown open before the Arbitral Tribunal, and therefore, the Tribunal did not exceed its jurisdiction in adjudicating all 4 (four) disputes.

Re: Section 21 notice serves to commence arbitration, not to restrict or defeat valid claims

The Supreme Court clarified that the object of Section 21 of Arbitration Act is limited to determining the commencement of arbitral proceedings for the purpose of limitation, and that the provision is procedural in nature and not jurisdictional.
Relying upon ASF Buildtech Private Limited vs. Shapoorji Pallonji and Co. Private Limited[3], the Supreme Court held that issuance of a notice under Section 21 of the Arbitration is not a mandatory requirement which must precede arbitration in all cases. The absence of such notice does not denude the Arbitral Tribunal of jurisdiction where the disputes are otherwise arbitrable.
The Supreme Court further held that failure to issue a notice under Section 21 of the Arbitration Act is not fatal, provided the claims are otherwise valid and the disputes fall within the scope of the arbitration agreement. In this context, reliance was also placed on State of Goa vs. Praveen Enterprises[4], wherein it was held that non-inclusion of certain disputes in a notice under Section 21 of the Arbitration Act affects only the computation of limitation and does not bar such claims from being raised before the Arbitral Tribunal.
Section 21 of the Arbitration Act does not restrict the jurisdiction of the Arbitral Tribunal only to those disputes which are expressly mentioned in the notice of invocation. Once the Arbitral Tribunal is constituted, the claimant is entitled, under Section 23 of the of the Arbitration Act, to file a statement of claim raising all disputes covered by the arbitration agreement. Such claims need not mirror the disputes referred to in a notice under Section 21 of the Arbitration Act.
Further, the contention that only the party issuing a notice under Section 21 of the Arbitration Act can be termed a ‘claimant’ was rejected as legally untenable. The Supreme Court held that the designation of claimant and respondent is a matter of procedural convenience and flows from who files the statement of claim first, a principle consistent with Section 23 and reinforced by the decision in Indian Oil Corporation Limited vs. Amritsar Gas Service[5].

Conclusion

The Supreme Court held that a notice under Section 21 of the Arbitration Act is not a mandatory precondition but merely marks the commencement of arbitral proceedings. The Supreme Court further held that failure to issue such notice is not fatal where disputes are otherwise valid and arbitrable.

The Supreme Court’s judgment demonstrates a pro-arbitration approach, as it has rejected a technical objection raised by a party to defeat arbitration. However, it must also be highlighted that in a prior decision, the Supreme Court (in Adavya Projects Private Limited vs. Vishal Structurals Private Limited[6]) had held that issuance of a Section 21 notice is mandatory as: (a) it fixes the date of commencement of arbitration; (b) determines limitation period; and (c) is a prerequisite for filing an application under Section 11 of the Arbitration Act.

This divergence creates uncertainty and ambiguity regarding the procedural framework governing the commencement of arbitral proceedings. Considering the significance of Section 21 of the Arbitration Act as the initiating step in arbitration, clarification by a larger bench of the Supreme Court would be necessary. This would ensure consistency, certainty, and uniform application of the law. Until such resolution, the mandate of Section 21 of the Arbitration Act is likely to remain a subject of continued judicial debate.

This Prism has been prepared by:

Sidharth Sethi
Partner

Shreya Sircar
Partner

Deepank Anand
Associate

Shivangi Pathak
Associate

For more details, please contact [email protected].

[1] 2026 SCC OnLine SC 5 (decided on January 6, 2026)

[2] (2012) 12 SCC 581

[3] (2025) 9 SCC 76

[4] (2012) 12 SCC 581

[5] (1991) 1 SCC 533

[6] 2025 INSC 507

Tags ADR India, Arbitration India, Arbitration Law India, Commercial Arbitration, Dispute Resolution India, India Law, JSA, Leading Law Firm, Leading Lawyers, Legal Update India, Litigation India, Section 21 Arbitration, Supreme Court India

JSA Prism | Dispute Resolution | March 2026

Please click here to download the Prism as a PDF.

