Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 – Detenu was detained under the provisions of the COFEPOSA Act – It was contended that there was non-application of mind since the allegations were raised under clauses (i) to (iv) of s.3(1) of the COFEPOSA Act, in an omnibus manner, revealing the bias of the detaining officer – It was further contended that the attempt was to somehow obtain preventive detention of the person who was arrested on the basis of the offences alleged; in which crime he was granted bail by the jurisdictional Court, imposing very stringent conditions: Held: In the instant case, the facts reveal that the detenu has not only been involved in smuggling of goods, but also has abetted such smuggling of goods through carriers, engaged in receiving the same, dispatching it to middle-men for keeping it concealed in their premises and effecting sale through them; who were paid a commission – This definitely brings in the ingredients of each of the clauses under (i) to (iv) of s.3(1) – The jurisdictional Magistrate released the detenu on bail vide order dated 16.04.2024 on certain conditions – The specific ground raised by the prosecution of apprehension of involvement in similar type of smuggling activity was reckoned by the jurisdictional Magistrate while granting bail and imposing conditions to prevent the detenu from engaging in such smuggling activities – However, nothing is stated by the detaining authority as to why the conditions are not sufficient to prevent the detenu from engaging in further activities of smuggling; which was the specific ground on which the conditions were imposed while granting bail – It was for the detaining authority to look into the conditions imposed by the Magistrate and enter into a subjective satisfaction as to whether the same was sufficient to avoid a preventive detention or otherwise, insufficient to restrain him from further involvement in similar smuggling activities – The criminal prosecution launched and the preventive detention ordered are on the very same allegations of organised smuggling activities – The detaining authority ought to have examined the bail conditions – Whether they were sufficient to curb the evil of further indulgence in identical activities; which is the very basis of the preventive detention ordered – Since detention order is silent on that aspect, the detention order is interfered with – Hence, the order of detention is set aside – The detenu directed to be released forthwith. [Paras 7, 14, 15, 19, 20, 22]

[2025] 3 S.C.R. 419 : 2025 INSC 327

Joyi Kitty Joseph v. Union of India & Ors.

(Criminal Appeal No. 1180 of 2025)

06 March 2025

[Sudhanshu Dhulia and K. Vinod Chandran, JJ.]

Issue for Consideration

The wife of the detenu; detained under the provisions of the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (COFEPOSA Act) is challenging the order of detention.

Headnotes

Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 – Detenu was detained under the provisions of the COFEPOSA Act – It was contended that there was non-application of mind since the allegations were raised under clauses (i) to (iv) of s.3(1) of the COFEPOSA Act, in an omnibus manner, revealing the bias of the detaining officer – It was further contended that the attempt was to somehow obtain preventive detention of the person who was arrested on the basis of the offences alleged; in which crime he was granted bail by the jurisdictional Court, imposing very stringent conditions:

Held: In the instant case, the facts reveal that the detenu has not only been involved in smuggling of goods, but also has abetted such smuggling of goods through carriers, engaged in receiving the same, dispatching it to middle-men for keeping it concealed in their premises and effecting sale through them; who were paid a commission – This definitely brings in the ingredients of each of the clauses under (i) to (iv) of s.3(1) – The jurisdictional Magistrate released the detenu on bail vide order dated 16.04.2024 on certain conditions – The specific ground raised by the prosecution of apprehension of involvement in similar type of smuggling activity was reckoned by the jurisdictional Magistrate while granting bail and imposing conditions to prevent the detenu from engaging in such smuggling activities – However, nothing is stated by the detaining authority as to why the conditions are not sufficient to prevent the detenu from engaging in further activities of smuggling; which was the specific ground on which the conditions were imposed while granting bail – It was for the detaining authority to look into the conditions imposed by the Magistrate and enter into a subjective satisfaction as to whether the same was sufficient to avoid a preventive detention or otherwise, insufficient to restrain him from further involvement in similar smuggling activities – The criminal prosecution launched and the preventive detention ordered are on the very same allegations of organised smuggling activities – The detaining authority ought to have examined the bail conditions – Whether they were sufficient to curb the evil of further indulgence in identical activities; which is the very basis of the preventive detention ordered – Since detention order is silent on that aspect, the detention order is interfered with – Hence, the order of detention is set aside – The detenu directed to be released forthwith. [Paras 7, 14, 15, 19, 20, 22]

Case Law Cited

Rameshwar Lal Patwari v. State of Bihar [1968] 2 SCR 505 : AIR 1968 SC 1303; Vijay Narain Singh v. State of Bihar [1984] 3 SCR 435 : (1984) 3 SCC 14 – relied on.

Narendra Purshotam Umrao v. B.B. Gujral [1979] 2 SCR 315 : (1979) 2 SCC 637; Khaja Bilal Ahmed v. State of Telangana [2019] 18 SCR 1174 : (2020) 13 SCC 632; Ameena Begum v. State of Telangana and Others (2023) 9 SCC 587; Rekha v. State of T.N. [2011] 4 SCR 740 : (2011) 5 SCC 244; Haradhan Saha v. State of W.B. [1975] 1 SCR 778 : (1975) 3 SCC 198 – referred to.

List of Acts

Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974; Narcotic Drugs and Psychotropic Substances Act, 1985; Customs Act, 1962; Constitution of India.

List of Keywords

Detenu; Preventive detention; Bail; Bail conditions; Smuggling; Section 3(1) of the COFEPOSA Act; Reasonableness of consideration; Subjective satisfaction; Judicial Review; Detaining authority; Liberty.

Case Arising From

CRIMINAL APPELLATE JURISDICTION: Criminal Appeal No. 1180 of 2025

From the Judgment and Order dated 29.10.2024 of the High Court of Delhi at New Delhi in WPCRL No. 1901 of 2024

Appearances for Parties

Advs. for the Appellant:

Farook M. Razack, Sr. Adv., Faisal Farook, Shubail Farook, Kshitij Kumar, Sharad Kumar Puri, Mrs. Priya Puri.

Advs. for the Respondents:

Vikramjit Banerjee, A.S.G., Gurmeet Singh Makker, Anuj Srinivas Udupa, Shubhendu Anand, Kartikeya Asthana, Sarthak Karol,

Ms. Priyanka Terdal.

Judgment / Order of the Supreme Court

Judgment

Leave granted.

2.The wife of the detenu; detained under the provisions of the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 19741, is before us challenging the order of detention. There is no challenge to the procedural aspects which have been scrupulously complied with. The High Court, before whom the detention order and its subsequent confirmation have been assailed rejected the contentions; which decision is impugned in the above appeal. The detention order, impugned before the High Court, is produced as Annexure P-1.

3.We have heard Mr. Farook M. Razack, learned Senior Counsel for appellant and Mr. Vikramjit Banerjee, learned Additional Solicitor General for India for the respondents.

4.Essentially, three grounds are raised before us to secure the release of the detenu who is behind bars for almost a year, the arrest being on 05.03.2024. That there is clear non-application of mind since the allegations are raised under clauses (i) to (iv) of Section 3(1) of the COFEPOSA Act, in an omnibus manner, clearly revealing the bias of the detaining officer. The attempt was to somehow obtain preventive detention of the person who was arrested on the basis of the offences alleged; in which crime he was granted bail by the jurisdictional Court, imposing very stringent conditions. Then, the Department had moved an application for cancellation of bail which was never pursued and importantly, the said application was not placed before the detaining authority. The detaining authority, thus, did not have the opportunity to consider the grounds raised for cancellation of bail and to consider as to why preventive detention should be made when such an application for cancellation of bail was pending before the competent Court. A cancellation would have resulted in the detenu being taken back in custody, in which event there was no cause for shackling the appellant on a preventive basis. When a judicious consideration was possible, as to whether the appellant should be taken back in custody, an order for preventive detention ought to have been avoided, which would also be in violation of the salutary provisions under Article 14, 19 and 21 of the Constitution of India, 1951. The last ground urged is that the impugned order refers to a conviction in a case involving narcotics which conviction is challenged before the Hon’ble Supreme Court by way of an appeal in which the detenu is also released on bail. The crime itself was registered way back and the incident has no live link with the order of detention. It is also urged that the proviso to Section 3(1) of the COFEPOSA Act specifically prohibited a detention under that provision if an order of detention can be made under Section 3 of the Narcotic Drugs and Psychotropic Substances Act, 19852.

5.To press home the contention of complete non-application of mind, the learned Senior Counsel for the appellant relied on a number of decisions. Clauses (i) to (iv) of Section 3(1) in seriatim refers to, smuggling goods (i), abetting the smuggling of goods (ii), engaging in transporting or concealing or keeping smuggled goods (iii) and dealing in smuggled goods otherwise than by engaging in transporting or concealing or keeping smuggled goods (iv). To consider whether the allegations against the detenu falls within all these, necessarily, we have to go through the detention order detailing the allegations raised against the detenu.

6.There was intelligence gathered that the detenu along with his wife (appellant-herein) were operating a syndicate involved in smuggling foreign original gold into India and selling it in the market. There was also specific intelligence regarding the transmission of 10 kg. of smuggled gold through named persons for selling in the local Mumbai market at a specified location; a shop room, wherein a raid was conducted on 05.03.2024. Huge cache of gold bars, coins and cut pieces along with a huge quantity of Indian currency was recovered from the premises. On enquiry with the persons present in the shop, it was disclosed that the contraband was brought in by Mohammad Rafique Noor Mohammad Razvi @ Aarif and Mahendra Jain and kept therein for sale in the local market on a cash basis without any invoice or bill. Mohammad Rafique Noor Mohammad Razvi @ Aarif and Mahendra Jain on being questioned admitted to the gold having been brought and kept at the shop on instructions from the detenu and they were stated to be acting as agents to sell the gold in the market on a commission basis. There were no documents produced pertaining to the cash and gold, to substantiate the legal sourcing of such goods and the same was seized by the officers of the Directorate of Revenue Intelligence3 who had conducted the raid.

7.The DRI officers then, based on the statements under Section 108 of the Customs Act, 19624, raided the residential premises of the detenu. The attempt made by the inmates to prevent entry was thwarted by the officers and the premises were found to be in complete disarray clearly indicating attempts to conceal contraband and other evidence regarding the smuggling activities carried on by the residents therein. The mobile phones and contraband, thrown away, were recovered from the office bearers of the Society of the residential complex and further contraband was also recovered from the residential premises of the detenu. The statements under Section 108 of the Customs Act reveal that continued smuggling activities involving gold bars and cut pieces of foreign origin was carried on by a syndicate headed by the detenu, in which Mohammad Rafique Noor Mohammad Razvi @ Aarif and Mahendra Jain acted as commission agents, the actual sale having been carried out through Ummed Singh and Mahipal Vyas, employees of the agents. All of them confirmed their involvement in the smuggling activities carried on by the detenu, who was the kingpin of the operation. Mohammad Rafique Noor Mohammad Razvi @ Aarif confessed to his involvement of smuggling gold bars acting as an agent for the detenu at a commission of Rs. 2000/- per kilogram. According to him, the detenu used to send 2 to 3 kilograms of smuggled gold, with foreign markings, every day for sale, upon which, the agent used to contact Mahendra Jain at his shop; which was the subject matter of the raid from which premises, the sale was effected. On the basis of the statement recorded of the aforesaid persons which was confirmed by the statement of the detenu under Section 108 of the Customs Act, the modus operandi of smuggling gold from Dubai to India through carriers, receipt of the same at Mumbai Airport at a pre-determined location by the detenu and his wife, the subsequent delivery to Mohammad Rafique Noor Mohammad Razvi @ Aarif and sale through him on a commission basis has been detailed in the order of detention. We are convinced that the above facts reveal that the detenu has not only been involved in smuggling of goods, but also has abetted such smuggling of goods through carriers, engaged in receiving the same, dispatching it to middle-men for keeping it concealed in their premises and effecting sale through them; who were paid a commission. This definitely brings in the ingredients of each of the clauses under (i) to (iv) of Section 3(1)1.

