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JSA Prism | Dispute Resolution | October 2025

Judge's gavel resting on a wooden table with a neutral background.

Please click here to download the Prism as a PDF.

Supreme Court of India upholds National Company Law Tribunal’s authority to decide on allegations of fraud and coercion in oppression and mismanagement petitions

The Hon’ble Supreme Court of India (“Supreme Court”) in the case of Mrs. Shailja Krishna vs. Satori Global Limited and Ors.[1] reaffirmed the jurisdiction of the Hon’ble National Company Law Tribunal (“NCLT”) to adjudicate complex issues of fraud, manipulation and coercion in allegations of oppression and mismanagement filed under Sections 397 and 398 of the Companies Act, 1956 (“CA 1956”). This judgment of the Supreme Court clarifies the powers of the NCLT to address the validity of controversial instruments/documents pivotal to the claim of oppression and mismanagement, including gift deeds and share transfers alleged to be vitiated by fraud.

Brief facts

Satori Global Limited (“Company”), which was originally incorporated as Sargam Exim Private Limited was incorporated in 2016 by Mrs. Shailja Krishna (“Appellant”) and her husband, Mr. Ved Krishna. Since its incorporation, the Company’s shareholding structure became highly concentrated, as the Appellant gradually increased her holding to approximately 98% of the total paid-up share capital. The Appellant also served as an executive director.

The Appellant and her husband separated in 2009-2010, leading to certain differences and the alleged transfer of the Appellant’s controlling shareholding to her mother-in-law through a gift deed dated December 17, 2010. The Appellant contended that the execution of the gift deed was under coercion and duress, and she was not physically present during the execution. The Appellant also asserted that her effective removal from the Company’s management was due to fraudulent board meetings and improper share transfers. These actions were supported by manipulated documents and violated several provisions of the Articles of Association (“AoA”) of the Company.

The NCLT being satisfied by the documentary evidence and credibility of her allegations, ruled in favour of the Appellant. The NCLT invalidated the impugned board resolutions and the contested share transfers and found the purported gift deed vitiated by fraud and contrary to the Company’s AoA. Consequentially, the Appellant was reinstated as both director and majority shareholder.

However, this was then overturned by the Hon’ble National Company Law Appellate Tribunal (“NCLAT”) vide its order dated June 2, 2023. (“Impugned Order”). The Hon’ble NCLAT set aside the order of the NCLT and stated that the NCLT lacked jurisdiction to adjudicate upon issues of fraud. The NCLAT directed the Appellant to seek her remedy before a civil court under Sections 31 and 34 of the Specific Relief Act, 1963. Being aggrieved by the Impugned Order, the Appellant approached the Supreme Court.

Issues

Whether the company petition, decided in favour of the Appellant by the NCLT was maintainable under Sections 397 and 398 of CA 1956?
Assuming maintainability, whether the NCLT had jurisdiction to decide on the validity of the gift deed?

Analysis and findings

The Supreme Court held that the company petition filed under Sections 397 and 398 of the CA 1956 was maintainable, particularly in light of Section 399 of the CA 1956, which sets out certain eligibility thresholds for members to file complaints alleging oppression and mismanagement. The Supreme Court noted that the NCLT found the Appellant’s petition to be maintainable in view of the circumstances under which the Appellant was allegedly divested of her shareholding. The Supreme Court also held that, having examined the pleadings, materials and evidence relating to membership and shareholding, the petition before the NCLT was rightly entertained, especially since fraud and coercion allegations would negate any purported divestment of rights.

On the question of jurisdiction, the Supreme Court affirmed that the NCLT possesses wide powers to adjudicate upon complaints of oppression and mismanagement, including the power to examine the validity of central instruments such as a gift deed tainted by fraud or coercion.

The Supreme Court held that the NCLT had powers to scrutinise both, the gift deed and the board meetings purportedly effectuating the Appellant’s removal. The analysis showed that the transfer of shares vide the gift deed was questionable as it violated the express provisions of the AoA by gifting shares to a class of person not permitted (the mother-in-law) and also had signs of manipulation.