Supreme Court of India clarifies issuance of notice is the rule and arrest an exception under Section 35 of the Bharatiya Nagarik Suraksha Sanhita, 2023

The Supreme Court of India (“Supreme Court”), in Satender Kumar Antil vs. Central Bureau of Investigation[1], delivered a significant ruling interpreting Section 35 of the Bharatiya Nagarik Suraksha Sanhita, 2023 (“BNSS”).

The judgment authoritatively clarifies the interplay between the power of arrest under Section 35(1)(b) of the BNSS[2] and the mandatory issuance of notice under Section 35(3) of the BNSS[3], particularly in cases involving offences punishable with imprisonment up to 7 (seven) years.

The decision settles the position of law by holding that issuance of notice under Section 35(3) of the BNSS is the rule in such cases, while arrest under Section 35(6)[4] read with Section 35(1)(b) of the BNSS is a narrowly circumscribed exception. In doing so, the Supreme Court harmonised the statutory safeguards under the BNSS with the constitutional mandate under Article 21 of the Constitution of India, 1950 (“Constitution”).

Issues

The Supreme Court considered whether notices under Section 35(3) of the BNSS are mandatorily required to be issued in all cases involving offences punishable with imprisonment up to 7 (seven) years. A consequential question that arose for consideration was whether, in the absence of circumstances contemplated under Sections 35(1)(b)(i) and 35(1)(b)(ii) of the BNSS, would an arrest by a police officer in such cases be legally justified.

Analysis and findings

Arrest is discretionary and not a matter of course

At the outset, the Supreme Court reiterated that the power of arrest under Section 35(1) of the BNSS is discretionary, as reflected by the use of the word ‘may’. The existence of a statutory power to arrest is distinct from the justification to exercise that power. An arrest cannot be made merely because it is lawful to do so.

Relying upon established precedent, including Joginder Kumar vs. State of UP and Ors.[5], the Supreme Court emphasised that arrest and detention have serious consequences on personal liberty and reputation, and therefore cannot be undertaken in a routine or mechanical manner. The investigating officer must apply his mind to the necessity of arrest and must be able to justify it independently of the mere existence of power.

The Supreme Court further observed that investigation is primarily concerned with the collection of evidence and formation of opinion regarding prosecution. An arrest is not an indispensable component of investigation. The statutory scheme recognises that investigation can proceed effectively even without taking the accused into custody.

Twin conditions under Section 35(1)(b) must coexist and be strictly complied with

The Supreme Court held that for offences punishable with imprisonment up to 7 (seven) years, the power of arrest under Section 35(1)(b) of the BNSS is conditioned upon strict compliance with two cumulative requirements.

First, under Section 35(1)(b)(i) of the BNSS, the police officer must have ‘reason to believe’, based on complaint, credible information or reasonable suspicion, that the person has committed the offence. This requirement is foundational and must be based on objective material.

Secondly, under Section 35(1)(b)(ii) of the BNSS, the police officer must be satisfied that arrest is necessary for one of the specified purposes, such as preventing further offence, ensuring proper investigation, preventing tampering with evidence, preventing inducement or threat to witnesses, or ensuring presence before the court.

The Supreme Court clarified that it is not necessary that all the conditions under Section 35(1)(b)(ii) of the BNSS be satisfied; the existence of any one would suffice. However, the requirement of necessity to arrest is substantive and not ornamental.

The Supreme Court reaffirmed the ratio laid down in Arnesh Kumar vs. State of Bihar[6], and in Satender Kumar Antil vs. Central Bureau of Investigation[7], observing that the twin requirements of ‘reason to believe’ and ‘satisfaction as to necessity of arrest’ must both be recorded in writing. Even where these conditions are present, arrest is not mandatory. The officer retains discretion and must exercise it on the touchstone of objective necessity and constitutional safeguards.

Notice under Section 35(3) of the BNSS is the rule; arrest under Section 35(6) of the BNSS is a narrow exception

The Supreme Court undertook a harmonious construction of Sections 35(1)(b), 35(3), 35(5)[8], and 35(6) of the BNSS. It held that Section 35(3) of the BNSS, which mandates issuance of notice where arrest is not required under sub-section (1), applies with full force to offences punishable with imprisonment up to 7 (seven) years.

