CaseCiter Supreme Court Daily Digest [15 May 2025]

Deep Shikha vs National Insurance Company Ltd 2025 INSC 675- MV Act - Married Daughter -Loss Of Dependency Compensation

Motor Vehicles Act, 1988 - Sections 140, 166,168 - Motor Accident Compensation - When a married daughter fails to prove that she was being financially supported by her mother post marriage, she cannot be said to be a dependent of her mother, the deceased - Once a daughter is married, logical presumption is that she now has rights on her matrimonial household and is also financially supported by her husband or his family, unless proven otherwise. It is more than likely that her dependence on her natal family, including her mother has now ceased. Sections 166 and 168 focus on the financial relationship between the deceased and the Claimant. A married daughter may be considered a legal representative, but she will not be eligible for loss of dependency compensation unless it is proven by the daughter that she was financially dependent- Referred to in Manjuri Bera & Anr. vs. Oriental Insurance Co. Ltd. (2007) 10 SCC 634 - As the legal representative of the deceased, she will only be entitled to compensation envisaged in Section 140 as liability under the same does not cease to exist in the absence of dependency.

Maintenance - The obligation of a child to maintain their parent in old age is as much of a duty as the obligation of a parent to maintain their child during minority. (Para 16)

Harcharan Dass Gupta vs Union Of India 2025 INSC 689 - MSMED Act - Arbitration Act

Arbitration and Conciliation Act 1996 - Micro, Small and Medium Enterprises (Development) Act 2006 - Provisions of Chapter V of the MSMED Act, 2006 have an effect overriding the provisions of the Arbitration Act, 1996 - no party to a dispute covered under Section 17 of the MSMED Act, 2006 would be precluded from making a reference to the Facilitation Council under Section 18(1) thereof, merely because there is an arbitration agreement existing between the parties -- A private agreement between the parties cannot obliterate the statutory provisions. Once the statutory mechanism under sub-section (1) of Section 18 is triggered by any party, it would override any other agreement independently entered into between the parties, in view of the non obstante clauses contained in sub-sections (1) and (4) of Section 18. The provisions of Sections 15 to 23 have also overriding effect as contemplated in Section 24 of the MSMED Act, 2006 when anything inconsistent is contained in any other law for the time being in force - Referred to Gujarat State Civil Supplies Corporation Ltd. v. Mahakali Foods Pvt. Ltd. (2023) 6 SCC 401 (Para 8-9)

Vijaya Bank vs Prashant B Narnaware 2025 INSC 691 - Employment Contract - Restrictive Covenant

Employment Contracts - Restrictive covenant prescribing a minimum term cannot be said to be unconscionable, unfair or unreasonable and thereby in contravention of public policy. [Context: SC held that the restrictive covenant in clause 11(k) of the appointment letter issued by Vijaya Bank does not amount to restraint of trade nor is it opposed to public policy.]

Indian Contract Act 1872 - Section 27 - A restrictive covenant operating during the subsistence of an employment contract does not put a clog on the freedom of a contracting party to trade or employment- In this case, the relevant clause was to work for a minimum term i.e. three years and in default to pay liquidated damages of Rs. 2 Lakhs. SC held: The clause sought to impose a restriction on the respondent’s option to resign and thereby perpetuated the employment contract for a specified term. The object of the restrictive covenant was in furtherance of the employment contract and not to restrain future employment. Hence, it cannot be said to be violative of Section 27 of the Contract Act. (Para 15-16) -Distinction between restrictive covenants operating during the subsistence of an employment contract and those operating after its termination - Referred to Niranjan Shankar Golikari v. Century Spinning and Manufacturing Co. (Para 13)

Precedents - judgments cannot be read as statutes and have to be applied keeping in mind the factual matrix peculiar to each case. (Para 34)

Standard form employment contracts - Interpretation of standard form employment contracts may be summarized as follows:- (i) Standard form employment contracts prima facie evidence unequal bargaining power. (ii) Whenever the weaker party to such a contract pleads undue influence/coercion or alleges that the contract or any term thereof is opposed to public policy, the Court shall examine such plea keeping in mind the unequal status of the parties and the context in which the contractual obligations were created. (iii) The onus to prove that a restrictive covenant in an employment contract is not in restraint of lawful employment or is not opposed to public policy, is on the covenantee i.e. the employer and not on the employee. (Para 21)

