We are delighted to share this month's AKP Dispute Resolution Monthly Digest. Please feel free to write to us with your feedback at info@akandpartners.in.
1. Writ
1.1. Banking & Finance
1.1.1. Supreme Court quashes forty-year-old legal battle against Odisha State Financial Corporation, orders INR 2.92 Crore refund
The Supreme Court, in an appeal, recently resolved a nearly four-decade-old (1988 suit) dispute involving Odisha State Financial Corporation ("OSFC") over a supply made in 1985 by Vigyan Chemical Industries to a borrower company. OSFC was later drawn into litigation as a defendant after taking over the defaulting unit. The trial court awarded compound interest under the Interest on Delayed Payment Act, 1993, vastly inflating the claim. The Supreme Court found that the Act was inapplicable since the supply happened before the enforcement of the Act, and that OSFC, a state entity, could not be made liable, without a statutory notice under Section 80 of the Code of Civil Procedure, 1098 or privity of contract. The Supreme Court declared the trial court's order against OSFC invalid and unenforceable, citing serious procedural lapses. It directed Vigyan Chemical Industries to refund INR 2.92 Crore (Indian Rupees Two Crore Ninety-Two Lakh only) to OSFC without interest if paid in three months, else with 6 per cent (six per cent) interest. Noting a forty-year delay, the Court invoked Article 142 to set aside all prior orders and ordered parties to bear their own costs.
2. Debt Recovery
2.1. Banking & Finance
2.1.1. Delhi High Court dismisses thirteen-year delayed DRT appeal by Netherland India Communication, rejects fraud claim as abuse of process
The Delhi High Court recently dismissed a writ petition filed by the petitioners-Netherland India Communication Enterprises Ltd. and another, against the State Bank of India. The petitioners had challenged a Debt Recovery Tribunal (DRT) order, claiming fraud in the original loan transaction and seeking to bypass an extraordinary 13-year delay in filing their appeal before the Debt Recovery Appellate Tribunal (DRAT). They alleged collusion, an unauthorised board resolution, and argued that fraudulent acts made all subsequent proceedings invalid. The petitioners also pointed out that they were beneficiaries of a separate INR 40 Crore (Indian Rupees Forty Crore only) arbitration award. The respondent bank argued that the petitioners participated in the proceedings, acknowledged their liability, and entered the amount as a debt in balance sheets, making their current petition both misconceived and an abuse of process.
The Delhi High Court held that while 'fraud vitiates everything,' limitation law and reasonable diligence remain vital; vague and general allegations of fraud are insufficient, especially when the parties were aware of the facts years earlier. The court concluded there was no justification for such an inordinate delay, rejected the plea of fraud as a shield against limitation, and dismissed the petition as a gross abuse of process. The judgment reinforced that finality, limitation and genuine pleading are foundational to justice in commercial disputes.
3. Taxation Law
3.1. Steel & Manufacturing
3.1.1. Delhi High Court upholds GST demand on India Steel, directs appeal amid pending Supreme Court review on ITC notifications
The Delhi High Court determined a writ petition filed by the petitioner, India Steel, which challenged a show cause notice and an order passed by the Sales Tax Officer regarding an alleged excess Input Tax Credit (ITC) availed for the financial year 2019-2020. The petitioner also challenged GST Notification No. 56/2023, which had extended the time limits for adjudication under GST. The court noted conflicting judgments by various High Courts on the validity of these notifications; the matter is already pending before the Supreme Court as a special leave petition.
The Delhi High Court, while acknowledging these pending proceedings, upheld the reasoned order raising a demand of over INR 2 Crore (Indian Rupees Two Crore only) against the petitioner. It directed the petitioner to file an appeal before the Appellate Authority with the appropriate pre-deposit by September 30, 2025, assuring that the appeal would not be dismissed on the ground of limitation and would not be dismissed for delay and would be decided on merits. The Court also directed that India Steel be given full access to the GST portal to obtain the necessary documents for its case.
4. Electricity Law
4.1. Power & Energy
4.1.1. Supreme Court directs the liquidation and recovery of regulatory assets due to the Power Distribution Companies (DISCOMs) within four years
The Supreme Court recently addressed the issue of "Regulatory Assets". Regulatory Assets are the tariff gaps that arise when Electricity Regulators approve consumer tariffs lower than the actual costs of Power Distribution Companies (DISCOMs). These gaps are carried forward for recovery in future tariff orders. While intended as a temporary measure to prevent sudden tariff hikes, prolonged accumulation creates huge liabilities, pushes up future tariffs, burdens consumers, and signals regulatory failure.
The Court directed all State Electricity Regulatory Commissions ("SERCs") to clear existing regulatory assets within four years from April 1, 2024, and ensure that any new ones are recovered within three years. It also capped the creation of such assets, ordered SERCs to publish liquidation roadmaps, and mandated strict audits. The judgment emphasised that Electricity is a public good under Article 39 of the Constitution of India, and its regulation must be guided by the Directive Principles.
5. Insurance Law
5.1. Automobile & Motor Vehicle
5.1.1. Supreme Court rules insurer liable for third-party losses if the vehicle registration is not transferred
The case arose from a truck accident that caused multiple deaths and injuries. Although the driver was in possession of the vehicle, its registration still stood in the name of the original owner, as the transfer had not been formally recorded. The Chhattisgarh High Court held the driver personally liable, accepting the insurer's claim that the policy issued to the registered owner was no longer valid. On appeal, the Supreme Court clarified that under Section 50 of the Motor Vehicles Act, 1988, a sale is incomplete until the registration is formally transferred. Hence, legal ownership and liability remain with the registered owner. The Court held the insurer bound to indemnify the registered owner and directed it to pay the compensation awarded to the victims.