The Supreme Court categorically held that issuance of notice under Section 35(3) of the BNSS is the rule in such cases. Once such notice is issued and the person complies with its terms and continues to do so, Section 35(5) creates an implied prohibition against arrest. Arrest at that stage can only be effected if the police officer records specific reasons demonstrating that custody has become necessary.

With respect to Section 35(6) of the BNSS, the Supreme Court clarified that even in cases of non-compliance with notice, arrest is not automatic. Non-compliance merely enables the officer to consider arrest; it does not mandate it. The officer must independently assess whether arrest has become necessary for investigation. Importantly, the Supreme Court held that arrest under Section 35(6) of the BNSS must be based on fresh circumstances or material that were not available at the time of issuance of notice under Section 35(3) of the BNSS. The power is to be exercised sparingly and with circumspection.

The Supreme Court further observed that these statutory safeguards are rooted in Article 21 of the Constitution, and any interpretation that reduces them to procedural formalities would defeat the legislative intent. Arrest cannot be justified merely for the purpose of questioning. It must be based on strict objective necessity.

Conclusion

The Supreme Court concluded that in offences punishable with imprisonment up to 7 (seven) years, the statutory framework under Section 35 of the BNSS establishes a clear hierarchy; issuance of notice under Section 35(3) of the BNSS is the norm, while arrest under Section 35(6) read with Section 35(1)(b) of the BNSS is an exception.

An arrest is a statutory discretion and not a mandatory investigative step. The police officer must consciously ask whether arrest is truly necessary before exercising that power. Even where the statutory conditions exist, arrest should not be undertaken unless absolutely warranted.

This judgment fortifies the constitutional guarantee of personal liberty and ensures that the transition from the Code of Criminal Procedure, 1973 to the BNSS does not dilute the safeguards evolved through judicial interpretation. By reaffirming that ‘notice is the rule and arrest the exception’ in offences punishable up to 7 (seven) years, the Supreme Court has provided much-needed clarity and reinforced the principle that deprivation of liberty must always remain a measure of last resort.

This Prism is prepared by:

Dheeraj Nair
Partner

Vishrutyi Sahni
Principal Associate

Sahir Seth
Associate

For more details, please contact [email protected].

[1] 2026 INSC 115 (decided on January 15, 2026)

[2] S 35(1) – “Any police officer may without an order from a Magistrate and without a warrant, arrest any person –

(a)…

(b) against whom a reasonable complaint has been made, or credible information has been received, or a reasonable suspicion exists that he has committed a cognizable offence punishable with imprisonment for a term which may be less than seven years or which may extend to seven years whether with or without fine, if the following conditions are satisfied, namely:

(i) the police officer has reason to believe on the basis of such complaint, information or suspicion that such person has committed the said offence;

(ii) the police officer is satisfied that such arrest is necessary – …”

[3] S 35(3) – “The Police Officer shall, in all cases where the arrest of a person is not required under sub-section (1) issue a notice directing the person against whom a reasonable complaint has been made, or credible information has been received, or a reasonable suspicion exists that he has committed a cognizable offence, to appear before him or at such other place as may be specified in the notice.”

[4] S 35(6) – “Where such person, at any time, fails to comply with the terms of the notice or is unwilling to identify himself, the police officer may, subject to such orders as may have been passed by a competent Court, in this behalf, arrest him for the offence mentioned in the notice.”

[5] (1994) 4 SCC 260

[6] (2014) 8 SCC 273

[7] (2022) 10 SCC 51

[8] S 35(5) – “Where such person complies and continues to comply with the notice, he shall not be arrested in respect of the offence referred to in the notice unless, for reasons to be recorded, the police officer is of the opinion that he ought to be arrested.”

Tags Arrest And Notice Rule, Article 21 Constitution, BNSS 2023, BNSS Compliance, Criminal Justice System, Criminal Law Developments, Criminal Law Reform India, Criminal Procedure India, Due Process India, Legal Developments India, Personal Liberty India, Police Powers India, Procedural Safeguards India, Supreme Court India, Supreme Court Judgment

JSA Prism | Consumer Protection | March 2026

A businessman holding an umbrella over miniature shopping bags and parcels in a cart, symbolizing online consumer protection.

Please click here to download the Prism as a PDF.