Public Policy - Generally speaking, public policy relates to matters involving public good and public interest. What is ‘just, fair and reasonable’ in the eyes of society varies with time. Civilizational advancements, growth of knowledge and evolving standards of human rights and dignity alter the contours of public good and policy. From the prism of employer-employee relationship, technological advancements impacting nature and character of work, re-skilling and preservation of scarce specialized workforce in a free market are emerging heads in the public policy domain which need to be factored when terms of an employment contract is tested on the anvil of public policy. (Para 22-25)

South Delhi Municipal Corporation of Delhi vs SMS Limited 2025 INSC 693 - Valid Arbitration Agreement -Elemental Test

Arbitration and Conciliation Act 1996 - Section 7 - A dispute resolution clause may only rise to the level of a valid arbitration clause or agreement when it signifies a clear intent to arbitrate, entails a binding adjudicatory process, and contemplates compliance with general arbitral norms. i. Clear Intent to Arbitrate The agreement must reflect a definitive and mutual intention to refer disputes to arbitration, excluding the jurisdiction of civil courts in respect of such matters. Consensus ad-idem or ‘meeting of the minds’ of the respective parties towards settling any disputes that may arise between them through the process of arbitration must be made out from the form and substance of the legal agreement or contract. This ideally entails the parties reducing their intention of entering into an arbitration agreement into some tangible medium. ii. Binding Adjudicatory Process The arbitration agreement must contemplate a binding and enforceable resolution of disputes. The process must culminate in a final and conclusive award, not a non-binding recommendation or mediation outcome. In essence, the result of the arbitral process should be final and binding on both the parties- iii. Compliance with Arbitration Norms While the statutory minimums do not universally require specification of seat, venue, or applicable procedural rules, best practices and several foreign jurisdictions encourage clarity in these respects to ensure legal certainty. The agreement should allow for party autonomy in the appointment of arbitrators and procedural conduct, subject to statutory safeguards. The adversarial process, which inheres in the institution of arbitration, must also be given due credence via provision for an impartial adjudicatory body, whose decisions involve deference to the principles of natural justice- The aforementioned elemental test is a conjunctive one, and not a disjunctive one -All the elements identified hereinabove must co-exist, apart from being duly proven by the party which seeks to assert that an arbitration agreement subsists. (Para 30-33) While it is true that an arbitration clause must result in a conclusive determination, finality alone does not equate it to arbitration.(Para 39)

Practice and Procedure - Arbitration - Courts or judicial fora of our country—as a matter of judicial best policy—must show an unwavering tendency towards rejecting shoddily drafted clauses at the very threshold. Such cases, which prima facie disclose mala fides woven into the very Agreement they seek adjudication over, must be thrown out of the Court, as they have been indulged for far too long. We would complementarily urge the Courts to invoke their suo moto powers in appropriate cases wherein legal firms or counsel are found designing ‘arbitration clauses’ which deliberately mislead and misguide. The time is not far when personal liability must be assigned for such unscrupulous acts, along with the sanctioning of the harshest punitive measures against the actors. We are confident that these steps are vital to infuse probity, transparency, and professionalism into Indian arbitration. Needless to say, to uphold the integrity of the arbitral process, the sanctity of such agreements must be preserved. (Para 59)

National Spot Exchange Limited vs Union Of India 2025 INSC 694 - MPID Act vs SARFAESI Act & RDB Act

Maharashtra Protection of Investors and Depositors Act, 1999 ; SARFAESI Act, 2002 ; RDB Act, 1993 -IBC 2016 - No priority of interest can be claimed by the Secured Creditors against the properties attached under the MPID Act and that the provisions of MPID Act would override any claim for priority of interest by the Secured Creditors in respect of the properties which have been attached under the MPID Act. (Para 44) SARFAESI Act and RDB Act having been enacted by the Parliament for the subject matter falling in List-I and the MPID Act having been enacted by the State Legislature for the subject matter falling in List-II in the Seventh Schedule, the latter would prevail in the State of Maharashtra in respect of the specific subject matter for which the said Act was enacted (Para 41)- Merely because the SARFAESI Act and RDB Act which are enacted in respect of the subject matter falling in List-I and having been enacted by Parliament, they could not be permitted to override the MPID Act, which is validly enacted for the subject matter falling in List-II – State List. (Para 38) The properties of the Judgment Debtors and Garnishees attached under the provisions of the MPID Act, would be available for the execution of the decrees against the Judgment Debtors by the S.C. Committee, despite the provision of Moratorium under Section 14 of the IBC. (Para 52)