The Supreme Court also noted that the evidence pointed to the Appellant being the victim of a series of co-ordinated acts amounting to oppression and mismanagement. The board meetings removing her from management, the invalid gift deed and manipulation of share transfer forms and the exclusion from company affairs constituted a breach of probity and fairness. The impact of these acts demonstrated a lack of transparency and due process, revoking her rights and majority status in a manner that the Supreme Court deemed wrongful. Accordingly, the Supreme Court set aside the Impugned Order of the NCLAT, restored the NCLT’s order and reaffirmed the jurisdiction of the NCLT to hold wide authority.

Conclusion

The Supreme Court has reaffirmed that the NCLT has wide jurisdiction to adjudicate all matters of oppression and mismanagement, including those involving allegations of fraud and coercion. The Supreme Court reiterated that fraud vitiates all transactions and therefore any instrument or action, such as share transfers or board resolutions, tainted by fraud, manipulation, or mala fide can be declared void by the NCLT.

The NCLT acts as a court of equity and focuses on remedying corporate wrongs rather than being limited by procedural technicalities or constraints cast by a civil court.

The NCLT’s remedial powers ensure shareholder protection and prevents abuse of power by those in control of the affairs of the company. The NCLT is empowered to set aside and correct any company actions that are unfair and wrongful or contrary to the AoA or law, whenever such acts affect the rights of members.

This Prism has been prepared by:

Varghese Thomas
Partner

Fatema Kachwalla
Partner

Virgil Braganza
Senior Associate

For more details, please contact [email protected].

[1] Civil Appeal Nos.6377-6378 of 2023 (decided on September 2, 2025)

Tags Coercion, Company law, Corporate Law, Fraud, JSA, JSALaw, Leading Law Firm, Leading Lawyers, NCLT, Oppression And Mismanagement, Supreme Court

IBC a business advantage not an obstacle

Businessman holding a virtual city skyline with financial growth graphs

Amid global economic volatility, regulatory certainty and resilience are essential to attract investment and build successful enterprises. The Insolvency and Bankruptcy Code, 2016 (IBC) has made India a desirable investment destination. True to its objectives, the IBC is now a vital legislation, balancing creditor rights with debtor revival. The IBC empowers financial creditors, domestic and international, and imposes credit discipline. In total, the IBC has resolved more than 1,194 cases, with creditors realising INR3.89 trillion (USD 44.4 billion).

The article was authored by Varghese Thomas and Soumitra Majumdar, Partners, and published in Law Asia.

Click here to read the full article.

Tags BusinessLawIndia, CorporateRestructuring, CreditDiscipline, DebtResolution, IBCLaw, InsolvencyIndia, JSA, JSALegal, JSAPartners, LawAsia, Leading Law Firm, Leading Lawyers, RestructuringAndInsolvency, SoumitraMajumdar, VargheseThomas

Amar Gupta | Not Just Cricket: Rule of law synergies in the Australia–India relationship and the Commonwealth

JSA and Australian Centre for International Commercial Arbitration (ACICA) co-hosted a Breakfast Session at the Delhi Arbitration Weekend 2025. This event presented a unique opportunity for industry leaders and legal professionals to engage in insightful discussions on the evolving landscape of cross-border disputes.

The discussion, titled ‘Not Just Cricket: Rule of law synergies in the Australia–India relationship and the Commonwealth’, was chaired by Hon’ble Mr. Justice A. Aradhe, Judge, Supreme Court of India. The panel featured Amar Gupta, Mark Dempsey SC, Richa Kaushal, and was moderated by Jodi Steele SC.

The Bar Bulletin interviewed the panellists on their views on the topic.

Tags AAA-ICDR, Cross-Border Disputes, Delhi Arbitration Weekend, Dheeraj Nair, Global Deals, International Arbitration, JSA

JSA secures relief for Pepsico India as Gauhati High Court sets aside show cause notice under GST Act

JSA Advocates & Solicitors provided relief to Pepsico India Holdings Pvt. Ltd. before the Gauhati High Court in a significant ruling concerning the interpretation of provisions under the Central Goods and Services Tax Act, 2017 (CGST Act).

The Gauhati High Court held that the scrutiny procedure prescribed under Section 61 of the CGST Act must be mandatorily followed in cases where show cause notices are issued under Sections 73 or 74 due to discrepancies in returns. The Court further observed that the mandate of Section 61 is a necessary pre-condition to invoke jurisdiction under Sections 73 and 74.