Supreme Court of India upholds consumer courts’ statutory power to award compensation despite contractual restrictions

The Supreme Court of India (“Supreme Court”), in Parsvnath Developers Limited vs. Mohit Khirbat[1], inter alia held that: (a) delay in completion and handing over possession of flats to buyers who are consumers constitutes deficiency in service; and (b) the power of the consumer fora to grant just and reasonable compensation for such deficiency in service is statutory and cannot be curtailed by contractual terms operating to the detriment of the consumer.

Brief facts

The respondents, Mohit Khirbat and others, purchased flats in a real estate project developed by the appellant, Parsvnath Developers Limited. Parties had entered into 3 (three) separate Flat Buyer Agreements (“Flat Buyer Agreements”). Under the Flat Buyer Agreements, possession of the respective flats were required to be delivered within 36 (thirty-six) months from the commencement of construction of respective blocks in the real estate project, with a grace period of 6 (six) months. Despite payment of almost the entire sale consideration by the respondents, possession was not delivered by the appellant within the stipulated period.

The respondents filed consumer complaints before the National Consumer Disputes Redressal Commission, Delhi (“NCDRC”) seeking inter alia delivery of possession, compensation, damages and costs. By 3 (three) separate Impugned Orders (“Impugned Orders”), the NCDRC allowed the consumer complaints and directed the appellant to inter alia: (a) complete the construction of the flats and hand over possession to the respondents within a timebound manner after obtaining the requisite occupancy certificate from the competent authority; (b) pay compensation by way of simple interest @ 8% per annum from the respective cut-off dates till actual delivery of possession; (c) pay/credit rebate for the specified period at the contractual rate; (d) pay litigation costs of INR 25,000 (Indian Rupees twenty-five thousand) to each respondent; and (e) bear any increase in stamp duty occurring after the stipulated dates. Aggrieved by the Impugned Orders, the appellant preferred 3 (three) civil appeals before the Supreme Court.

Before the Supreme Court, the appellant inter alia contended that: (a) the NCDRC exceeded its jurisdiction under Section 14[2] of the Consumer Protection Act, 1986 (“CP Act”) by not giving due effect to the contractual terms; and (b) the respondents were not entitled to any damages or compensation by way of interest over and above what was stipulated under the Flat Buyer Agreements; and (c) the Flat Buyer Agreements cast the liability to bear stamp duty and registration charges on the respondents. In support of the Impugned Orders, the respondents inter alia contended that despite having paid nearly the entire sale consideration, the appellant had failed to complete the project or obtain requisite approvals including the occupancy certificate for over a decade and beyond the contractually agreed timeframe.

Issue

Whether the NCDRC exceeded jurisdiction under Section 14 of the CP Act by travelling beyond the contractual terms recorded in the Flat Buyer Agreements?

Findings and analysis

The Supreme Court dismissed the civil appeals and inter alia observed as follows:

it is a settled position in law[3] that flat purchasers are consumers and any delay in handing over possession amounts to deficiency in service under the CP Act. In exercise of powers under Section 14 of the CP Act, the consumer fora are competent to redress such deficiency and award just and reasonable compensation commensurate with the injury suffered;
in Pioneer Urban Land and Infrastructure Limited vs. Govindan Raghavan[4], the Supreme Court held that the one-sided and unreasonable clauses in builder buyer agreements constitute an unfair trade practice under Section 2(1)(r)[5] of the CP Act and incorporation of such oppressive terms in a standard form contract, where purchasers have little or no bargaining power, cannot bind the consumer so as to defeat statutory remedies under the CP Act;
the provisions of the Flat Buyer Agreements[6] stipulating compensation for delay were nominal and disproportionate, particularly in cases of prolonged delay causing financial strain and mental hardship. The statute does not impose any embargo on the grant of higher or reasonable compensation merely because the parties agreed to a particular clause, especially where such clause is found to be unfair or oppressive;
as delay in completion and handing over possession was undisputed, the NCDRC was well within its statutory remit in awarding reasonable compensation beyond the compensation envisaged in the Flat Buyer Agreements;
the power of consumer fora to grant just and reasonable compensation for deficiency in service is traceable to the statute and cannot be curtailed by contractual terms operating to the detriment of the consumer.