8.Narendra Purshotam Umrao v. B.B. Gujral,5 held that the different grounds mentioned in Section 3(1) are all regarding smuggling of goods and the word smuggling includes abetting smuggling activities. Therein also, the contention of non-application of mind was held to be not sustainable since there is always, on facts, overlapping of smuggling and its abetting. As was noticed above, in the present case it has been clearly substantiated that the detenu was at the helm of affairs of the smuggling of gold, a continuing activity, wherein he had engaged carriers to carry out the act of smuggling, from whom the smuggled goods were received either by him or his wife, alone or together and then transmitted to the agents who would sell them in the market on a cash basis without invoices or bills; the proceeds of which minus the commission is received by the detenu. There is a complete chain of activity revealed which commences with the detenu and ends with him, bringing in the ingredients of all the four provisions.

9.We, further, notice from the detention order, which has been extracted in the judgment of the High Court, from paragraph 3 to 9 where the satisfaction has been entered by the detaining authority. The detenu was found to be a habitual offender and a key person of the well-organized syndicate involved in smuggling and disposal of foreign gold brought illegally into India, which activity was habitually carried out through his associates without declaration before the customs authorities and without payment of applicable duties. The smuggling of gold was for the purpose of illegal profiteering putting the national economy into danger which activity was sought to be curbed by the detention order. The detenu was found to have indulged in the activities amounting to smuggling under both the Customs Act and the COFEPOSA Act. The detenu was also found to have an innate propensity to devise ways and means to smuggle foreign gold into India which was done through a well-organized smuggling network and an established mechanism operated through trusted associates. The habitual indulgence in such fraudulent activities by way of smuggling goods, abetting of smuggling of goods, engaging in transporting and concealing or keeping the smuggled goods and dealing in such smuggled goods at the cost of government revenue and national security was found to be with a clear motive of illegal enrichment with no concern to the general economy and national security interests. The detenu was found to have played a vital role in smuggling foreign original gold through the organized network and executing disposal of such smuggled goods with meticulous planning and deliberate design, regardless of the consequences to the society at large. The detaining authority not only has detailed the various aspects of smuggling carried out by the detenu but has also brought out the ingredients of each of clauses (i) to (iv) of Section 3(1) for the purpose of ordering preventive detention, validated further by the huge seizures made from different locations.

10.The further contention taken by the appellant is of there being no live link insofar as the reference to the case under the NDPS Act; the subject matter of which cannot also be proceeded with under the COFEPOSA Act, due to the prohibition in the proviso to Section 3(1). True, there is a reference to the crime under the NDPS Act as one in which the appellant was involved. However, the same was only in relation to the specific ground taken by the detaining authority that after release of the detenu from jail in Baroda, in October, 2013; pursuant to the bail granted by this Court, the detenu had officially changed his name from ‘Afzal Haroon Batatawala’ to ‘Sameer Haroon Marchant’, in which name he was arrested in a case of gold smuggling in the year 2017. We do not find any reference made to the allegations in the narcotics case in the operative portion of the detention order. It cannot be disputed that there is no live link with the arrest in the narcotics case, in which, by the year 2013, he had spent nine years of the sentence awarded. The subject matter of a narcotics case cannot also be a ground for preventive detention under Section 3(1) of the COFEPOSA Act. Be that as it may, we do not find either of these points, vitiating the impugned order, since, neither is the subject matter of offence under the NDPS Act referred to in the detaining order nor is the involvement in the said crime a ground taken for detention under the COFEPOSA Act. As is noticed above, reference to the NDPS case is only to emphasise the propensity of the detenu to involve in such illegal activities by even changing the name officially, to supress his real identity. We do not find any reason to hold the detention to be illegal on the ground of a mere reference to the NDPS case; which we reiterate is only to emphasise the change in name resorted to by the detenu after being released on bail.

11.The decision in Khaja Bilal Ahmed v. State of Telangana6 deprecated the order of the detaining authority which merely referred to a pending criminal case, without any clear indication and casual connection to hold it as the basis of an order of detention. We have already found that, here, the involvement in a case under the NDPS Act, was not raised as a ground, anywhere in the detention order. The incidents which led to the impugned detention order commenced on a raid in the premises of the detenu’s associates followed up with successive raids at the residence of the detenu and other associates, from all of which locations there was recovery of huge cache of contraband; commending us to uphold the subjective satisfaction entered into by the detaining authority.

12.The last contention raised is with respect to the application for cancellation of bail having not been placed before the detaining authority. The impugned judgment has specifically considered the said ground and finds that the application for cancellation of bail was filed on 06.05.2024 and the detention order was passed on 09.05.2024. There was no possibility of placing the said document before the detaining authority and the same would not amount to non-supply of a vital document, since the cancellation of bail cannot be considered as an alternative to a detention order. We would, rather, emphasise on the undisputed fact that both the parties are in agreement that the cancellation of bail has not been pursued by the department. The grounds for cancellation of bail could not have swayed the detaining authority this way or that way; since it was not competent on the authority to speculate as to whether the jurisdictional Court would permit such cancellation. In fact, if the application for cancellation of bail was allowed then probably the situation would have been different. We are also of the opinion that the non-supply of the application for cancellation of bail would not be a compelling circumstance to find the order itself to be vitiated. We find absolutely no reason to interfere with the preventive detention order on the grounds stated herein above.

13.However, as the sentinel on the qui vive we cannot, but, notice a compelling ground, which was not argued before us. Admittedly, after the successive raids and the arrest of the accused, including the detenu, the accused were remanded to judicial custody. The original confessional statements were retracted when they were produced before the Additional Chief Metropolitan Magistrate at the 19th Court, Esplanade, Mumbai. The detenu was initially placed in judicial custody till 19.03.2024 and an extension was subsequently granted till 01.04.2024 by the jurisdictional Magistrate who further extended the judicial custody till 15.04.2024. The bail application dated 01.04.2024 before the jurisdictional Magistrate was replied to by the DRI, Mumbai on 15.04.2024.

14.The jurisdictional Magistrate released the detenu on bail vide order dated 16.04.2024 on certain conditions. The order of the Magistrate is extracted in the impugned judgment. The contentions raised by the DRI regarding the all-pervasive role of the detenu and his propensity to indulge in such smuggling activities, detrimental to the interest of the nation was considered in juxtaposition with the contention raised by the accused; on the basis of the investigation carried out thus far. The specific ground raised by the prosecution of apprehension of involvement in similar type of smuggling activity was reckoned by the jurisdictional Magistrate while granting bail and imposing conditions to prevent the detenu from engaging in such smuggling activities. The various conditions are revealed from the order extracted and have been referred to in paragraph-(xxii) of the detention order. However, nothing is stated by the detaining authority as to why the conditions are not sufficient to prevent the detenu from engaging in further activities of smuggling; which was the specific ground on which the conditions were imposed while granting bail.

15.We are not examining the conditions imposed by the Magistrate since it was for the detaining authority to look into it and enter into a subjective satisfaction as to whether the same was sufficient to avoid a preventive detention or otherwise, insufficient to restrain him from further involvement in similar smuggling activities. As has been held in Rameshwar Lal Patwari v. State of Bihar7 :

“The formation of the opinion about detention rests with the Government or the officer authorised. Their satisfaction is all that the law speaks of and the courts are not constituted an Appellate Authority. Thus the sufficiency of the grounds cannot be agitated before the court. However, the detention of a person without a trial, merely on the subjective satisfaction of an authority however high, is a serious matter. It must require the closest scrutiny of the material on which the decision is formed, leaving no room for errors or at least avoidable errors. The very reason that the courts do not consider the reasonableness of the opinion formed or the sufficiency of the material on which it is based, indicates the need for the greatest circumspection on the part of those who wield this power over others.’

[underlining by us for emphasis]

16.If there is a consideration, then the reasonableness of the consideration could not have been scrutinised by us in judicial review, since we are not sitting in appeal and the provision for preventive detention provide for such a subjective satisfaction to be left untouched by the Courts. However, when there is no such consideration then we have to interfere.

17.Ameena Begum v. State of Telangana and others8 held that the observations in Rekha v. State of T.N.9; that preventive detention is impermissible when the ordinary law of the land is sufficient to deal with the situation was per incuriam to the Constitution Bench decision in Haradhan Saha v. State of W.B.10, in the limited judicial review available to constitutional courts in preventive detention matters. The Courts would be incapable of interference by substituting their own reasoning to upset the subjective satisfaction arrived at by the detaining authority, especially since preventive detention law is not punitive but preventive and precautionary.

18.In Ameena Begum8, this Court was concerned with the true distinction between a threat to “law and order” and acts “prejudicial to public order”, which was not to be determined merely by the nature or quality of the act complained of, but was held to lie, in the proper degree and extent of its impact on the society. It was held that there could be instances where “disturbance of public order” would not be attracted but still, would fall within the scope of maintenance of “law and order”. It was held that :- “preventive detention laws—an exceptional measure reserved for tackling emergent situations—ought not to have been invoked in this case as a tool for enforcement of “law and order” (sic para 47), especially when the existing legal framework to maintain law and order is sufficient to address the offences under consideration.

19.Likewise, in the present case, we are not concerned as to whether the conditions imposed by the Magistrate would have taken care of the apprehension expressed by the detaining authority; of the detenu indulging in further smuggling activities. We are more concerned with the aspect that the detaining authority did not consider the efficacy of the conditions and enter any satisfaction, however subjective it is, as to the conditions not being sufficient to restrain the detenu from indulging in such activities.

20.Ameena Begum,8 noticed with approval Vijay Narain Singh v. State of Bihar11 and extracted paragraph 32 from the same:

“It is well settled that the law of preventive detention is a hard law and therefore it should be strictly construed. Care should be taken that the liberty of a person is not jeopardised unless his case falls squarely within not be used merely to clip the wings of an accused who is involved in a criminal prosecution. It is not intended for the purpose of keeping a man under detention when under ordinary criminal law it may not be possible to resist the issue of orders of bail, unless the material available is such as would satisfy the requirements of the legal provisions authorising such detention. When a person is enlarged on bail by a competent criminal court, great caution should be exercised in scrutinising the validity of an order of preventive detention which is based on the very same charge which is to be tried by the criminal court.”

[underlining by us for emphasis]

21.The criminal prosecution launched and the preventive detention ordered are on the very same allegations of organised smuggling activities, through a network set up, revealed on successive raids carried on at various locations, on specific information received, leading to recovery of huge cache of contraband. When bail was granted by the jurisdictional Court, that too on conditions, the detaining authority ought to have examined whether they were sufficient to curb the evil of further indulgence in identical activities; which is the very basis of the preventive detention ordered. The detention order being silent on that aspect, we interfere with the detention order only on the ground of the detaining authority having not looked into the conditions imposed by the Magistrate while granting bail for the very same offence; the allegations in which also have led to the preventive detention, assailed herein, to enter a satisfaction as to whether those conditions are sufficient or not to restrain the detenu from indulging in further like activities of smuggling.

22.We, hence, allow the appeal and set aside the order of detention. The detenu shall be released forthwith, if still in custody.

23.Pending application(s), if any, shall stand disposed of.

Result of the case: Appeal allowed.