The Court also upheld Pepsico’s contention that furnishing information in Table 14 of Form GSTR-9C was optional — which was the genesis of the dispute — and noted that the Revenue Department failed to demonstrate anything to the contrary.

The JSA team was led by Partner Manish Mishra, with support from Partner Shareen Gupta, Principal Associates, Joybrata Misra and Ruchita Modi, and Senior Associate Tanay Vyas.

Tags CGST Act, Gauhati High Court, GST, Indirect Tax, JSA, Manish Mishra, Shareen Gupta, Tax Litigation

Dheeraj Nair | Global Deals, Indian Threads: The Next Wave of Cross-Border Disputes

JSA was privileged to co-host a breakfast panel discussion with AAA-ICDR Asia Case Management Centre at the Delhi Arbitration Weekend 2025.

The distinguished panel comprised of Hon’ble Mr. Justice M.M. Sundresh (Judge, Supreme Court of India), Ms. Thara Gopalan (Vice President, AAA-ICDR), Mr. Jimmy Yim, SC (Chairman, Drew & Napier LLC, Singapore), Mr. Amit Sibal (Senior Advocate and Associate Member, 3 Verulam Buildings Barristers), Ms. Genevieve Poirier (Partner, LALIVE London) and Mr. Dheeraj Nair (Partner, JSA Advocates & Solicitors), who brought exceptional depth to the discussion.

The panel titled “Global Deals, Indian Threads: The Next Wave of Cross-Border Disputes”explored how global deal structures are growing increasingly complex, with Indian capital expanding outward through layered SPVs, minority stakes, and frontier-market transactions, while inbound capital grapples with ESG compliance and exit constraints. These dynamics are giving rise to a new category of cross-border disputes, particularly within the framework of international arbitration.

The discussion also addressed issues of state immunity and the divergent approaches taken by courts in enforcing arbitral awards, highlighting the challenge of balancing commercial interests with broader public considerations.

The Bar Bulletin interviewed the panellists on their views on the topic.

Tags AAA-ICDR, Cross-Border Disputes, Delhi Arbitration Weekend, Dheeraj Nair, Global Deals, International Arbitration, JSA

JSA Prism | Dispute Resolution | October 2025

Please click here to download the Prism as a PDF.

Bombay High Court rules that arbitral proceedings need not pause for stamp duty adjudication

The Hon’ble Bombay High Court (“Bombay HC”), in the case of Sachin Corporation and Anr. vs. Kusuma Bhandary Construction Private Limited and Ors.^[1], clarified that an ongoing arbitration proceeding need not stall due to stamp duty objections. The Bombay HC further held that an arbitral tribunal is empowered to determine and collect deficient stamp duty and applicable penalty on an insufficiently stamped document. It can admit documents into evidence and continue with the arbitration proceeding without waiting for the stamp authorities to adjudicate the duty. The judgment, however, carved out an important exception for instruments covered by Section 32A[2] of the Maharashtra Stamp Act, 1958 (“Mah Stamp Act”). For such instruments, whose stamp duty depends on the market value of the immovable property, if the arbitral tribunal has reason to believe that the market value has not been accurately stated, it is incumbent upon the tribunal to refer such instrument to the District Collector for proper valuation and assessment of duty.

Brief facts

Arbitration proceedings were commenced by and between Sachin Corporation and Yadushrestra T. Shetty (“Petitioners”) and Kusuma Bhandary Construction Private Limited (“Kusuma”).
In the course of the arbitration proceeding between the Petitioners and Kusuma, certain instruments were sought to be relied upon in evidence. Those instruments appeared to be insufficiently stamped as required under the Mah Stamp Act.
To facilitate the use of these documents in the arbitral proceedings, the Petitioners filed a petition in the Bombay HC under Section 27 of the Arbitration and Conciliation Act, 1996 (“Arbitration Act”), which allows courts to assist in taking evidence.
The petition was filed against Kusuma, the Collector of Stamps (Andheri) (“Collector”), and the State of Maharashtra, and sought a direction to the Collector to expeditiously assess the appropriate stamp duty and any penalty on the documents. The Petitioners argued that such a direction would enable the documents to be duly stamped and introduced in evidence before the arbitral tribunal without causing undue delay in the proceedings.