5.1.2. Supreme Court reaffirms: Insurers must pay victims first, recover later from the owner in motor accident claims
In an appeal filed by National Insurance Co. Ltd, the Supreme Court dealt with an accident claim arising from a 2005 incident where a motorcyclist died after being hit by a truck. The Motor Accident Claims Tribunal had awarded INR 8.23 Lakh (Indian Rupees Eight Lakh Twenty-Three Thousand only) compensation to the victim's family, directing the insurer to pay first and recover later from the vehicle owner, as the insurance policy had been cancelled due to a dishonoured premium cheque. The Delhi High Court upheld this "pay and recover" principle. On appeal, the insurer argued it bore no liability since the policy stood cancelled months before the accident. Referring to earlier rulings in Seema Malhotra, Deddappa, and Laxmamma, the Supreme Court reaffirmed that while cancellation absolves an insurer in law, courts may still direct it to pay victims first and recover from the owner to protect third-party rights. Since 50 per cent (fifty per cent) of the award with interest had already been paid and withdrawn by the claimants, the Court held this amount would not be clawed back, but the insurer could recover it from the owner. The balance 50 per cent (fifty per cent) would be directly recoverable by the claimants from the vehicle owner. The appeal was thus disposed of, balancing justice between the victims, insurer, and owner.
6. Insolvency and Bankruptcy Code
6.1. EdTech
6.1.1. NCLAT affirms Insolvency Resolution Professional cannot reconstitute Committee of Creditors (CoC) without NCLT's approval
Byju Raveendran, suspended director of Think and Learn Pvt. Ltd. (Byju's), appealed against the National Company Law Tribunal ("NCLT") Bengaluru order dated August 29, 2025, concerning the reconstitution of the Committee of Creditors ("CoC"). The dispute arose when the Interim Resolution Professional (IRP) initially constituted a CoC on August 21, 2024, including major creditors like Aditya Birla Finance and Glass Trust, but later, without NCLT's approval, reconstituted the CoC on August 31, 2024, to exclude them, leaving only one creditor with 100 per cent (hundred per cent) voting power. The National Company Appellate Tribunal ("NCLAT") held that the IRP has no adjudicatory power to reclassify creditors once the CoC is constituted, and its actions were "mischievous" and prejudicial, warranting disciplinary proceedings by the Insolvency and Bankruptcy Board of India (IBBI). It upheld the first CoC dated August 21, 2024, restored Aditya Birla Finance as a financial creditor, and nullified resolutions of the reconstituted CoC. The NCLAT dismissed Byju's appeal, affirming that the NCLT order remains valid.
6.2. Real Estate
6.2.1. NCLT Chennai reiterates: No new claims allowed once CIRP begins
The National Company Law Tribunal ("NCLT"), Chennai, recently ruled that once the Corporate Insolvency Resolution Process ("CIRP") begins, no new claims or encumbrances can be created against the assets of the corporate debtor. In this case, inpiduals claimed rights over a flat owned by the debtor, but their claims were based on an unregistered agreement and payments made to a suspended director. The tribunal held that since there was no valid contract with the corporate debtor, the applicants could not be treated as financial creditors under the Insolvency and Bankruptcy Code, 2016 ("IBC"). The NCLT rejected the application, making it clear that CIRP cannot be derailed and that the corporate debtor's assets are protected from new claims under the IBC.
7. Prevention of Money Laundering
7.1. Public Sector & Enforcement Agencies
7.1.1. Delhi High Court rules: Accused entitled to pre-cognizance hearing under Bhartiya Nagrik Suraksha Sanhita, 2023
The Delhi High Court set aside a Special Judge's order that denied the accused a pre-cognizance hearing in proceedings under the Prevention of Money Laundering Act, 2002 (PMLA). The Court noted that since the Enforcement Directorate (ED) filed the complaint after the Bhartiya Nagrik Suraksha Sanhita, 2023 ("BNSS") came into force, Section 223 of the BNSS would be applicable. This section requires that the accused be allowed to be heard before the court takes cognizance. The High Court held that the trial court erred by not following this safeguard and sent the matter back to the Special Judge with directions to first hear the accused before passing any further order.
8. Energy Law
8.1. Electricity Distribution and Regulation
8.1.1. Appellate Tribunal for Electricity rules Time-of-Use Tariff must be evidence-based
In the present case, an appeal was filed by Sihor Steel Rerolling Mills Association against the tariff order dated March 31, 2016, issued by the Gujarat Electricity Regulatory Commission ("GERC"). The appeal was restricted to just one issue – Time of Use (ToU) charges, i.e., extra charges during "peak hours." The appellant argued that designating 7–11 AM as peak hours was arbitrary and unsupported by any study, while the respondents defended it as part of tariff design and long-standing practice. The Appellate Tribunal for Electricity ("Tribunal") noted that ToU and peak charges are recognised by law (Electricity Act, 2003 and National Tariff Policy, 2016) as a way to manage demand and encourage efficient energy use. However, it also stressed that deciding peak hours must be based on a proper study of load patterns, not just past practice. Finding the order cryptic and unjustified, the Tribunal set it aside and remanded the issue to GERC for fresh consideration, directing a reasoned order within two months.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