1 “the COFEPOSA Act”

2 “NDPS Act”

3 “DRI”

4 “Customs Act”

5 (1979) 2 SCC 637

6 (2020) 13 SCC 632

7 AIR 1968 SC 1303

8 (2023) 9 SCC 587

9 (2011) 5 SCC 244

10 (1975) 3 SCC 198

11 (1984) 3 SCC 14

Penal Code, 1860 – ss.376, 384, 323, 504, 506 – Code of Criminal Procedure, 1973 – s.482 – Criminal proceeding against the appellant for having sexually exploited/assaulted the complainant for over a period of 16 years, based on a false promise of marriage – Appellant chargesheeted u/ss.376, 384, 323, 504, 506 – Appellant sought quashing of proceedings – Rejected by the High Court – Justification: Held: Accused is not liable for the offence of rape if the victim has wilfully agreed to maintain sexual relations – Complainant’s allegations seem to be well-arranged story – Complainant, being a highly qualified major woman continued unabatedly in a consensual intimate sexual relationship with the appellant over a period of 16 years, which is sufficient to conclude that there was never an element of force or deceit in the relationship – It cannot be said that the appellant is liable to be prosecuted for having sexually exploited/assaulted the complainant based on a false promise of marriage – Allegations of the complainant are full of material contradictions and are ex facie unbelievable – Throughout the prolonged period of 16 years, the complainant kept completely quiet about the alleged sexual abuse, meted out to her by the appellant until she learnt that the appellant had married another woman – Further in complete contradiction to the case setup in the FIR, the complainant has on many occasions portrayed herself to be the wife of the appellant and thus, evidently, they lived together as man and wife – Long gap of 16 years between the first alleged act of sexual intercourse, continued relations for one and a half decade till the filing of the FIR convinces that it is a clear case of a love affair/live in relationship gone sour – Allowing the prosecution of the appellant to continue for the offences alleged, would be nothing short of a gross abuse of the process of law– Impugned order quashed and set aside – Impugned FIR and proceedings arising thereunder quashed. [Paras 21, 24, 25, 27, 35, 37, 39]

[2025] 3 S.C.R. 303 : 2025 INSC 308

Rajnish Singh @ Soni v. State of U.P. and Another

(Criminal Appeal No. 1055 of 2025)

03 March 2025

[Vikram Nath and Sandeep Mehta,* JJ.]

Issue for Consideration

Matter pertains to the liability of the appellant to be prosecuted for committing rape upon the complainant by giving her a false promise of marriage; and the correctness of the order passed by the High Court dismissing the petition seeking the quashing of the criminal proceedings arising out of the chargesheet u/ss.376, 384, 323, 504, 506 IPC.

Headnotes

Penal Code, 1860 – ss.376, 384, 323, 504, 506 – Code of Criminal Procedure, 1973 – s.482 – Criminal proceeding against the appellant for having sexually exploited/assaulted the complainant for over a period of 16 years, based on a false promise of marriage – Appellant chargesheeted u/ss.376, 384, 323, 504, 506 – Appellant sought quashing of proceedings – Rejected by the High Court – Justification:

Held: Accused is not liable for the offence of rape if the victim has wilfully agreed to maintain sexual relations – Complainant’s allegations seem to be well-arranged story – Complainant, being a highly qualified major woman continued unabatedly in a consensual intimate sexual relationship with the appellant over a period of 16 years, which is sufficient to conclude that there was never an element of force or deceit in the relationship – It cannot be said that the appellant is liable to be prosecuted for having sexually exploited/assaulted the complainant based on a false promise of marriage – Allegations of the complainant are full of material contradictions and are ex facie unbelievable – Throughout the prolonged period of 16 years, the complainant kept completely quiet about the alleged sexual abuse, meted out to her by the appellant until she learnt that the appellant had married another woman – Further in complete contradiction to the case setup in the FIR, the complainant has on many occasions portrayed herself to be the wife of the appellant and thus, evidently, they lived together as man and wife – Long gap of 16 years between the first alleged act of sexual intercourse, continued relations for one and a half decade till the filing of the FIR convinces that it is a clear case of a love affair/live in relationship gone sour – Allowing the prosecution of the appellant to continue for the offences alleged, would be nothing short of a gross abuse of the process of law– Impugned order quashed and set aside – Impugned FIR and proceedings arising thereunder quashed. [Paras 21, 24, 25, 27, 35, 37, 39]

Case Law Cited

Mahesh Damu Khare v. State of Maharashtra, 2024 SCC OnLine SC 3471; Prashant v. State (NCT of Delhi) 2024 SCC OnLine SC 3375; Deepak Gulati v. State of Haryana [2013] 6 SCR 544 : (2013) 7 SCC 675; Shivashankar v. State of Karnataka (2019) 18 SCC 204 – referred to.

List of Acts

Code of Criminal Procedure, 1973; Penal Code, 1860.

List of Keywords

Quashing of criminal proceedings; Forcible sexual intercourse; Promise of marriage; Obscene video; Causing miscarriage; Threat of making the obscene video/pictures viral; Forcibly taking money; Agreement of marriage; Relationship between two consenting adults; Love affair subsisting over one and a half decade; Gross abuse of process of law; Physical relationship directly traceable to false promise; Vitiation of consent under misconception of fact; Misconception of marriage; Secret marriage ceremony; Distinction between rape and consensual intercourse; Living together as man and wife; Ex facie unbelievable allegations.

Case Arising From

CRIMINAL APPELLATE JURISDICTION: Criminal Appeal No. 1055 of 2025

From the Judgment and Order dated 24.04.2023 of the High Court of Judicature at Allahabad In A482 No. 43177 of 2022

Appearances for Parties

Advs. for the Appellant:

Dr. Purvish Malkan, Sr. Adv., Pradeep Kumar Yadav, Vishal Thakre, Ms. Anjale Kumari, Ms. Manshu Sharma, Dinesh Satyapal Sehgal, Aditya Yadav, Sanjeev Malhotra.

Advs. for the Respondents:

Ankit Goel, Vikas Bansal, Harshit Singhal, Nitin Meshram, Saurabh Singh, Rishi Raj Singh, Ranbir Singh Yadav.

Judgment / Order of the Supreme Court

Judgment

Mehta, J.

1.Heard.

2.Leave granted.

3.The appellant herein has preferred the instant appeal by special leave, assailing the order dated 24th April, 2023, passed by the learned Single Judge of the High Court of Judicature at Allahabad1 dismissing the petition filed by the appellant, being Application U/S 482 No. 43177 of 2022, for quashment of the proceedings of Criminal Case No. 1246 of 2022 arising out of chargesheet in Case Crime No. 269 of 2022 under Sections 376, 384, 323, 504, 506 of the Indian Penal Code, 18602 at Police Station Bakewar, District Etawah.

4.Brief facts relevant and essential for the disposal of the present appeal are reproduced hereinbelow.

5.Ms. A, respondent No. 2-complainant,3 lodged an FIR in Case Crime No. 269 of 2022 dated 5th July, 2022, against the appellant at Police Station Bakewar, District Etawah alleging, inter alia, that she is a resident of village Kudaria and was qualified with degrees in M.Com and B.Ed. and since 2008, she had been serving on the post of Lecturer in AFS Bhemora College in Lucknow.

6.It was alleged that the accused, appellant herein, sometime in the year 2006, sneaked into the house of the complainant in the night and subjected her to forcible sexual intercourse. She was neither able to scream nor could call out for help as the appellant had gagged her mouth due to which her parents, who were also present in the house, were unable to get a wind of the incident. She warned the appellant that she would disclose about the incident to her family members, upon which the appellant apologised profoundly and requested her to remain quiet and gave her an assurance of marriage. The complainant, therefore, neither lodged any complaint nor did she take other action in respect of the incident of sexual assault upon her.

7.The appellant initially, was working as a constable in the police department. Later, in 2009, he joined as a Clerk in the State Bank of India in Dhani branch of Maharajganj district. In the intervening period, the intimacy between the appellant and the complainant continued to flourish. The appellant had once called the complainant to Maharajganj, where he made her to consume some intoxicant mixed with ENO, without her knowledge, which made her semi-conscious. Taking advantage, the appellant subjected her to forcible sexual intercourse. He not only video-graphed the offending acts but later, showed it to the complainant when she regained consciousness. The complainant, fearing retribution in society, did not share information about the said incident with anyone. Subsequently, the complainant became pregnant which was confirmed with a pregnancy detection kit. When this information came to the knowledge of the appellant, he mixed some medication in water and made the complainant to drink it in order to cause miscarriage. Since the appellant continuously blackmailed and threatened the complainant using the obscene video, she did not tell anyone about the abortion.

8.The complainant had initially gone to meet the appellant out of her own free will, but the appellant, later on, pressurised her under the threat of making the obscene video/pictures viral. She would therefore, meet him only with the objective of collecting the video from him so that she could delete it. In 2015, the appellant called the complainant to Pratapgarh and threatened her that if she did not accede to his demands, he would make the video viral.

9.Additionally, it was also alleged in the FIR that the appellant forcibly took money from the complainant on a number of occasions. In 2011, the appellant had taken a cheque of Rs.94,000/- from the complainant, however, he did not return a dime to her. As the appellant threatened her by using the obscene video of intimate relations that he possessed, she did not complain to anyone, about the aforesaid criminal acts that had taken place with her between the years 2006 to 2021.

10.In 2021, a woman, named Namrata, entered into the life of the appellant, whereupon the complainant filed a complaint with Lucknow Commissionerate. However, she was advised to go to Etawah Police Station. Thereupon, she lodged a complaint against the appellant at the One Stop Centre, Lalitpur on 23rd March, 2022 which was closed based upon an agreement entered into between the complainant and the appellant, wherein they both agreed to marry each other. However, on 22nd April, 2022, the appellant resiled from his promise and married Namrata. When the factum of appellant’s marriage came to the complainant’s knowledge, she immediately shared the information of the illegal acts and incidents of sexual assaults by the appellant with her family members and the people of her community. Later, when she decided to take police action, the appellant along with his brother-Ashwani and father-Rajbahadur made an attempt to cause harm to her parents. On 1st May, 2022, the appellant barged into her house, in the presence of her parents, and threatened that she would be killed if she continued with the legal cases filed by her.

11.Based on the above allegations, an FIR4 dated 5th July, 2022, came to be registered against the appellant for the offences punishable under Sections 313, 376, 384, 323, 504 and 506 of IPC and investigation was commenced. Almost similar allegations were set in the statements of the complainant recorded under Sections 161 and 164 of Code of Criminal Procedure, 19735 and in addition, she further stated that upon discovering that the appellant had developed relations with Namrata, she had disclosed everything to her but in spite thereof, Namrata got married to appellant on 22nd April, 2022.

12.Consequent to the completion of the investigation, the police submitted a report under Section 173(2) CrPC dated 29th September, 2022, against the appellant for the offences punishable under Sections 376, 384, 323, 504 and 506 IPC in the Court of learned Additional Chief Judicial Magistrate, Court No.-04, Etawah. Vide order dated 10th November, 2022, the learned Magistrate took cognizance for the above offences and issued summons to the appellant. Aggrieved, the appellant filed a criminal petition under Section 482 CrPC seeking quashing of the proceedings in Criminal Case No. 1246 of 2022 in the High Court. The quashing petition stands rejected vide order dated 24th April, 2023, which is assailed in this appeal by special leave.

SUBMISSIONS ON BEHALF OF THE APPELLANT: -

13.Learned counsel for the appellant vehemently and fervently urged that the entire case as set out in the impugned FIR and the chargesheet is false and cooked up. The complainant is a major educated girl, who was fully conscious of the consequences of the intimate relationship which flourished between her and the appellant for a period of almost 16 years. The acts of repeated intimacy and sexual relations were totally consensual in nature and were not established under any false promise, threat, duress or coercion. The appellant all along intended to marry the complainant. He thus, urged that the case of a prolonged voluntary relationship/love affair between two consenting adults has been given a colour of forcible sexual intercourse with oblique purposes and motive.