Issue

Whether an arbitral tribunal must send an inadequately stamped instrument to the Collector for adjudication and await the Collector’s decision or whether the arbitral tribunal can itself calculate the deficit duty and penalty payable, collect the amount, and then proceed with the arbitration?

Analysis and findings

Whilst disposing of the Section 27 petition, the Bombay HC examined the scheme of the Mah Stamp Act in depth and made the following key findings:

Arbitral tribunal’s authority to impound and assess stamp duty: An arbitral tribunal falls within the category of persons having by law or consent of parties’ authority to receive evidence as per the Mah Stamp Act. Accordingly, the tribunal has a legal duty to scrutinize any instrument produced before it and determine whether it is duly stamped. If the instrument is not properly stamped (either unstamped or under-stamped), the tribunal has the power to assess the stamp duty deficiency on the instrument so that the shortfall can be remedied. Thus, an arbitral tribunal can adjudicate on the amount of stamp duty payable;
Procedure for instruments not covered by Section 32A: For instruments that do not fall under Section 32A of the Mah Stamp Act, the tribunal is empowered to calculate the deficient stamp duty amount and the statutory penalty due, collect these amounts from the responsible party, and then admit the instrument into evidence. The Bombay HC held that the arbitrator can forward the stamp duty directly after collecting it and that the arbitration need not be interrupted while this stamping process is undertaken. Once the tribunal has ensured that the proper duty and penalty are paid, the hearing can continue without waiting for any further certification from the stamp authorities;
Procedure for instruments covered by Section 32A: For instruments falling under Section 32A of the Mah Stamp Act, essentially documents whose stamp duty is assessed based on the market value of an immovable property or similar valuation, the tribunal cannot independently determine the stamp duty. The Bombay HC held that in such cases, the arbitral tribunal should follow the statutory procedure of reference to the Collector instead of attempting to assess the duty itself. Thus, the tribunal allow the concerned District Collector to evaluate the instrument’s market value and stamp duty, as required by the Mah Stamp Act, before the document can be admitted in evidence. This is the sole exception to the tribunal’s general ability to handle stamp duty issues on its own;
Payment of stamp duty and penalty under Section 34: The Bombay HC reiterated that no insufficiently stamped instrument may be admitted as evidence unless the stamp deficiency is cured in accordance with the Mah Stamp Act. Under Section 34 of the Mah Stamp Act, an instrument that is chargeable with stamp duty cannot be admitted in evidence by any authority (including an arbitral tribunal) unless it is duly stamped. However, Section 34 contains a proviso (Clause (a)) which allows admission of such an instrument under two circumstances: (i) the unpaid stamp duty required to make up the deficiency is paid, and (ii) a penalty is paid at the rate of 2% per month on the deficient portion of the duty from the date of the instrument’s execution (subject to a statutory cap of four times the deficit). The Bombay HC held that the tribunal can facilitate the payment of the duty and penalty and then proceed to admit a copy of the document as evidence without awaiting a formal assessment by the concerned District Collector; and
Effect of curing the stamp defect: Once the deficit stamp duty and penalty have been paid and the instrument is admitted into evidence, the Mah Stamp Act provides a degree of finality to prevent further challenges on the same issue. Bombay HC stated that if an instrument has been admitted in evidence (after proper stamp duty and penalty are paid), that admission cannot be questioned later in the same proceeding on the ground that the instrument was not duly stamped. The only exception to this rule is found in Section 58 of the Mah Stamp Act which permits a higher court to review the stamp duty decision. Bombay HC clarified that for purposes of stamp duty review, the court hearing a Section 34 petition can be viewed as equivalent to the appellate court under Section 58 of the Mah Stamp Act. The Section 34 court could then require any additional duty and penalty to be paid if it finds a deficiency.

Conclusion

The judgment provides a clear and pragmatic framework to handle stamp duty issues in arbitration without derailing the proceedings. It reaffirms that arbitral tribunals, being authorised to receive evidence, can themselves address stamp duty deficiencies on documents by impounding the documents, facilitating payment of the required duty and penalty, and then admitting the documents into evidence.