In light of the foregoing, the Supreme Court affirmed the Impugned Orders passed by the NCDRC and dismissed the Civil Appeals.

Conclusion

The Supreme Court has clarified that the power of consumer fora to award compensation for deficiency in housing services is a statutory power which cannot be curtailed or restricted by the nominal compensation clauses in builder-buyer agreements.

By holding that such restrictive stipulations cannot operate to the detriment of consumers, the judgment regulates the balance between contractual rights and statutory consumer protection, with significant implications for risk allocation in real estate transactions.

This Prism is prepared by:

Farhad Sorabjee
Partner

Pratik Pawar
Partner

Shanaya Cyrus Irani
Partner

Sanjana Pandey
Associate

For more details, please contact [email protected].

[1] 2026 INSC 170 (decided on February 20, 2026)

[2] Section 14 of the CP Act provides for the findings that may be recorded by a district forum in its order to the opposite party.

[3] IREO Grace Realtech Private Limited vs. Abhishek Khanna and Ors. (2021) 3 SCC 241

[4] (2019) 5 SCC 725

[5] Section 2(1)(r) of the CP Act contains the definition of unfair trade practice.

[6] Clause 10(c) of the Flat Buyer Agreements provided for compensation for delay at the rate of INR 10 (Indian Rupees ten) per sq. ft. per month.

Tags Builder Buyer Agreements, Consumer Compensation, Consumer Courts India, Consumer Dispute Resolution, Consumer Protection India, Delayed Possession Cases, Homebuyer Rights India, Housing Law India, Housing Litigation India, Property Law India, Real Estate Compliance India, Real Estate Disputes, Real Estate Litigation, Real Estate Regulation, Supreme Court India

JSA Prism | Dispute Resolution | March 2026

Please click here to download the Prism as a PDF.

No automatic substitution on mandate expiry: Supreme Court reins in expansive reading of Section 29A(4) of the Arbitration and Conciliation Act, 1996

A Division Bench of the Supreme Court of India (“Supreme Court”), in Viva Highways Limited vs. Madhya Pradesh Road Development Corporation Limited and Anr.[1], set aside an interim Madhya Pradesh High Court (“MP HC”) order which held that when the mandate of an arbitrator has expired, his continuation is impermissible under the Arbitration and Conciliation Act, 1996 (“Arbitration Act”). The Supreme Court further held that the MP HC erred in its interpretation of the Supreme Court’s precedents relating to substitution of arbitrators.

Brief facts

Disputes arose between Viva Highways Limited (“Appellant”), Madhya Pradesh Road Development Corporation Limited and National Highway Authority of India, which were referred to arbitration. During the pendency of the arbitral proceedings, the statutory period prescribed under Section 29A of the Arbitration Act[2] for making the arbitral award was nearing expiry.

An application for extension of the arbitrator’s mandate under Section 29A(4) of the Arbitration Act was made before the Commercial Court, Bhopal (“Commercial Court”), which dismissed the application as being non-maintainable in view of Supreme Court’s decision in Chief Engineer (NH) PWD (Roads) vs. M/s BSC and C and CJ V[3]. Aggrieved by the Commercial Court’s decision, the Appellant filed a miscellaneous civil case before the MP HC seeking extension of the mandate.

The MP HC, by an interim order dated December 2, 2025, held that upon expiry of the mandate under Section 29A of the Arbitration Act, the arbitrator’s mandate stood terminated. The MP HC further directed the parties to propose the name of a substitute arbitrator for appointment. In arriving at this conclusion, the MP HC relied upon the Supreme Court’s decision in Mohan Lal Fatehpuria vs. Bharat Textiles and Ors.[4], interpreting it to mean that expiry of the mandate necessarily results in substitution.

Aggrieved by the interim order, the Appellant filed a special leave petition before the Supreme Court, challenging the legal correctness of the MP HC’s interpretation and the resultant order directing substitution of the arbitrator.

Issue

Whether the expiry of an arbitrator’s mandate under Section 29A automatically necessitates substitution of the arbitrator?