14.Learned counsel further submitted that, as a matter of fact, the appellant and the complainant had performed the rituals of marriage with each other during the subsistence of their love affair which extended to over one and a half decade. However, the relationship went sour leading to the strife and culminated into the FIR. In this regard, he placed reliance on the application dated 25th May, 2022, given by the complainant to the Senior Superintendent of Police, Etawah and urged that the said application was filed prior to the lodging of the FIR, wherein the complainant had categorically mentioned her marital status as the wife of the appellant. She had also alleged in the complaint that her husband, i.e., the appellant herein, had refused to keep her with him.

15.Learned counsel urged that it is a case of voluntary sexual relationship between two consenting adults and hence, the proceedings of the criminal case registered against the appellant for the aforesaid offences, tantamount to a gross abuse of the process of law and therefore, the same deserve to be quashed.

SUBMISSIONS ON BEHALF OF THE RESPONDENTS: -

16.Per contra, learned counsel for the State and learned counsel appearing for the complainant have vehemently opposed the submissions advanced by the counsel for the appellant. They urged that the appellant won over the confidence of the complainant by giving her false assurances of marriage and based on such promise he sexually exploited her, when in fact, he had no intentions to marry her. After subjecting the complainant to forcible sexual intercourse repeatedly over a period of almost 15 years, the appellant ditched her and married another woman.

17.Learned counsel further contended that the appellant had also recorded intimate videos and pictures of the complainant and blackmailed her under the threat of making them viral. They, urged that the High Court was justified in dismissing the criminal petition filed by the appellant and hence, sought rejection of the present appeal.

ANALYSIS AND CONCLUSION: -

18.We have given our anxious consideration to the submissions advanced at the bar and have carefully gone through the impugned judgment and the material placed on record.

19.The allegation that the appellant spiked the complainant’s drink and caused her miscarriage stands refuted as the Investigation Officer has deleted Section 313 IPC while submitting the police report under Section 173(2) CrPC dated 29th September, 2022. Further, Investigation Officer also concluded that the involvement of the other co-accused, i.e., the relatives of the appellant who were arraigned by the complainant in the FIR, was not substantiated by any reliable evidence and thus, the chargesheet was only submitted against the appellant.

20.Therefore, we have to consider whether in the facts and circumstances of the present case, the appellant is liable to be prosecuted for committing rape upon the complainant by giving her a false promise of marriage.

21.There is no dispute that the complainant, a highly qualified female, was major at the time when her relationship with the appellant sprouted. The first act of sexual intercourse between the appellant and the complainant is alleged to have taken place in the year 2006 and that too in her own house. However, at that time, the complainant did not make any complaint to anyone, including her own family members, that the appellant had established sexual relations with her based on an express promise to marry her in future. It needs to be highlighted that the complainant categorically came out with a case in the FIR that the first act of sexual relation between her and the appellant (albeit forcible as per the complainant) took place in her own house where her parents were also present. The very manner in which this incident is said to have taken place, puts the case of the complainant under serious doubt. It is difficult to swallow that the complainant, a well-qualified major girl, was subjected to forcible sexual intercourse by an outsider in her own house where her parents were present and still, they did not get a whiff about the incident. Thus, the complainant’s allegations seem to be a well-orchestrated story and nothing beyond that.

22.It was nearly 16 years since the first incident, in a highly belated FIR, that the complainant alleged, for the first time, that the appellant, who was on friendly terms with her, forcibly subjected her to sexual intercourse in the year 2006. Further, she also stated that though she initially protested to this act and intended to report the matter to the police, she changed her mind trusting the appellant’s assurance that he loved her and if she refrained from spilling the beans, he would marry her. Under this guise, the appellant continued to establish sexual relations with the complainant.

23.Admittedly, the appellant got a job in the year 2006 as a Constable in the police department and was posted in a different town. The complainant alleged that whenever the appellant would visit the village Kudaria, he would establish sexual relations with her under the promise of marriage. However, she has not clarified or elaborated when and where these acts of fornication took place. In the year 2008, the complainant came to be appointed as a Lecturer in the Kendriya Vidyalaya whereas, the appellant in the year 2009, got a job as a Clerk in the State Bank of India. As per the complainant, in the year 2009, the appellant called her to his residence in the town Farinda, Anand Nagar, where he mixed certain intoxicating substance in her drink and thereafter, subjected her to sexual assault and while she was in the state of drug induced stupor, he recorded her obscene videos and pictures. He, thereafter, sent offensive messages to the complainant on WhatsApp, threatening that he would make her videos and pictures viral unless she continued to have sexual relations with him.

24.It does not stand to reason that when the intimate relations were continuing between the parties without any hitch for more than three years, then why would the appellant be impelled to take the trouble of spiking the drink of the complainant in order to establish sexual relations with her.

25.It is hard to believe that the complainant, being a highly qualified and well-placed major woman, kept on bending to the demands of the appellant for a period of nearly 16 years without raising any protest to any quarter that the appellant was exploiting her sexually under the pretext of a false promise of marriage. The prolonged period of 16 years during which the sexual relations continued unabatedly between the parties, is sufficient to conclude that there was never an element of force or deceit in the relationship. The complainant and the appellant were posted at different places pursuing their respective jobs. On a few occasions, the appellant would visit the complainant at her place whereas on other occasions, the complainant was called by the appellant to his house where these acts of fornication continued unabatedly till the year 2020/2021. It is almost impossible to swallow the version of the complainant that for the entire period of 16 years, she unreservedly allowed the appellant to subject her to repeated acts of sexual intercourse under the impression that the accused would on someday act upon his promise of marriage.

26.In the case of Mahesh Damu Khare v. State of Maharashtra,6 this Court held that to make a man, accused of having sexual relationship by making a false promise of marriage, criminally liable, the physical relationship must be traceable directly to the false promise made and it must not be qualified by other circumstances or consideration. In a situation where the woman knowingly maintains the physical relationship for a prolonged period, it cannot be said with certainty that the said physical relationship was purely because of alleged promise made by the accused to marry her.

27.In conclusion, the Court held that unless it can be shown that the physical relationship was purely because of the promise of marriage and without being influenced by any other consideration, it cannot be said that there was vitiation of consent under misconception of fact. It was further held that even if it is assumed that a false promise of marriage was made to the complainant initially by the accused, the fact that the relationship continued for a period of nine long years would render the plea of the complainant that her consent for all these years was under misconception of the fact that the accused would marry her implausible.

28.In the case of Prashant v. State (NCT of Delhi),7 this Court observed that it is inconceivable that the complainant would continue to meet the accused or maintain a prolonged association or physical relationship with him in the absence of voluntary consent on her part.

29.Testing the facts of the case at hand, on the touchstone of the above precedents, it is clear that the complainant, being a highly qualified major woman continued in a consensual intimate sexual relationship with the appellant over a period of 16 years. At some point in time, the relationship went sour leading to the filing of the FIR. No reasonable man would accept the version that the complainant allowed the accused to establish sexual relations with her over a period of 16 years purely under the misconception of marriage.

30.There is no dispute that from the year 2006 onwards, the complainant and the appellant were residing in different towns. The complainant is an educated woman and there was no pressure whatsoever upon her which could have prevented her from filing a police complaint against the accused if she felt that the sexual relations were under duress or were being established under a false assurance of marriage. On many occasions, she even portrayed herself to be the wife of the appellant thereby, dispelling the allegation that the intention of the appellant was to cheat her right from the inception of the relationship. We cannot remain oblivious to the fact that it was mostly the complainant who used to travel to meet the appellant at his place of posting. Therefore, we are convinced that the relationship between the complainant and appellant was consensual without the existence of any element of deceit or misconception.

31.Further, the application filed by the complainant at One Stop Center, Lalitpur on 23rd March, 2022, makes it abundantly clear that she was in a consensual relationship with the appellant since 2006. It is alleged in the complaint that when she had proposed that they should marry and live together, the appellant physically abused her and beat her up. If at all there was an iota of truth in this allegation then the FIR should have been registered immediately after this incident. However, it is only when it came to the knowledge of the complainant that the appellant was getting married to another woman, in an attempt to stop his marriage, she filed aforesaid complaint at the One Stop Center wherein she also admitted that she was equally guilty as the appellant and therefore, his marriage must be stopped.

32.Further, on the perusal of the statement made by the complainant under Section 161 CrPC, it is evident that she came to know about the relations between the appellant and Namrata in the year 2020-2021. Thus, once the complainant was aware that the appellant had broken the ties with her and was involved in a relationship with another woman, there was no reason for her to hold back from filing the FIR.

33.To the contrary, the complainant has herself set up a case that there was a secret marriage ceremony between her and the appellant. Therefore, in our opinion, even if the allegations made by the complainant are accepted on their face value, it is evident that the appellant and the complainant were in a long-standing live-in relationship during which they even performed marriage rituals albeit informal in nature.

34.It is trite that there is a distinction between rape and consensual intercourse. This Court in Deepak Gulati v. State of Haryana,8 differentiated between a mere breach of promise and not fulfilling a false promise and held that an accused will only be liable if the Courts concludes that his intentions are mala fide and he has clandestine motives. The relevant extract is reproduced hereinbelow: -

“21. Consent may be express or implied, coerced or misguided, obtained willingly or through deceit. Consent is an act of reason, accompanied by deliberation, the mind weighing, as in a balance, the good and evil on each side. There is a clear distinction between rape and consensual sex and in a case like this, the court must very carefully examine whether the accused had actually wanted to marry the victim, or had mala fide motives, and had made a false promise to this effect only to satisfy his lust, as the latter falls within the ambit of cheating or deception. There is a distinction between the mere breach of a promise, and not fulfilling a false promise. Thus, the court must examine whether there was made, at an early stage a false promise of marriage by the accused; and whether the consent involved was given after wholly understanding the nature and consequences of sexual indulgence. There may be a case where the prosecutrix agrees to have sexual intercourse on account of her love and passion for the accused, and not solely on account of misrepresentation made to her by the accused, or where an accused on account of circumstances which he could not have foreseen, or which were beyond his control, was unable to marry her, despite having every intention to do so. Such cases must be treated differently. An accused can be convicted for rape only if the court reaches a conclusion that the intention of the accused was mala fide, and that he had clandestine motives.

. . .

24. Hence, it is evident that there must be adequate evidence to show that at the relevant time i.e. at the initial stage itself, the accused had no intention whatsoever, of keeping his promise to marry the victim. There may, of course, be circumstances, when a person having the best of intentions is unable to marry the victim owing to various unavoidable circumstances. The “failure to keep a promise made with respect to a future uncertain date, due to reasons that are not very clear from the evidence available, does not always amount to misconception of fact. In order to come within the meaning of the term “misconception of fact”, the fact must have an immediate relevance”. Section 90 IPC cannot be called into aid in such a situation, to pardon the act of a girl in entirety, and fasten criminal liability on the other, unless the court is assured of the fact that from the very beginning, the accused had never really intended to marry her.”

(emphasis supplied)

35.It is, therefore, clear that the accused is not liable for the offence of rape if the victim has wilfully agreed to maintain sexual relations. The Court has also recognised that a prosecutrix can agree to have sexual intercourse on account of her love and passion for the accused.

36.This Court in Shivashankar v. State of Karnataka,9 had quashed criminal proceedings on the ground that it is difficult to hold sexual intercourse in the course of a relationship, which continued for eight years, as ‘rape’ especially when the complainant therein had alleged that they lived together as man and wife. The relevant extract is reproduced hereinbelow: -

“4. In the facts and circumstances of the present case, it is difficult to sustain the charges levelled against the appellant who may have possibly, made a false promise of marriage to the complainant. It is, however, difficult to hold sexual intercourse in the course of a relationship which has continued for eight years, as “rape” especially in the face of the complainant’s own allegation that they lived together as man and wife.”