This ensures that, in most cases, an arbitration need not be put on hold awaiting the outcome of stamp duty adjudication by government authorities. Only in exceptional situations, namely, where the document in question falls under Section 32A of the Mah Stamp Act and requires a true market valuation of property, must the arbitral tribunal halt and refer the matter to the Collector for determination of stamp duty.

By drawing this distinction, Bombay HC’s ruling streamlines arbitral practice. It prevents unnecessary interruptions in arbitral timelines due to stamp duty technicalities, while still preserving the role of the Collector for those instruments that statutorily demand a formal valuation. This decision thus bolsters the efficiency of arbitration proceedings and reflects a pro-arbitration approach, ensuring that procedural stamp duty requirements are met without frustrating the speedy resolution of dispute.

This Prism is prepared by:

Hormuz Mehta
Partner

Ahsan Allana
Senior Associate

Avantika Kadapatti
Associate

For more details, please contact [email protected].

[1] Commercial Arbitration Petition (L) No. 22660 of 2025 (decided on July 30, 2025)

[2] Section 32A of the Mah Stamp Act pertains to determination of the true market value of immovable property; allows referral to Collector for valuation assessment.

Tags Arbitration, Bombay High Court, Dispute Resolution, JSA, Judgment, Leading Law Firm, Leading Lawyers, Legal Update, Stamp Duty

JSA Prism | Dispute Resolution | September 2025

Please click here to download the Prism as a PDF.

Bombay High Court holds that statutory arbitration overrides a contractual arbitration clause in the absence of an exclusive jurisdiction clause

The Hon’ble Bombay High Court (“Bombay HC”), in the case of GEA Westfalia Separator India Private Limited vs. SVS Aqua Technologies LLP[1], presents a significant legal discourse on arbitration jurisdiction, specifically examining the applicability of the contractual arbitration clause vis-à-vis arbitration conducted under the Micro, Small and Medium Enterprises (“MSMEs”) Development Act (“MSMED Act”). The Bombay HC held that in the absence of an exclusive jurisdiction clause in a contract, the statutory arbitration under the MSMED Act takes precedence. It clarified that petitions under Section 34[2] of the Arbitration and Conciliation Act, 1996 (“Arbitration Act”) challenging the arbitral awards passed by the Micro and Small Enterprises Facilitation Council (“MSEFC”), Pune must be filed before courts having territorial jurisdiction under the MSMED Act.

Brief facts

GEA Westfalia Separator India Private Limited (“Petitioner”) and SVS Aqua Technologies LLP (“Respondent”) executed a manufacturing and supply agreement. The arbitration clause in the said agreement, inter alia envisaged for disputes to be “referred to and finally resolved by arbitration in Mumbai” (“Arbitration Clause”). There was no exclusive or non-exclusive jurisdiction clause.

Disputes arose between the Petitioner and Respondent culminating into awards being passed by the MSEFC, Pune under the MSMED Act in favour of the Respondent and against the Petitioner (“Impugned Awards”). Being aggrieved, the Petitioner challenged the Impugned Awards under Section 34 of the Arbitration Act before the Bombay HC (“Section 34 Petitions”).

In the proceedings, the Respondent raised a preliminary objection on the territorial jurisdiction of the Bombay HC to entertain the Section 34 Petitions and inter alia contended that: (a) since the arbitration was conducted by the MSEFC in Pune, as a matter of statutory territorial jurisdiction, the courts in Pune would have the jurisdiction under Section 34 of the Arbitration Act; and (b) Section 18 of the MSMED Act overrides the provisions of the Arbitration Act and therefore, the arbitration agreement between the Petitioner and Respondent is irrelevant for all purposes.

The Petitioner, on the other hand, relied upon the contractually agreed arbitration clause and inter alia contended that: (a) the arbitration clause envisaged the seat of arbitration as Mumbai. Consequently, the Bombay HC had the exclusive jurisdiction for the purpose of Section 34 Petitions; and (b) the arbitration conducted by the MSEFC, Pune merely indicated that Pune was the convenient venue for the proceedings.