Findings and analysis

The Supreme Court upheld the Appellant’s challenge, set aside the impugned MP HC order and revived the application filed before the Commercial Court on the following key reasoning:

the Supreme Court noted that the MP HC erred in reading Mohan Lal Fatehpuria (supra) as imposing a mandatory obligation to substitute an arbitrator upon mandate expiry. In Mohan Lal Fatehpuria (supra), the Supreme Court merely explained the operation of Section 29A(6) of the Arbitration Act. It emphasised the court’s power to appoint a substitute arbitrator where circumstances warranted, not an automatic substitution upon the mandate’s expiry;
the Supreme Court further clarified that the expression ‘obligates’ in Mohan Lal Fatehpuria (supra) must be understood contextually. The court may appoint a substitute arbitrator if warranted. However, it cannot treat mandate expiry as ipso facto termination necessitating substitution without reference to the arbitral framework and factual matrix;
the Supreme Court relied on Velusamy vs. K. Indhera[5], wherein it has been clarified that Mohan Lal Fatehpuria (supra) does not mandate substitution of an arbitrator an as inevitable consequence of expiry of mandate;
further, the Supreme Court, relying on Jagdeep Chowgule vs. Sheela Chowgule[6], confirmed that Section 11 of the Arbitration Act (appointment of arbitrators) does not bear upon the working of Sections 29A(4) of the Arbitration Act and related provisions. Therefore, an application for extension of time for an arbitrator’s mandate is maintainable before the appropriate forum. It cannot be bypassed by treating the existing mandate as terminated and automatically inviting substitution; and
the Supreme Court noted that where the mandate of an arbitrator is about to expire, continuity and clarity serve the interests of justice. This is subject to the legal and factual prerequisites for extension or substitution are being appropriately considered. The MP HC’s approach disrupted this continuity and lacked basis in statutory and precedential norms.

Conclusion

The Supreme Court’s decision realigns the law on expiry of arbitral mandate and substitution of arbitrator with statutory intent and judicial precedent. It set aside the MP HC’s order, which had declared the arbitrator’s mandate terminated based on a misinterpretation of precedent. The Supreme Court clarified that substitution is not an automatic consequence of mandate expiry under Section 29A(4) of the Arbitration Act, but an action contingent on legal criteria and contextual necessity. The ruling underscores judicial restraint in arbitration supervision and reinforces clarity on arbitrator appointment and extension.

This Prism is prepared by:

Dheeraj Nair
Partner

Kumar Kislay
Partner

Suparba Chattaraj
Associate

For more details, please contact [email protected].

[1] 2026 SCC OnLine SC 195 (decided on February 6, 2026)

[2] Section 29A of the Arbitration Act prescribes the time limit for making an arbitral award and regulates extension of the arbitral tribunal’s mandate. It empowers courts to extend the mandate, impose conditions (including fee reduction), and, where necessary, substitute the arbitrator to ensure expeditious completion of proceedings.

[3] 2024 SCC OnLine SC 1801

[4] 2025 SCC OnLine SC 2754

[5] 2026 SCC OnLine SC 142

[6] 2026 SCC OnLine SC 124

Tags Arbitration Law, Arbitration Update, Arbitrator, Dispute Resolution, India Law, JSA, Judicial Clarification, Leading Law Firm, Leading Lawyers, Litigation, Section 29A, Supreme Court

Karnataka Appellate Tribunal grants relief to PepsiCo India under the erstwhile VAT regime in a INR 50 crore VAT demand

Four colorful cocktails in short glasses garnished with citrus slices and mint leaves, arranged side by side against a dark background.

The Karnataka Appellate Tribunal grants PepsiCo India relief in a classification matter pertaining to the erstwhile Value Added Tax (“VAT”) regime. The VAT authorities at lower levels had classified Nimbooz, Slice and Tropicana under the “residuary entry” leviable to tax at the higher rate of 14%/ 14.5% (as applicable during the relevant period), on the ground that the said products are “fruit beverages” as per the labels affixed on such products, and thus cannot claim lower rate of VAT at 4%/ 5.5% (as applicable during the relevant period) available for “fruit drinks and fruit juices” under Entry No. 3 of the Third Schedule to the Karnataka Value Added Tax Act, 2003 (“KVAT Act”).