(emphasis supplied)

37.Thus, by no stretch of imagination, can this Court be convinced that present is a case wherein the appellant is liable to be prosecuted for having sexually exploited/assaulted the complainant based on a false promise of marriage. The allegations of the complainant are full of material contradictions and are ex facie unbelievable. Throughout the prolonged period of 16 years, the complainant kept completely quiet about the alleged sexual abuse, meted out to her by the appellant until she learnt that the appellant had married another woman. Further in complete contradiction to the case setup in the FIR, the complainant has on many occasions portrayed herself to be the wife of the appellant and thus, evidently, they lived together as man and wife. Additionally, the long gap of 16 years between the first alleged act of sexual intercourse, continued relations for one and a half decade till the filing of the FIR convinces us that it is a clear case of a love affair/live in relationship gone sour.

38.In this background, we are of the opinion that allowing the prosecution of the appellant to continue for the offences alleged, under Sections 376, 384, 323, 504 and 506 IPC would be nothing short of a gross abuse of the process of law.

39.The order dated 24th April, 2023, passed by the High Court of Judicature at Allahabad is quashed and set aside and as a consequence, the impugned FIR No. 269 of 2022 and all the consequent proceedings sought to be taken thereunder against the appellant are also quashed and set aside.

40.The appeal is allowed accordingly.

41.Pending application(s), if any, shall stand disposed of.

Result of the case: Appeal allowed.

1 Hereinafter, referred to as ‘High Court’.

2 Hereinafter, being referred to as ‘IPC’.

3 For short, ‘complainant’.

4 FIR No. 269 of 2022.

5 Hereinafter, referred to as ‘CrPC’.

6 2024 SCC OnLine SC 3471

7 2024 SCC OnLine SC 3375

8 (2013) 7 SCC 675

9 (2019) 18 SCC 204

Consumer Protection Act, 1986 – s.27 – Insolvency and Bankruptcy Code, 2016 – s.96 – The NCDRC imposed multiple penalties on the appellant for failing to deliver possession of residential units to home-buyers as per the agreed timeline – The appellant sought a stay on the penalty proceedings before the NCDRC, contending that an application u/s.95 of the IBC has been filed against them, triggering an interim moratorium u/s.96 of the IBC – The NCDRC vide the impugned order dated 07.02.2024 rejected this application, holding that consumer claims and the penalty imposed did not fall within the moratorium under the IBC – Correctness: Held: In the present case, the damages awarded by the NCDRC arise from a consumer dispute, where the appellant has been held liable for deficiency in service – Such damages are not in the nature of ordinary contractual debts but rather serve to compensate the consumers for loss suffered and to deter unethical business practices – Courts and tribunals, including the NCDRC, exercise their statutory jurisdiction to award such damages, and these are distinct from purely financial debts that may be subject to restructuring under the IBC – Since such damages are covered under "excluded debts" as per s.79(15) of the IBC, they do not get the benefit of the moratorium u/s.96 of the IBC, and their enforcement remains unaffected by the initiation of insolvency proceedings – The penalties imposed by the NCDRC arise due to non-compliance with consumer protection laws and serve a regulatory function rather than constituting "debt recovery proceedings" – This distinction is crucial – The IBC is designed to deal with insolvency resolution and financial distress, whereas consumer protection laws exist to uphold consumer rights and ensure fair business practices – The penalties u/s. 27 of the CP Act are aimed at compelling compliance and cannot be equated with recovery of an outstanding debt – The appellant cannot claim that such penalties fall within the scope of a debt moratorium, as they do not constitute financial liabilities owed to a creditor but rather statutory obligations enforced to uphold consumer rights. [Paras 33, 35]

[2025] 3 S.C.R. 325 : 2025 INSC 314

Saranga Anilkumar Aggarwal v. Bhavesh Dhirajlal Sheth & Ors.

(Civil Appeal No. 4048 of 2024)

04 March 2025

[Vikram Nath* and Prasanna B. Varale, JJ.]

Issue for Consideration

Whether the execution of penalty orders passed by the NCDRC can be stayed under the interim moratorium provisions of s.96 of the Insolvency and Bankruptcy Code, 2016.

Headnotes

Consumer Protection Act, 1986 – s.27 – Insolvency and Bankruptcy Code, 2016 – s.96 – The NCDRC imposed multiple penalties on the appellant for failing to deliver possession of residential units to home-buyers as per the agreed timeline – The appellant sought a stay on the penalty proceedings before the NCDRC, contending that an application u/s.95 of the IBC has been filed against them, triggering an interim moratorium u/s.96 of the IBC – The NCDRC vide the impugned order dated 07.02.2024 rejected this application, holding that consumer claims and the penalty imposed did not fall within the moratorium under the IBC – Correctness:

Held: In the present case, the damages awarded by the NCDRC arise from a consumer dispute, where the appellant has been held liable for deficiency in service – Such damages are not in the nature of ordinary contractual debts but rather serve to compensate the consumers for loss suffered and to deter unethical business practices – Courts and tribunals, including the NCDRC, exercise their statutory jurisdiction to award such damages, and these are distinct from purely financial debts that may be subject to restructuring under the IBC – Since such damages are covered under "excluded debts" as per s.79(15) of the IBC, they do not get the benefit of the moratorium u/s.96 of the IBC, and their enforcement remains unaffected by the initiation of insolvency proceedings – The penalties imposed by the NCDRC arise due to non-compliance with consumer protection laws and serve a regulatory function rather than constituting "debt recovery proceedings" – This distinction is crucial – The IBC is designed to deal with insolvency resolution and financial distress, whereas consumer protection laws exist to uphold consumer rights and ensure fair business practices – The penalties u/s. 27 of the CP Act are aimed at compelling compliance and cannot be equated with recovery of an outstanding debt – The appellant cannot claim that such penalties fall within the scope of a debt moratorium, as they do not constitute financial liabilities owed to a creditor but rather statutory obligations enforced to uphold consumer rights. [Paras 33, 35]

Consumer Protection Act, 1986 – s.27 – Negotiable Instruments Act, 1881 – s.138 – Distinction between proceedings u/s.138 of NI Act and s.27 of the CP Act:

Held: There is distinction between proceedings u/s.138 of the NI Act and those u/s.27 of the CP Act – Proceedings u/s.138 of the NI Act pertain to dishonour of cheques and are criminal in nature, where the assumption of debt is inherent in the offence itself – The dishonour of a cheque indicates a failure to honour financial obligations, and the proceedings are initiated for the recovery of the debt in question – In contrast, s.27 of the CP Act deals with non-compliance with consumer protection orders, which are remedial in nature rather than criminal – The primary focus of proceedings u/s.27 of the CP Act is to enforce consumer rights and ensure that service providers fulfil their obligations – These proceedings do not assume the existence of a financial debt but rather deal with deficiencies in service and the failure to comply with consumer redressal mechanisms – Thus, the analogy drawn by the appellant between the moratorium on s.138, NI Act proceedings and s.27, CP Act proceedings is misconceived and legally untenable. [Para 36]

Case Law Cited

State Bank of India v. V. Ramakrishnan & Anr. [2018] 10 SCR 974 : (2018) 17 SCC 394; Ajay Kumar Radheyshyam Goenka v. Tourism Finance Corporation of India Ltd. [2023] 4 SCR 986 : (2023) 10 SCC 545; Manish Kumar v. Union of India and Another [2021] 14 SCR 895 : (2021) 5 SCC 1; Sheetal Gupta v. National Spot Exchange Limited and Ors., 2023 SCC OnLine Bom 3095; P. Mohanraj and Others v. Shah Brothers Ispat Private Limited [2021] 14 SCR 204 : (2021) 6 SCC 258; Kaushalya Devi Massand v. Roopkishore Khore [2011] 3 SCR 879 : (2011) 4 SCC 593; Kunhayammed & Ors. v. State of Kerala & Anr. [2000] Supp. 1 SCR 538 : (2000) 6 SCC 359; Khoday Distilleries Limited & Ors. v. Sri Mahadeshwara Sahakara Sakkare Karkhane Limited, Kollegal [2019] 3 SCR 411 : (2019) 4 SCC 376; Satyawati v. Rajinder Singh and Another [2013] 3 SCR 471 : (2013) 9 SCC 491; Vijay Madanlal Chaudhary & Ors. v. Union of India, 2021 SCC OnLine SC 1048 – referred to.

List of Acts

Consumer Protection Act, 1986; Insolvency and Bankruptcy Code, 2016; Negotiable Instruments Act, 1881.

List of Keywords

Section 27 of Consumer Protection Act, 1986; Section 138 of Negotiable Instruments Act, 1881; Section 96 of Insolvency and Bankruptcy Code, 2016; Execution proceeding; Stay of execution; Penalty; Consumer claims; Consumer rights; Moratorium; Criminal proceedings.

Case Arising From

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4048 of 2024

From the Judgment and Order dated 07.02.2024 of the National Consumers Disputes Redressal Commission, New Delhi in EA No. 140 of 2019

Appearances for Parties

Advs. for the Appellant:

K. Parmeshwar, Sr. Adv., Vipul Jai, Aamir Siraj, Vinam Gupta, Puneet Singh Bindra.

Advs. for the Respondents:

Shashwat Parihar, Dhruva Vig, Deepanshu Badiwal, Shashwat Anand.

Judgment / Order of the Supreme Court

Judgment

Vikram Nath, J.

1.The present appeal has been filed against the final judgment and order passed by the National Consumer Disputes Redressal Commission1, wherein multiple penalties (27 in total) were imposed on the appellant for failing to deliver possession of residential units to homebuyers as per the agreed timeline. The appellant seeks a stay on the penalty proceedings before the NCDRC, contending that an application under Section 95 of the Insolvency and Bankruptcy Code, 20162 has been filed against them, triggering an interim moratorium under Section 96 of the IBC.

2.This Court is called upon to adjudicate whether execution proceedings under Section 27 of the Consumer Protection Act, 19863, can also be stayed during an interim moratorium under Section 96 of the IBC. The present matter arises from an application filed by the appellant, who is the proprietor of proforma respondent no. 3 – East & West Builders (RNA Corp. Group Co.), in an execution application filed by respondent nos. 1 and 2 before the NCDRC, challenging the execution of multiple penalty orders imposed by the NCDRC during the pendency of insolvency proceedings against the Corporation. The appellant contends that the imposition and execution of these penalties should be stayed due to the pendency of insolvency proceedings initiated under Section 95 of the IBC.

3.The appellant is engaged in real estate development and has several pending consumer complaints before the NCDRC filed by homebuyers alleging delay in possession, deficiency in service, and breach of contractual obligations. The NCDRC, in its final judgment dated 10.08.2018 in CC/1362/2017 along with other connected matters, allowed the complaints and directed the appellant to complete construction, obtain the requisite occupancy certificate, and hand over possession and imposed 27 penalties on the appellant for deficiency in service by failing to deliver possession within a reasonable time. The respondent no.1 and 2, as decree holders, subsequently filed execution applications seeking execution of the abovementioned order of the NCDRC as the appellant failed to comply with the directions of the NCDRC.