SARFAESI Act, 2002 - Section 26E - Monies or deposits of depositors/ investors, who have been allegedly defrauded by the Financial Establishment, and for the recovery of which the MPID Act has been enacted, could not be said to be a “debt” contemplated in Section 26E of the SARFAESI Act- No priority of interest can be claimed by the Secured Creditors against the properties attached under the MPID Act and that the provisions of MPID Act would override any claim for priority of interest by the Secured Creditors in respect of the properties which have been attached under the MPID Act. (Para 43-44)

Constitution of India - Article 142 -while exercising the powers under Article 142, the express provisions in the other relevant Statutes should not be ignored, particularly when the exercise of powers under Article 142, would directly be in conflict with what has been express provisions in such Statutes (Para 19) The exercise of power under Article 142(1) of the Constitution of India being curative in nature, the Supreme Court would not ordinarily pass an order ignoring or disregarding a statutory provisions governing the subject, except to balance the equities between conflicting claims of the litigating parties by ironing out creases in a “cause or matter” before it. Therefore, even while exercising the powers under Article 142, the Supreme Court has to take note of the express provisions of any substantive statutory law and accordingly regulate the exercise of its power and discretion to do complete justice between the parties in the pending “cause or matter” arising out of such statutes. Though, the powers of this Court cannot be controlled by any statutory provisions, when the exercise of powers under Article 142 comes directly in conflict with what has been expressly provided in a statute, ordinarily, such power should not be exercised. Article 142 cannot be used to achieve something indirectly what cannot be achieved directly. (Para 13)

Constitution of India - Article 246 -A three-fold distribution of legislative power between the Union and the States made in the three Lists in the Seventh Schedule of the Constitution read with Article 246, exhibits the Principle of Federal supremacy viz. that in case of inevitable conflict between Union and State powers, the Union power as enumerated in List-I shall prevail over the State power as enumerated in Lists-II and III, and in case of overlapping between Lists II and III, the latter shall prevail. In view of such distribution of Legislative powers, situations have arisen where two legislative fields have apparently overlapped. In such situations, this Court has held that it would be the duty of the courts to ascertain as to what degree and to what extent, the authority to deal with the matters falling within these classes of subjects exists in each of such legislatures, and to define the limits of their respective powers. (Para 26)

Constitution of India - Article 254 - The issue of repugnancy or conflict as contemplated in Article 254 would arise only when the State Legislation and the Central Legislation, both, are relatable to the Entries contained in List-III-Concurrent List of Seventh Schedule. (Para 47)

Interpretation of Statutes - While interpreting the statutes which have arguably the conflicting provisions, has to keep in mind the Federal structure embedded in our Constitution, as a Basic Structure. (Para 26)

In Re : Alarming Rise In The Number Of Reported Child Rape Incidents 2025 INSC 695 - POCSO Act- Timelines

POCSO Act - Since the timelines have been stipulated under the POCSO Act for all stages right from the stage of Investigation up to the stage of Trial, the same must be adhered to as far as possible- Union of India and the State Governments shall take appropriate steps to sensitize the officials associated with the investigation of POCSO cases, and also to create dedicated Courts to try POCSO Cases on top priority basis, and to see to it that the chargesheets are filed within the mandatory period stipulated in the Act, and the Trials are completed within the time frame as contemplated in the Act. (Para 6)

Dhanbad Fuels Private Limited vs Union Of India 2025 INSC 696 - S. 12A C0mmercial Courts Act - Pre Litigation Mediation - Order VII Rule 11 CPC

Commercial Courts Act - Section 12A - Section 12A is mandatory in nature - The declaration of the mandatory nature of Section 12A of the 2015 Act relates back to the date of the Amending Act- Referred to Patil Automation Private Limited v. Rakheja Engineers Private Limited (2022) 10 SCC 1 - A suit which contemplates an urgent interim relief may be filed under the 2015 Act without first resorting to mediation as prescribed under Section 12A of the 2015 Act- leave of the court is not required to be obtained before filing a suit without complying with Section 12A of the 2015 Act- The test for “urgent interim relief” : If on an examination of the nature and the subject-matter of the suit and the cause of action, the prayer of urgent interim relief by the plaintiff could be said to be contemplable when the matter is seen from the standpoint of the plaintiff.- The urgent interim relief must not be merely an unfounded excuse by the plaintiff to bypass the mandatory requirement of Section 12A of the 2015 Act- Even if the urgent interim relief ultimately comes to be denied, the suit of the plaintiff may be proceeded with without compliance with Section 12A if the test for “urgent interim relief” is satisfied notwithstanding the actual outcome on merits. (Para 62)