Issue

Whether in the absence of an exclusive jurisdiction clause, an arbitration clause can confer jurisdiction to a court for setting aside an award passed in a statutory arbitration?

Findings and analysis

The Bombay HC dismissed the Section 34 Petitions and inter alia held as follows:

the Impugned Awards did not arise from the Arbitration Clause reduced into writing by the parties. It was passed pursuant to the proceedings initiated under Section 18[3] of the MSMED Act, which provision statutorily creates an independent arbitration agreement between parties. The Arbitration Clause was not acted upon in any manner, and the arbitration was conducted at MSEFC Pune, as per the statutory arbitration agreement created by the MSMED Act;
there is no exclusive/non-exclusive jurisdiction clause designating any particular court to have jurisdiction in the manufacturing and supply agreement. Given that the Respondent, as the supplier was based in Pune, and as per the provisions of the MSMED Act, the arbitration proceedings were conducted before MSEFC, Pune. In these circumstances, the statutory requirement is a strong indication of Pune being the seat of the arbitration;
on a holistic reading of Section 34 read with Section 2(1)(e)(i) of the Arbitration Act, the petitions under Section 34 of the Arbitration Act must be filed before the principal courts of civil jurisdiction that would possess jurisdiction to deal with the dispute if the same had been in the form of a suit. In the present case, given that none of the parties are located in Mumbai and no activity in pursuance of the agreement has been carried out in Mumbai, the courts in Mumbai would not have the jurisdiction to deal with any disputes between the parties; and
in the absence of an exclusive jurisdiction clause in the agreement, there is no connecting factor conferring jurisdiction to the Bombay HC. Considering that the contractual arbitration clause has been supplanted with the statutory arbitration provisions under the MSMED Act, the relevant court in Pune would have the jurisdiction within the meaning of Section 34 read with Section 2(1)(e)(i) of the Arbitration Act.

Conclusion

The ruling clarifies that in the absence of an exclusive jurisdiction clause, the provisions of statutory arbitration under the MSMED Act will prevail in determining the jurisdiction of courts in arbitral proceedings. This decision underscores the importance for parties to exercise diligence in drafting jurisdiction and dispute resolution clauses specifically while entering into contracts with MSMEs.

This Prism has been prepared by:

Farhad Sorabjee
Partner

Pratik Pawar
Partner

Shanaya Cyrus Irani
Partner

Sanjana Pandey
Associate

For more details, please contact [email protected].

[1] Arbitration Petition (L) No. 7358 of 2025 (decided on September 10, 2025)

[2] Section 34 of the Arbitration Act sets out the grounds for challenging an arbitral award.

[3] Section 18 of the MSMED Act sets out the mechanism for referring disputes pertaining to the outstanding sums to the MSEFC.

Tags Arbitration, Bombay High Court, Dispute Resolution, JSA, Leading Law Firm, Leading Lawyers, Legal Update, Msme, Statutory Arbitration

JSA Prism | Dispute Resolution | September 2025

Please click here to download the Prism as a PDF.

Supreme Court of India lays down a 4 (four) pronged test to be followed by High Courts for determining the authenticity of a plea for quashing under Section 482 of the Criminal Procedure Code, 1973

A Division Bench of the Hon’ble Supreme Court of India (“Supreme Court”), in the case of Pradeep Kumar Kesarwani vs. The State of Uttar Pradesh and Anr.[1], allowed an appeal arising out of an order of the Allahabad High Court (“Allahabad HC”). The Allahabad HC had dismissed the appellant’s petition seeking quashing of the summoning order dated August 25, 2015. The Supreme Court while quashing the impugned order, discussed the manifest duty of a High Court to carefully examine cases where an accused seeks quashing of a First Information Report (“FIR”) on the ground of vexatious litigation. The Supreme Court while rebuking the apparent judicial error, laid down a 4 (four) pronged test which must be followed by a High Court. It must determine the authenticity of a plea for quashing an order, while exercising its inherent powers under Section 482 of the Criminal Procedure Code, 1973 (“CrPC”).