4.Subsequently, the appellant, facing insolvency proceedings before the National Company Law Tribunal4 under the IBC, moved an application before the NCDRC seeking a stay of execution proceedings. The appellant in the application before the NCDRC sought to contest the execution on various grounds, including financial distress, adverse market conditions in the real estate sector, and its ongoing insolvency proceedings. The appellant contended that it had entered into settlement agreements with several decree holders and had already made significant payments, satisfying a substantial portion of the execution claims. Specifically, the appellant stated that pursuant to entering into respective settlement agreements, it had made entire payments in the matters of seven homebuyers, thereby fully satisfying seven execution petitions, leaving only thirteen execution petitions pending out of a total of twenty. It further stated that a total amount of Rs. 11,57,34,925/- had been paid in execution proceedings. However, some instalment payments were delayed due to reasons beyond its control, particularly adverse economic conditions in the real estate sector. The appellant also contended that it was one of the personal guarantors to credit facilities extended to A.A. Estates Pvt. Ltd. by the State Bank of India (SBI). Due to an alleged default in repayment, insolvency proceedings under Section 7 of the IBC were initiated against A.A. Estates Pvt. Ltd. before the NCLT, Mumbai Bench. Additionally, SBI initiated proceedings under Section 95 of the IBC against the appellant, the proprietor of the Judgment Debtor – proforma respondent no.3. Consequently, an interim moratorium was triggered against the appellant as per Section 96 of the IBC, which the appellant claimed barred further legal proceedings, including the ongoing execution proceedings before the NCDRC.

5.The NCDRC vide the impugned order dated 07.02.2024 rejected this application, holding that consumer claims and the penalty imposed did not fall within the moratorium under the IBC.

6.The NCDRC relied on this Court’s decision in State Bank of India v. V. Ramakrishnan & Anr.,5 which clarified that Sections 96 and 101 of the IBC provide a distinct moratorium applicable to personal guarantors, separate from the moratorium under Section 14 applicable to corporate debtors. The NCDRC emphasized that the stay under Sections 96 and 101 extends only to proceedings concerning the debt and does not necessarily shield the guarantor from all legal actions.

7.Additionally, the NCDRC placed significant reliance on this Court’s ruling in Ajay Kumar Radheyshyam Goenka v. Tourism Finance Corporation of India Ltd.6. In that case, this Court reaffirmed that criminal proceedings against directors or signatories of a company do not abate merely because the corporate debtor is undergoing insolvency resolution. This Court, referring to Manish Kumar v. Union of India and Another,7 held that individuals associated with the corporate debtor remain liable for their acts, and the company’s dissolution does not absolve them of personal liability under statutes like the Negotiable Instruments Act, 18818.

8.Furthermore, the NCDRC rejected the applicant’s reliance on the Bombay High Court’s decision in Sheetal Gupta vs. National Spot Exchange Limited and Ors.,9 wherein the Bombay High Court had directed stay of criminal proceedings under Section 138 of the NI Act against the concerned persons representing the corporate debtors. The Commission noted that while this Court had dismissed an appeal against this ruling in SLP (Criminal) No. 4727 of 2023 in order dated 28.04.2023, the dismissal was by a brief and non-speaking order, without any discussion on legal principles. Given that this Court’s judgment in Ajay Kumar Radheyshyam Goenka (supra) was pronounced in the interim and was not considered in the summary dismissal of the appeal, the NCDRC deemed the earlier Bombay High Court ruling as per incuriam.

9.Accordingly, for the reasons stated above the NCDRC concluded that the interim moratorium under Section 96 of the IBC did not bar the continuation of criminal proceedings under Section 27 of the CP Act, against the applicant in her personal capacity as a guarantor.

10.The appellant is before us challenging this order of the NCDRC.

11.The primary question of law before this Court is whether the execution of penalty orders passed by the NCDRC can be stayed under the interim moratorium provisions of Section 96 of the IBC.

12.The appellant argues that all debts and all proceedings relating to debt are automatically stayed under Section 96 of the IBC. The respondents, on the other hand, contend that the penalties imposed by NCDRC are distinct from “debt recovery” proceedings and should not fall within the ambit of the interim moratorium.

13.The appellant contended that Section 96 of the IBC creates an absolute bar on any proceedings against the debtor relating to any debt once an interim moratorium is in place. It is submitted that the penalties imposed by the NCDRC arise out of financial obligations or debts and must, therefore, be stayed. The appellant submits that as per Section 96 of the IBC when an application is filed under Section 94 or Section 95 of the IBC, an interim moratorium shall commence on the date of the application, in relation to all debts. In the present case the application under Section 95 of the IBC was filed against the appellant on 20.01.2022 and therefore, as per the provisions of Section 96 of the IBC, the interim moratorium commenced against the appellant from 20.01.2022 and thus the proceedings under Section 27 of the CP Act pending before the NCDRC shall be deemed to have been stayed since as per Section 96(1)(b)(i) of the IBC during the interim moratorium period, “any legal action or proceedings, pending in respect of any debt, shall be deemed to have been stayed.”

14.The appellant further submitted that the proceedings under Section 27 of the CP Act are effectively recovery proceedings. Respondent No. 1 and 2 in their execution application have primarily sought for an award of Rs. 1,55,00,000/- while abandoning the other prayers or reliefs granted in the Consumer Complaint. Therefore, the execution proceedings initiated by the Respondent Nos. 1 and 2 are proceedings to recover the amounts under the garb of seeking an award. Since, the interim moratorium has commenced against the appellant, the appellant is estopped from undertaking any preferential payments, as such the continuation of the execution proceedings against the appellant would constitute an act of double jeopardy.

15.The appellant cited P. Mohanraj and Others v. Shah Brothers Ispat Private Limited,10 where it was held that proceedings under Section 138 of the NI Act are covered under “any legal action or proceeding pending” even though they are quasi-criminal in nature, thus also staying criminal proceedings against the corporate debtor. The principle that insolvency proceedings should take precedence over all other claims is reiterated, and the appellant seeks similar protection under Section 96 of the IBC for interim moratoriums applicable to personal guarantors and individuals. It is argued that unless such a stay is granted, the insolvency process will be frustrated, and the appellant will be subjected to conflicting proceedings across multiple fora.

16.The appellant also relied upon the judgment of this Court in the matter of SBI V. V.Ramakrishnan (supra), wherein it was held that when an application is filed under Part III of the IBC, an interim moratorium or a moratorium is applicable in respect of any debt due and that the protection under Section 96 of the IBC is far greater than that under Section 14 of the IBC. Reliance was also placed on the judgment of this Court in Kaushalya Devi Massand vs. Roopkishore Khore,11 holding that the gravity of complaint under the NI Act cannot be equated with an offence under the provisions of the Indian Penal Code, 186012 or other criminal offences and that an offence under Section 138 of the NI Act is almost in the nature of civil wrong which has been given criminal overtones. Thus, it has been submitted, similarly the penal provisions under the CP Act cannot be equated to offences under the IPC. Since these are also recovery proceedings in nature, they would also fall within the ambit of Section 96 of the IBC.

17.It was thus the submission of the appellant that a bare perusal of the aforementioned judgments, would leave no scope of interpretation that the definition of the term ‘debt’ is wide enough to not only include quasi-criminal proceedings but also recovery proceedings. Therefore, it is abundantly clear that the NCDRC erred in dismissing the application filed by the appellant. Furthermore, in view of the settled legal position as enunciated hereinabove, the execution proceeding pending against the appellant must be stayed till the operation of interim moratorium under Section 96 of the IBC.

18.On the other hand, the respondent nos. 1 and 2, primarily homebuyers, contend that the penalties imposed by the NCDRC are not merely monetary claims but punitive measures to deter unfair trade practices. They argue that consumer protection proceedings serve a vital public function in ensuring compliance with orders protecting homebuyers, who are already vulnerable due to the developer’s delays. The respondents assert that staying such penalties would set a dangerous precedent where developers can indefinitely delay justice by invoking insolvency proceedings.

19.The respondents submitted that the moratorium imposed under Section 96 of the IBC does not extend to criminal proceedings under Section 27 of the CP Act. The respondents contend that the moratorium under Section 96 of the IBC is limited to recovery actions and civil proceedings against the debtor, with no applicability to criminal proceedings. It is submitted that Section 27 of the CP Act provides for punitive action against those who fail to comply with orders of the consumer forum, which is penal in nature and distinct from debt recovery proceedings. The NCDRC, by its order dated 07.02.2024, has rightly held that the moratorium under IBC does not cover criminal proceedings, and such an interpretation is consistent with established judicial precedents. Additionally, the respondents contend that the nature of proceedings under Section 27 of the CP Act is inherently punitive, as it prescribes punishment, including imprisonment, for non-compliance with consumer forum orders. Unlike civil recovery proceedings, which aim at debt enforcement, Section 27 of the CP Act serves a penal function by ensuring compliance with consumer rights and providing a deterrent against non-execution of forum orders. The regulatory and penal proceedings are distinct from civil claims and cannot be stalled due to insolvency moratoriums. Since Section 27 of the CP Act explicitly provides for imprisonment as a consequence of non-compliance, it cannot be considered a mere debt recovery mechanism and thus falls outside the scope of the IBC moratorium.

20.The appellant sought to rely on the Bombay High Court’s decision in Sheetal Gupta v. National Spot Exchange Ltd. & Ors. (supra), and this Court’s subsequent dismissal of the challenge in National Spot Exchange Ltd. v. Sheetal Gupta & Anr. (supra). However, the respondents argued that since this Court’s order was a mere dismissal without any reasoning, it does not constitute a binding precedent. Citing Kunhayammed & Ors. v. State of Kerala & Anr.13 and Khoday Distilleries Limited & Ors. v. Sri Mahadeshwara Sahakara Sakkare Karkhane Limited, Kollegal,14 the respondents submitted that a non-speaking dismissal does not decide any legal issue and, therefore, does not attract the doctrine of merger. In contrast, NCDRC correctly applied the ratio of Ajay Kumar Radheyshyam Goenka (supra), which distinguishes civil liability from criminal prosecution.

21.The respondents further argued that the moratorium under IBC is designed to protect the assets of the corporate debtor and the personal guarantor from alienation. However, not all debts are covered under this protection. Section 94 of the IBC clarifies that the moratorium applies only to debts that are not “excluded debts” under Section 79(15) of the IBC. As per this provision, liabilities arising from fines imposed by courts or tribunals, damages for negligence or breach of obligation, maintenance liabilities, student loans, and other prescribed debts are excluded. Since the damages awarded by NCDRC and their execution fall under “excluded debts,” the moratorium under Section 96 of the IBC does not apply.

22.The respondents emphasize that Section 27 of the CP Act, imposes criminal liability, including imprisonment for non-compliance with consumer court orders. This Court in Satyawati v. Rajinder Singh and Another,15 highlighted the severe impact of delays in execution proceedings, observing that such delays deprive decree-holders of the fruits of litigation. Given that the NCDRC award falls within the category of “excluded debts,” the moratorium does not extend to criminal proceedings initiated for its enforcement, these proceedings are merely delay tactics on part of the appellant.

23.The respondents highlighted the prolonged hardship faced by the decree holders due to the appellant’s repeated delays in execution proceedings. Despite this Court’s ruling in Vijay Madanlal Chaudhary & Ors. v. Union of India,16 which held that orders granting “no coercive action” should not be treated as a stay of proceedings, the appellant has used such an order to stall the matter. Through a timeline of events the respondents sought to demonstrate the appellant’s continued non-compliance, starting from the booking of flats in 2011, the filing of consumer complaints in 2017, the NCDRC’s ruling in favour of the consumers in 2018, and the subsequent delays in execution proceedings. Non-bailable warrants were issued against Saranga Aggarwal in 2021 due to non-compliance, yet the appellant has failed to take steps to honour its obligations.

24.Lastly, the respondents counter the appellant’s argument that the execution petition’s prayer is defective. They submit that the prayer must be read holistically, as it seeks to enforce compliance under Section 27 of the CP Act. The execution petition was filed only after the appellant failed to pay compensation or resume construction as per the consumer court’s orders. Given these circumstances, the respondents contended that NCDRC’s order is legally sound and should be upheld, as the moratorium under IBC does not bar the continuation of criminal proceedings for non-compliance with consumer court awards.