Code of Civil Procedure 1908 - Order VII Rule 111 ; Commercial Courts Act - Section 12A - Any suit which is instituted under the 2015 Act without complying with Section 12A is liable to be rejected under Order VII Rule 11 -If the suit is instituted on or after the date of the decision in Patil Automation (supra), i.e., 20.08.2022, without complying with Section 12A of the 2015 Act, then it must meet with rejection under Order VII Rule 11, either on an application by the defendant or suo motu by the court - If the suit was instituted prior to 20.08.2022 without complying with Section 12A of the 2015 Act, and the same does not fall within one of the exceptional categories, then it would be open to the court to keep the suit in abeyance and direct the parties to explore the possibility of mediation in accordance with the 2015 Act, the PIMS Rules and the 2020 SOP.

Code of Civil Procedure 1908 - Order VII Rule 11 - No time period within which the plaint may be rejected has been stipulated. The power to reject a plaint, thus, can be exercised at any stage of the suit. (Para 39)

Legal Maxims - Lex non cogit ad impossibilia - law does not compel an impossible performance. (Para 49)

Interpretation of Statutes -Any declaration of the correct position of the law goes back to the day of the inception of the law itself, as the courts merely discover the correct position of law by applying settled legal principles and not legislate a new legal position- But Courts, while declaring an interpretation of the law, may declare it to be operative only prospectively so as to prevent chaos which may ensue as a result of the unsettling of the transactions which may have taken place before such declaration. (Para 48)

Gayatri Project Limited vs Madhya Pradesh Road Development Corporation Limited 2025 INSC 698 - S.34 Arbitration Act - Lack Of Jurisdiction

Arbitration and Conciliation Act 1996 - Section 34 - A plea of lack of jurisdiction, being a question of law, may be raised for the first time under Section 34, yet such a plea is nevertheless subject to the waiver - Such a plea may only be entertained if the party demonstrates a strong and sufficient reason for not raising it before the arbitral tribunal. (Para 36)

Arbitration and Conciliation Act 1996 - Section 34 - M.P. Madhyastham Adhikaran Adhiniyam, 1983 - Where the arbitration proceedings have concluded and an award has been passed, and if no objection to the jurisdiction in view of the applicability of MP Act, 1983 was taken at the relevant stage then such an award cannot be annulled only on the ground of lack of jurisdiction. (Para 38)

Interstate Construction vs National Projects Construction Corporation Ltd. 2025 INSC 699 - S. 31(7) Arbitration Act - Pre Reference & Pendente Lite Interest

Arbitration and Conciliation Act - Section 31(7)(a) - There is now a statutory recognition of the power of the arbitral tribunal to grant pre-reference interest from the date on which the cause of action arose till the date on which the award is made (Para 34) - The arbitral tribunal has the discretion to include in the sum awarded : firstly, interest at such rate as it deems reasonable; and secondly, for the whole or any part of the period between the date on which the cause of action arose and the date on which the award is made. This would mean that the arbitral tribunal can exclude a period from the date on which the cause of action arose till the date on which the award is made for the purpose of grant of interest - It would also mean that the arbitral tribunal can grant interest for the whole or any part of the period between the date on which the cause of action arose and the date on which the award is made. It can be a composite period or the said period can be further sub-divided, as done in the present case i.e. from the date of cause of action to filing of the claim and from the date of filing of the claim till the date of the award excluding the period when the appellant was found to be remiss. It would also mean that there can be one rate of interest for the whole period or one or more rates of interest for the sub-divided periods.- Referred to North Delhi Municipal Corporation Vs. S.A. Builders Ltd and Pam Developments Private Limited Vs. State of West Bengal (Para 35) [Context: SC set aside HC judgment which had held that the arbitral tribunal had no jurisdiction to award interest for two periods i.e. pre-reference and pendente lite]

Arbitration and Conciliation Act - Section 31(7) - Post-award interest can be granted by an arbitrator on the interest amount awarded.- The sum awarded would mean the principal amount plus the interest awarded from the date of cause of action upto the date of the award. The sum awarded in Section 31(7)(a) would mean principal amount plus the interest awarded. Thereafter, as per Section 31(7)(b) of the 1996 Act, the sum (principal amount + interest) would carry further interest at the rate of 2 per cent higher than the current rate of interest prevalent on the date of the award to the date of payment- Referred to North Delhi Municipal Corporation Vs. S.A. Builders Ltd. (Para 43)

Ishwar Chanda Sharma vs Devendra Kumar Sharma 2025 INSC 700

Note: No legal aspects discussed in this judgment.