Brief facts

On August 11, 2014, respondent no. 2 had lodged a private complaint before the Court of Additional Chief Judicial Magistrate, Allahabad (“Ld. Magistrate”), for offences punishable under Sections 323, 504, 376, 452, 377 and 120B of the Indian Penal Code, 1860 (“IPC”) and Section 3(1)(10) of the Scheduled Caste and Scheduled Tribe (Prevention of Atrocities) Act, 1989 (“Atrocities Act”). However, at the time of filing the complaint, the same was labelled as an application under Section 156 (3) of the CrPC.

Having said that, the Ld. Magistrate, instead of ordering police investigation under Section 156(3) of the CrPC, as prayed for by the complainant, took cognisance of the complaint and postponed the issuance of process for a magisterial inquiry under Section 202 of the CrPC. On completion of the magistral inquiry, the Ld. Magistrate issued process for the offence punishable under Section 376 of the IPC.

The appellant in the above case, being aggrieved by the summoning order passed by the Ld. Magistrate, challenged the same before the Allahabad HC under Section 482 of the CrPC, which came to be rejected, leading the appellant to file an appeal before the Supreme Court.

Findings and analysis

The Supreme Court, while acknowledging the error committed by the Ld. Magistrate, observed that the Allahabad HC too erred in rejecting the petition. It further held that, given the multiplicity of offences alleged, the complainant’s assertions did not inspire confidence. Moreover, the Supreme Court also observed that there was an inordinate delay of over 4 (four) years in filing the complaint. Even the parents of the appellant were arrayed as accused, which it found to be wholly unwarranted. Since the appellant had submitted that the complaint filed by respondent no. 2 was vexatious, the Supreme Court reiterated the principles laid down in Mohammad Wajid vs. State of U.P.[2]. The Supreme Court emphasised Allahabad HC’s duty to consider the surrounding circumstances when dealing with a petition for quashing an FIR or complaint on the ground of vexatious litigation. Such proceedings can tarnish a person’s reputation.

Accordingly, the Supreme Court laid down a 4 (four) step test to be adopted by a High Court while determining the veracity of a prayer for quashing an FIR or a complaint. In such cases, the accused often produce documents and material in support of their plea for quashing. The 4 (four) step approach laid down by the Supreme Court is as under:

whether the material relied upon by the accused is sound, reasonable, and indubitable, i.e., the material is of sterling and impeccable quality?
whether the material relied upon by the accused is of such nature as would reject and overrule the factual assertions in the complaint thereby justifying dismissal of the accusations as false?
whether the material relied upon by the accused, has not been refuted by the prosecution/complainant; and/or the material is such, that it cannot be justifiably refuted by the prosecution/complainant?
whether proceeding with the trial would result in an abuse of process of the court, and would not serve the ends of justice?

The Supreme Court emphasised that extra care and circumspection is warranted in cases that are manifestly vexatious or have been filed with an ulterior motive for wreaking vengeance upon an accused. It was also observed that the High Court when dealing with such matters has to read in between the lines and ought to thoroughly check the veracity of the allegations raised by an accused.

Conclusion

The Supreme Court in this decision has crystallised a 4 (four) step test to guide the High Courts while considering quashing petitions under Section 482 of the CrPC. The Supreme Court has established a principled framework to determine if continuing proceedings would constitute an abuse of process, by requiring the material relied upon by the accused to be of impeccable quality and incapable of being justifiably refuted.

Moreover, such a thorough test would also ensure that complaints containing substantiated and legitimate allegations are not quashed and that only frivolous prosecutions are prevented. By laying down a 4 (four) pronged test, the Supreme Court has preserved the balance between protecting the rights of the accused and upholding the interests of justice.

This Prism is prepared by:

Dheeraj Nair
Partner

Hormuz Mehta
Partner

Vishrutyi Sahni
Principal Associate

Kunal Bilaney
Associate

Sahir Seth
Associate

For more details, please contact [email protected].

[1] 2025 SCC OnLine SC 1947 (decided on September 2, 2025)

[2] 2023 SCC OnLine SC 951

Tags CrPC, JSA, Judgment, Leading Law Firm, Leading Lawyers, Legal Update, Quashing, Section 482, Supreme Court

JSA Brief | August 2025

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 (August 2025).