25.In light of the above, the respondent submitted that the appeal against the NCDRC’s order is devoid of merit and should be dismissed. The judicial precedents, as well as the legislative intent behind the CP Act and the IBC, make it clear that the moratorium under Section 96 of the IBC is not meant to protect individuals from criminal prosecution. Accepting the appellant’s argument would lead to an anomalous situation where persons violating consumer rights could evade penal consequences merely by initiating insolvency proceedings, thereby frustrating the very purpose of consumer protection laws.

26.We have heard Mr. K. Parmeshwar, learned senior counsel appearing for the appellant and Mr. Shashwat Parihar, learned counsel appearing on behalf of respondent nos.1 and 2.

27.We find that there is a fundamental distinction between civil and criminal proceedings concerning a debt moratorium. While civil proceedings are generally stayed under IBC provisions, criminal proceedings, including penalty enforcement, do not automatically fall within its ambit unless explicitly stated by law. The penalties imposed by the NCDRC are regulatory in nature and arise due to non-compliance with consumer protection laws. They are distinct from “debt recovery proceedings” under the IBC.

28.A moratorium under Section 96 of the IBC is distinct from a corporate moratorium under Section 14 of the IBC. Section 96 of the IBC applies to individuals and personal guarantors and provides that during the interim moratorium period, “any legal action or proceedings relating to any debt shall be deemed to have been stayed.” However, it is pertinent to note that this provision applies only to “debt” as defined under the IBC and not to regulatory penalties imposed for non-compliance with consumer protection laws. A careful reading of the statutory scheme of the IBC suggests that penalties arising from regulatory infractions are not covered under the ambit of “debt” as envisioned under the Code.

29.It is well settled that there exists a distinction between punitive actions and criminal proceedings. While a criminal proceeding is initiated by the State against an accused to determine guilt and impose penal consequences, punitive actions in the regulatory sphere, such as those imposed by the NCDRC, are meant to ensure compliance with the law and to act as a deterrent against future violations. Section 27 of the CP Act empowers consumer fora to impose penalties to ensure adherence to consumer protection norms. These penalties do not arise from any “debt” owed to a creditor but rather from the failure to comply with the remedial mechanisms established under consumer law. Unlike a criminal prosecution, which requires the establishment of mens rea, the penalties imposed by NCDRC are regulatory in nature and aim to protect the public interest rather than to punish criminal behaviour.

30.Further, a distinction must be drawn between the moratorium applicable to a corporate debtor under Section 14 of the IBC and the interim moratorium applicable to individuals and personal guarantors under Section 96 of the IBC. The former is much broader in scope and stays all proceedings against the corporate debtor, including execution and enforcement actions. However, Section 96 of the IBC is more limited in its scope, staying only “legal actions or proceedings in respect of any debt.” Unlike corporate insolvency proceedings, where the goal is a comprehensive resolution of the company’s liabilities, individual insolvency proceedings are designed primarily for restructuring personal debts and providing relief to the debtor. The legislative intent behind limiting the scope of the interim moratorium under Section 96 of the IBC must be respected, and a blanket stay on all regulatory penalties would result in defeating the objectives of consumer protection laws.

31.The moratorium under Section 96 of the IBC is intended to provide temporary relief to debtors by preventing certain proceedings against them during the resolution process. However, this protection is not absolute and does not extend to all categories of debts. The legislative intent behind the moratorium is to ensure that the debtor’s assets are preserved for an efficient resolution process and to prevent creditors from taking unilateral actions that may frustrate the objective of insolvency proceedings. However, the statutory scheme of the IBC makes it clear that the protection under the moratorium does not cover all forms of liabilities, particularly those classified as “excluded debts” under Section 79(15) of the IBC.

32.The respondents have rightly contended that Section 94(3) of the IBC explicitly limits the scope of the moratorium by carving out exceptions for certain categories of debts. Section 79(15) of the IBC defines “excluded debts” to include liabilities arising from fines imposed by courts or tribunals, damages for negligence or breach of obligation, maintenance liabilities, student loans, and other prescribed debts. This classification is based on the nature of such obligations, which are either statutory, penal, or personal in nature, and therefore, they do not form part of the insolvency estate that can be discharged under the resolution process.

33.In the present case, the damages awarded by the NCDRC arise from a consumer dispute, where the appellant has been held liable for deficiency in service. Such damages are not in the nature of ordinary contractual debts but rather serve to compensate the consumers for loss suffered and to deter unethical business practices. Courts and tribunals, including the NCDRC, exercise their statutory jurisdiction to award such damages, and these are distinct from purely financial debts that may be subject to restructuring under the IBC. Since such damages are covered under “excluded debts” as per Section 79(15) of the IBC, they do not get the benefit of the moratorium under Section 96 of the IBC, and their enforcement remains unaffected by the initiation of insolvency proceedings.

34.Furthermore, the rationale behind excluding such liabilities from the moratorium is rooted in public policy considerations. If damages arising from legal violations, consumer protection claims, or penalties imposed by courts and tribunals were to be shielded under the moratorium, it would create an unfair advantage for errant entities and individuals, allowing them to evade their legal obligations under the guise of insolvency. The IBC, being a special law meant to balance the interests of all stakeholders, does not intend to provide relief to those who have been held liable for statutory breaches or misconduct.

35.The penalties imposed by the NCDRC arise due to non-compliance with consumer protection laws and serve a regulatory function rather than constituting “debt recovery proceedings.” This distinction is crucial. The IBC is designed to deal with insolvency resolution and financial distress, whereas consumer protection laws exist to uphold consumer rights and ensure fair business practices. The penalties under Section 27 of the CP Act are aimed at compelling compliance and cannot be equated with recovery of an outstanding debt. The appellant cannot claim that such penalties fall within the scope of a debt moratorium, as they do not constitute financial liabilities owed to a creditor but rather statutory obligations enforced to uphold consumer rights. Allowing the stay of such penalties would effectively enable businesses to flout consumer protection mandates by merely initiating insolvency proceedings, which would be an unintended and dangerous consequence of a misinterpretation of the law.

36.The distinction between proceedings under Section 138 of the NI Act and those under Section 27 of the CP Act must also be examined. Proceedings under Section 138 of the NI Act pertain to dishonour of cheques and are criminal in nature, where the assumption of debt is inherent in the offence itself. The dishonour of a cheque indicates a failure to honour financial obligations, and the proceedings are initiated for the recovery of the debt in question. In contrast, Section 27 of the CP Act deals with non-compliance with consumer protection orders, which are remedial in nature rather than criminal. The primary focus of proceedings under Section 27 of the CP Act is to enforce consumer rights and ensure that service providers fulfil their obligations. These proceedings do not assume the existence of a financial debt but rather deal with deficiencies in service and the failure to comply with consumer redressal mechanisms. Thus, the analogy drawn by the appellant between the moratorium on Section 138, NI Act proceedings and Section 27, CP Act proceedings is misconceived and legally untenable.

37.If the appellant’s argument is accepted, homebuyers, who have already suffered immense delays and financial hardship, would be further deprived of relief. The legislative intent behind consumer protection laws is to safeguard the interests of consumers and ensure accountability from service providers. Permitting a stay on regulatory penalties under the guise of insolvency proceedings would undermine the very purpose of the CP Act and embolden errant developers to escape liability through insolvency proceedings. Homebuyers, many of whom invest their life savings in purchasing residential units, are already in a precarious position due to delays in possession and breaches of contractual obligations. Staying penalties that serve as deterrence against such unfair practices would render consumer protection mechanisms ineffective and erode trust in the regulatory framework.

38.Judicial precedents support the view that statutory penalties and regulatory actions do not automatically fall within the ambit of an insolvency moratorium. In P. Mohanraj (supra) this Court held that a moratorium under Section 14 of the IBC extends to proceedings under Section 138 of the NI Act. However, a distinction between debt recovery proceedings and punitive actions needs to be created, and therefore all criminal liabilities do not fall within the scope of the moratorium unless explicitly covered under the IBC. Consequently, penalties imposed by regulatory bodies in the public interest cannot be stayed merely because insolvency proceedings are ongoing.

39.The present case does not involve a mere financial dispute but concerns the enforcement of consumer rights through regulatory penalties. Given that the legislative intent behind the CP Act is to ensure compliance with consumer welfare measures, staying such penalties would be contrary to public policy. Further, the appellant cannot invoke insolvency proceedings as a shield to evade statutory liabilities. The objective of the IBC is to provide a mechanism for resolving financial distress, not to nullify obligations arising under regulatory statutes.

40.For the foregoing reasons, this Court finds no merit in the appellant’s arguments. The penalties imposed by the NCDRC are regulatory in nature and do not constitute “debt” under the IBC. The moratorium under Section 96 of the IBC does not extend to regulatory penalties imposed for non-compliance with consumer protection laws.

41.The appeal is accordingly dismissed, and the appellant is directed to comply with the penalties imposed by the NCDRC within a period of eight weeks from the date of this judgment.

42.Pending application(s), if any, shall stand disposed of.

Result of the case: Appeal dismissed.

1 NCDRC

2 IBC

3 CP Act

4 NCLT

5 (2018) 17 SCC 394

6 (2023) 10 SCC 545

7 (2021) 5 SCC 1

8 NI Act

9 2023 SCC OnLine Bom 3095

10 (2021) 6 SCC 258

11 (2011) 4 SCC 593

12 IPC

13 (2000) 6 SCC 359

14 (2019) 4 SCC 376

15 (2013) 9 SCC 491

16 2021 SCC OnLine SC 1048

Service law – Pension – Pension scheme – Exercise of option by the eligible retired employees when not within the stipulated period – Effect – Bank-appellant no.1 invited options from the eligible retired employees to join the Bank Employees’ Pension Scheme – First respondent-employee of appellant no.1, though eligible, but did not exercise his option to apply for pension scheme within the stipulated period – He had travelled to United States and returned to India a week after the said circular was issued but much prior to the last date for exercise of option – He expressed his interest to opt for the pension scheme four months after the stipulated date claiming that he came to know of the scheme from the erstwhile empolyees of the Bank but the Bank did not accept the option – Writ petition by the employee dismissed by the Single Judge of the High Court, however allowed by the Division Bench of the High Court – Correctness:

[2025] 4 S.C.R. 120 : 2025 INSC 373

Bank of India & Ors. v. Muthyala Saibaba Suryanarayana Murthy & Anr.

(Civil Appeal No. 3829 of 2025)

18 March 2025

[Dipankar Datta* and Manmohan, JJ.]

Issue for Consideration

Whether the Division Bench was justified in interfering with the order of the Single Judge dismissing the writ petition by the eligible retired employee who had failed to exercise option under Bank of India (Employees’) Pension Scheme, 1995 within the stipulated period.