The Hon’ble Tribunal allowed the Appeal filed by PepsiCo in this regard and held that there is no difference between the terms “drink” and “beverage” in relation to Entry No. 3 of the Third Schedule to the KVAT Act. Additionally, on perusal of the ingredients and manufacturing process, it was held that Nimbooz, Slice and Tropicana are “fruit drinks”. Further, reliance was also placed on the view taken by Hon’ble Punjab and Haryana High Court in Saluja and Company vs. State of Haryana & Ors [(2021) 92 GSTR 251] and the Larger Bench of Hon’ble CESTAT, Allahabad in Brindavan Beverages (P) Ltd. v. Commissioner, Customs, Central Excise & Services TAX [2019 (29) GSTL 418 (Tri.-LB)], wherein Nimbooz and Slice were held to be fruit drinks or fruit juice-based drinks. The Hon’ble Tribunal also referred to the license granted under the Food Safety and Standards Act, 2006 to authorize the Appellant to manufacture fruit drink/ ready to serve fruit beverages.

The JSA team was led by Manish Mishra, Partner and Head of Practice, Indirect Tax, with support from Ankur Mittal, Counsel; and Sameer Samal, Associate

Tags Classification Dispute, Deal Alert, India Tax, Indirect Tax, JSA, KVAT, Leading Law Firm, Leading Lawyers, PepsiCo, Tax Litigation, Tribunal Ruling, VAT

JSA Brief | January 2026

This edition of the JSA Brief showcases JSA authored articles, updates & newsletters and achievements such as deals and events in all practice area over the preceding month (January 2026).

To read further details, click here or refer to the below document.

For more details, please contact [email protected]

*In case the document is not visible on the device you are using, please click the link above.

Tags Articles, Deal Making, Events, JSA, JSA Prism, Legal Updates, Newsletters, Publications, Recognitions

Gujarat High Court grants relief to Ford India in a INR 1800 crore GST demand (inclusive of tax and penalty)

Stacks of coins arranged in ascending order with wooden blocks spelling “TAX %” on top, and a blurred judge’s gavel in the background.

The Hon’ble Gujarat High Court has stayed two Orders confirming the demand of INR 1800 crore upon Ford India. The GST authorities had confirmed the demand under Section 74 of the CGST Act inter alia on account of alleged mismatch in tax liability reported in E-way bills and Form GSTR-3B returns; ITC mismatch in Form GSTR-2A compared to Form GSTR-3B, as well as ITC mismatch in Form GSTR-9 and Form GSTR-3B.

The Petitioners challenged the Orders on the ground that the reply and documentary evidence submitted during the adjudication proceedings were not considered/ examined by the Department. Further, the procedure prescribed under Section 61 of the CGST Act was not followed in the present matter. The Court took note of the same holding that the replies and documentary evidence submitted during the adjudication proceedings are not properly examined by the Department and stayed the operation of the Orders.

The JSA team was led by Manish Mishra, Partner, with support from Ankur Mittal, Counsel; Sameer Samal, Associate; Dhwani Vyas, Associate; and Siddharth Sinha, Senior Associate, from the Disputes team.

Tags CGST, Ford India, GST, Gujarat High Court, India Tax, ITC, JSA, Leading Law Firm, Leading Lawyers, Litigation Success, Tax Dispute, Tax Litigation

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Issue

Findings and analysis

Conclusion

Delhi High Court holds that the National Company Law Tribunal has exclusive jurisdiction to adjudicate if there is fraud or malicious initiation of insolvency proceedings

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Issues

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Conclusion

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Supreme Court of India clarifies that failure to issue notice under Section 21 of the Arbitration and Conciliation Act, 1996 is not fatal

Brief facts

Issues

Findings and analysis

Conclusion

Supreme Court of India clarifies issuance of notice is the rule and arrest an exception under Section 35 of the Bharatiya Nagarik Suraksha Sanhita, 2023

Issues

Analysis and findings

Conclusion

Supreme Court of India upholds consumer courts’ statutory power to award compensation despite contractual restrictions

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Issue

Findings and analysis

Conclusion

No automatic substitution on mandate expiry: Supreme Court reins in expansive reading of Section 29A(4) of the Arbitration and Conciliation Act, 1996

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Conclusion

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