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

JSA successfully defends a listed NBFC – PTC India Financial Services Ltd. before the Hon’ble Supreme Court of India in a batch of connected Special Leave Petitions, upholding lenders’ right to enforce terms of the loan facility extended to borrowers.

Digital balance scale hologram representing law, justice, and financial regulation.

JSA has successfully advised and represented PTC India Financial Services Ltd. (“PFS”) before the Hon’ble Supreme Court of India in a batch of connected Special Leave Petitions filed by certain wind power companies from the State of Andhra Pradesh. These wind power companies (“Borrowers”) had availed credit facilities from PFS (and few other lenders) and had defaulted in their repayment obligations. To explain their defaults, the Borrowers took a plea that there are certain payment disputes between them and Discoms; that they should not be declared as Non-Performing Assets (“NPAs”) owing to such disputes; and that their defaults are justified. The decision of the Hon’ble Supreme Court of India upholds the lenders’ right to declare the defaulting borrowers/accounts as NPAs and to recover outstanding dues from such NPAs, irrespective of any disputes which such borrowers may have with third parties.

In 2019, the Petitioners (i.e., Borrowers) had filed a writ petition before the Hon’ble High Court of Andhra Pradesh (“High Court”) seeking, inter alia, payments under Power Purchase Agreements (“PPAs”) executed between them and Andhra Pradesh Power Distribution Company (“APSPDCL”).

In the said writ petition, interim orders were passed by a Ld. Single Judge restricting the lenders (of such power projects) from declaring the loan accounts of the Borrowers as NPAs. Additionally, the lenders were restrained from taking any coercive action against the Borrowers (collectively, “Interim Orders”).

Subsequently, at the behest of the lenders, the Interim Orders were successfully challenged and vacated by the Ld. Single Judge by an Order dated 2 July 2025. This Order vacating the Interim Orders was also upheld by an Hon’ble Division Bench of the High Court by a final Judgment and Order dated 11 July 2025 (“DB Order”). In doing so, the Hon’ble Division Bench permitted the lenders, being third parties to the PPAs, to recover their respective dues from the Borrowers. The Hon’ble Division Bench held that the lenders’ right to recover outstanding dues cannot be curtailed or made conditional upon recoveries from APSPDCL. Feeling aggrieved, the Borrowers challenged the DB Order before the Hon’ble Supreme Court of India in the present batch of Special Leave Petitions.

After a detailed hearing and upon review of the entire material on record, the Hon’ble Supreme Court of India refused to interfere with the DB Order. While affirming the DB Order, the Hon’ble Supreme Court of India has underscored the fundamental principle that the lenders cannot be made to suffer at the hands of the Borrowers – on account of disputes that such Borrowers may have with third parties. In effect, the Hon’ble Supreme Court of India has upheld the lenders’ right to recover outstanding dues from accounts declared as NPAs, which, cannot be curtailed or made conditional upon recoveries from third parties.

Our Disputes Team comprised Lead Partner – Sidharth Sethi, Partner – Shreya Sircar, Associate – Deepank Anand, and Junior Associate – Riya Singh. JSA Team had also represented PFS before the Hon’ble High Court of Andhra Pradesh (both Single Judge and Division Bench).

Tags Banking and Finance, Corporate Law, Debt Recovery, Dispute Resolution, Energy Sector, Financial Services, Insolvency, JSA, JSA Law, Legal Victory, Lenders Rights, Loan Enforcement, Nbfc, NPA, Power Projects, Renewable Energy, Supreme Court

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New Filters: Dispute Resolution and Arbitration

Supreme Court of India upholds National Company Law Tribunal’s authority to decide on allegations of fraud and coercion in oppression and mismanagement petitions

Brief facts

Issues

Analysis and findings

Conclusion

Bombay High Court rules that arbitral proceedings need not pause for stamp duty adjudication

Brief facts

Issue

Analysis and findings

Conclusion

Bombay High Court holds that statutory arbitration overrides a contractual arbitration clause in the absence of an exclusive jurisdiction clause

Brief facts

Issue

Findings and analysis

Conclusion

Supreme Court of India lays down a 4 (four) pronged test to be followed by High Courts for determining the authenticity of a plea for quashing under Section 482 of the Criminal Procedure Code, 1973

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