Headnotes

Service law – Pension – Pension scheme – Exercise of option by the eligible retired employees when not within the stipulated period – Effect – Bank-appellant no.1 invited options from the eligible retired employees to join the Bank Employees’ Pension Scheme – First respondent-employee of appellant no.1, though eligible, but did not exercise his option to apply for pension scheme within the stipulated period – He had travelled to United States and returned to India a week after the said circular was issued but much prior to the last date for exercise of option – He expressed his interest to opt for the pension scheme four months after the stipulated date claiming that he came to know of the scheme from the erstwhile empolyees of the Bank but the Bank did not accept the option – Writ petition by the employee dismissed by the Single Judge of the High Court, however allowed by the Division Bench of the High Court – Correctness:

Held: Whenever a policy is formulated, which is beneficial in nature for the subjects to be governed thereby but prescribes a time limit for the subjects to act, it is not and cannot be the law that the proposed benefits can be availed of by a subject beyond the stipulated period and at any time in future suiting his convenience – Wide publicity was given by the Bank through local and national newspapers and also through its branches that employees, who are otherwise eligible, may opt for the pension scheme by the stipulated period – Employee not diligent enough to make himself aware of the developments touching his interest while he was abroad – After the employee did not avail the opportunity to exercise option by the last date, no occasion for denial or deprivation of a legal right of the employee by the appellants – Harm or loss arising out of failure of the employee to opt for the pension scheme not wrongful in the eye of law since it is he who has to be blamed for the situation – Thus, not having a legally protected right which could be judicially enforced by seeking a mandamus, the writ petition was not maintainable and the Single Judge rightly dismissed the same – Division Bench failed to realise that in exercise of writ powers u/Art. 226, the High Courts do not come to the aid of the tardy, the indolent, and the lethargic – Considerations of sympathy, grace, charity, or compassion do not have any place where a subject is called upon to exercise his option upon a settlement executed by and between the parties, one of which represents the subject himself, and such settlement is binding on the parties during its validity – There being no unreasonableness or arbitrariness in the process of decision making adopted by the Bank, writ petition rightly dismissed and interference by the Division Bench not called for – Impugned judgment set aside – Bank of India (Employees’) Pension Scheme, 1995. [Paras 10, 11, 14, 15, 17-19, 21, 22]

Case Law Cited

Calcutta Port Trust and Ors. v. Anadi Kumar Das (Captain) and Ors. [2013] 12 SCR 862 : (2014) 3 SCC 617; Mani Subrat Jain v. State of Haryana [1977] 2 SCR 361 : (1977) 1 SCC 486 – referred to.

List of Acts

Constitution of India.

List of Keywords

Bank of India (Employees’) Pension Scheme, 1995; Eligible retired employees; Last date for exercise of option; Beneficial in nature; Deprivation of legal right; Considerations of sympathy, grace, charity, or compassion.

Case Arising From

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 3829 of 2025

From the Judgment and Order dated 07.03.2024 of the High Court for the State of Telangana at Hyderabad in WA No. 188 of 2024

Appearances for Parties

Advs. for the Appellants:

Som Raj Choudhury, Ms. Shrutee Aradhana, Siddhant Goel, Prashant Kumar.

Advs. for the Respondents:

V. Shanth Kumar Mahale, Sr. Adv., V. Sridhar Reddy, Abhijit Sengupta.

Judgment / Order of the Supreme Court

Judgment

Dipankar Datta, J.

1.Leave granted.

2.The appellants call in question the judgment and order dated 7th March, 2024 passed by a Division Bench of the High Court for the State of Telangana1, allowing a writ appeal2 carried by the first respondent from the judgment and order dated 22nd November, 2023 of dismissal of his writ petition3 by a Single Judge of the same court.

3.The solitary question arising for decision on this appeal is whether the Division Bench was justified in its interference with the order of dismissal of the writ petition.

4.After serving the first appellant4 for about 25 years, the first respondent opted for voluntary retirement and was relieved from the service of BoI on 30th December, 2000.

5.On 24th August, 2010, BoI published Circular No. 104/645 inviting options from retired employees between 1st September, 2010 and 30th October, 2010 to join the Bank of India (Employees’) Pension Scheme, 1995. The said circular recorded that the option to join the pension scheme was being extended in terms of an agreement / joint note dated 27th April, 2010 signed between the Indian Banks Association6 and various Officers’ Associations/Workmen Unions (United Forum of Bank Unions). The option was available to be exercised inter alia by employees of BoI who were in service prior to 29th September, 1995 and retired prior to the date of settlement, i.e., 27th April, 2010.

6.The first respondent had travelled to the United States of America in March, 2010. He returned to India a week after the said circular was issued but much prior to the last date for exercise of option. He claimed that he had to undergo a surgery in the 1st week of October, 2010. He also claimed that not being aware of the opportunity extended by BoI to exercise option within 30th October, 2010 and despite being eligible, he missed such opportunity. It was only on 19th March, 2011, i.e., 4 (four) months beyond the stipulated date, that the first respondent proceeded to express his interest to opt for the pension scheme by submitting a representation on that day itself by filling up the requisite forms claiming that he derived knowledge of the said circular from two erstwhile employees of BoI.

7.Option not having been exercised by the first respondent within the stipulated time, obviously, BoI did not accept such option. This triggered the writ petition, which the Single Judge dismissed. It was held that the period for exercise of option having expired by the time the first respondent exercised his option, the decision not to entertain the option was neither unreasonable nor arbitrary; hence, no interference was called for.

8.Aggrieved thereby, the first respondent appealed. It is such appeal that has succeeded by reason of the impugned judgment and order of the Division Bench.

9.We have heard learned counsel appearing for the parties and perused the impugned judgment and order. The only reason that can be traced in the impugned judgment and order for the writ appeal to be allowed is found in paragraph 6 thereof, reading as follows:

“6. This Court, having considered the rival submissions made by the learned counsel on either side, is of the view that the respondent-bank has issued Circular dated 24.08.2010 wherein a policy was taken to extend pension to all the retired employees. When such policy is beneficial in nature, the respondent-bank ought to have considered the application submitted by the appellant; though it was submitted belatedly after expiry of the deadline prescribed in the Circular 24.08.2010. As the appellant has undergone surgery during the relevant period of time, the lapse on his part can be condoned. Therefore, the learned Single Judge was not justified in dismissing the writ petition and hence, the same is liable to be set aside.”

10.We have no hesitation to hold that the Division Bench was entirely wrong in interfering with the dismissal of the writ petition, as ordered by the Single Judge.

11.It is noted from the judgment and order of the Single Judge that wide publicity had been given by IBA as well as by BoI through local and national newspapers and also through its branches that employees, who are otherwise eligible, may opt for the pension scheme by 30th October, 2010. Such recording was made on perusal of the counter affidavit of BoI to the writ petition of the first appellant. It has not been shown by the first respondent that the contents of the counter affidavit, filed by BoI, either did not contain any such material or that even if it did contain such material, the same did not amount to wide publicity.

12.Our attention has been invited by learned counsel appearing for the appellants to a decision of this Court in Calcutta Port Trust and Ors. vs. Anadi Kumar Das (Captain) and Ors.7, in particular to paragraph 23 thereof, reading as follows:

“23. We would like to observe that whenever an employer introduces the pension scheme or makes the same applicable to retired employees and gives them opportunity to exercise option, the circulars/instructions issued for that purpose should either be communicated to the retirees or made known to them by some reasonable mode. Mere display of such notice/instructions on the notice board of the head office cannot be treated as an intimation thereof to the retired employees/officers. The employer cannot presume that all the retirees have settled in the city where the head office is located. If the employees belong to the services of the Central Government or its agencies/instrumentalities, they are likely to settle in their native places which may be far away from the seat of the Government or head office of the establishment or organisation. The retirees are not expected to frequently travel from their native places to the seat of the Government or head office to know about additional benefits, if any, extended by the Government or their establishment/organisation and it is the duty of the employer to adopt a suitable mechanism for communicating the decision to the retired employees so as to enable them to exercise option. This could be done either by publishing a notice in the newspaper about which the retirees are told at the time of their retirement or by sending copies of the circulars/instructions to the retirees or by sending a copy thereof to the association of the employees and/or officers with a direction to them to circulate the same among the retirees concerned. By taking advantage of the modern technology, the employer can also display the circulars/instructions on a designated website about which prior information is made available to the employees at the time of their retirement. If one of these modes is not adopted, the retired employees can legitimately complain that they have been denied right to exercise the option and can seek intervention of the court.”

13.In the absence of the first respondent proving to the contrary, we are left with no option but to hold that BoI did observe the aforesaid directions in letter and spirit and spared no effort to make it known to all the retired employees, eligible to opt for the pension scheme, that they would be having the window of opportunity to so opt by submitting the requisite forms by 30th October, 2010.

14.It is the admitted case of the first respondent that he had returned to India from the United States of America on 1st September, 2010. However, he was not diligent enough to make himself aware of the developments touching his interest while he was abroad. The bogey of hospitalisation raised by the first respondent, and that too for a short period of four days between 3rd October and 7th October, 2010, was not such so as to overlook his recalcitrance in not acting with intent and purpose within the period made available by the said circular.

15.The Division Bench referred to the beneficial nature of the policy to grant relief to the first respondent. Whenever a policy is formulated, which is beneficial in nature for the subjects to be governed thereby but, at the same time, prescribes a time limit for the subjects to act, it is not and cannot be the law that the proposed benefits can be availed of by a subject beyond the stipulated period and at any time in future suiting his convenience.

16.Almost half a century back, this Court in Mani Subrat Jain v. State of Haryana8 had sounded a word of caution as follows:

“9. … It is elementary though it is to be restated that no one can ask for a mandamus without a legal right. There must be a judicially enforceable right as well as a legally protected right before one suffering a legal grievance can ask for a mandamus. A person can be said to be aggrieved only when a person is denied a legal right by someone who has a legal duty to do something or to abstain from doing something. …”

17.In the present case, after the first respondent did not avail the opportunity to exercise option by 30th October, 2010, there was no occasion for denial or deprivation of a legal right of the first respondent by the appellants. The harm or loss arising out of failure of the first respondent to opt for the pension scheme was not wrongful in the eye of law since it is he who had to be blamed for the situation where he found himself. The first respondent had neither sustained any injury to any legally protected interest nor had he been subjected to a legal wrong. He did not suffer a legal grievance and had no legal peg for a justiciable claim to hang on. Thus, not having a legally protected right which could have been judicially enforced by seeking a mandamus, the writ petition of the first respondent was plainly not maintainable and, thus, the Single Judge rightly dismissed the same.

18.The Division Bench, in course of its interference with the order dismissing the writ petition, failed to realise that in exercise of writ powers under Article 226 of the Constitution, the high courts of the country do not come to the aid of the tardy, the indolent, and the lethargic. This golden truth has to borne in mind by all courts exercising high prerogative writ jurisdiction. While mandamus will issue to reach injustice, wherever found, it is equally true that exercise of discretion should not unnecessarily be coloured by considerations of sympathy or grace or compassion or charity. These are beyond the scope of the high courts’ writ powers. In cases such as these, where acceptable justification for the failure to act with expedition is not proffered, the high courts should stay at a distance.

19.The Division Bench should have also done well to remember that considerations of sympathy, grace, charity, or compassion do not have any place where a subject is called upon to exercise his option upon a settlement executed by and between the parties, one of which represents the subject himself, and such settlement is binding on the parties during its validity. If belated options are to be accepted, it would bring in its train chaos, confusion and public inconvenience without there being any end in sight and unsettle the very settlement reached by and between the parties which is the foundation of the rights of the subjects.

20.Since it had not been shown to the High Court that the said circular was not widely published and, therefore, opening up a window of opportunity for submission of options between 1st September and 30th October, 2010 was nothing more than a mere lip service, no case for interference had been set up by the first respondent either.

21.Also, there being no unreasonableness or arbitrariness in the process of decision making adopted by the appellants, the writ petition rightly came to be dismissed and there was absolutely no occasion for the Division Bench to interfere and allow the writ appeal of the first respondent.

22.For the foregoing reasons, the appeal succeeds. The impugned judgment and order dated 7th March, 2024 is set aside and the judgment and order of the Single Judge dated 22nd November, 2023 affirmed, with the result that the writ petition of the first respondent on the file of the High Court shall stand dismissed.

Result of the case: Appeal allowed.

1 High Court

2 Writ Appeal No. 188 of 2024

3 Writ Petition No. 29659 of 2011

4 BoI

5 said circular

6 IBA

7 (2014) 3 SCC 617