Thursday, 3 September 2026

The dispute. A diamond trader was penalised over ₹425 crore under the Customs Act for allegedly mis-declaring natural diamonds as lab-grown. The penalty order extensively relied on fictitious legal precedents and articles generated through unverified artificial intelligence tools. The Gujarat High Court dismissed the importer's appeal upholding the penalty, prompting the present civil appeal before the Supreme Court.

The reasoning. The Supreme Court declared zero tolerance for unverified artificial intelligence citations, holding that adjudicatory decisions predicated on fabricated authorities are legally void.

For your practice. Counsel must independently verify every precedent suggested by research software, as courts will invalidate orders founded on fictitious citations.

The order. The Supreme Court set aside the ₹425,27,99,100 penalty and the confirming High Court order.

Section 114, Customs Act, 1962

Case

VIJAY GHANSHYAM GADIYA vs UNION OF INDIA

Citation

Supreme Court of India · C.A. No.-012155-012155 - 2026 · 2026:INSC:947 · 02.09.2026

Bench

Dipankar Datta, Sheel Nagu

The dispute. Kotak Mahindra Bank took over defaulted loan accounts from an unnotified NBFC and sought possession of borrowers' mortgaged properties under SARFAESI. The DRT Mumbai and the Bombay High Court held that the bank could not invoke SARFAESI, prompting the bank's appeal to the Supreme Court.

The reasoning. The Supreme Court held that SARFAESI applies to all live debts once held by an eligible bank, irrespective of the assignor's status. Upon acquisition, the debt immediately acquires secured status because the holder's statutory character governs enforcement.

For your practice. Banks acquiring distressed debts can immediately enforce SARFAESI remedies against borrowers without establishing whether the originating NBFC was a notified financial.

The order. The Supreme Court set aside the Bombay High Court judgment, restored the borrowers' securitisation application before the DRT, and directed the Mehtas to deposit ₹25 lakh with the bank within eight weeks.

Section 2(1)(c), Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002

Case

KOTAK MAHINDRA BANK LTD. vs TRUPTI SANJAY MEHTA

Citation

Supreme Court of India · C.A. No.-008531-008531 - 2015 · 2026:INSC:943 · 02.09.2026

Bench

Sanjay Kumar, Sanjeev Sachdeva

The dispute. Following defaults by trading member Anugrah, clearing member Edelweiss liquidated pledged securities to discharge settlement obligations. The Securities Appellate Tribunal affirmed the restitution directives.

The reasoning. Regulatory obligations to verify client-wise collaterals rest exclusively on trading members, not on professional clearing members who lack investor privity.

For your practice. Shield professional clearing members against investor shortfall claims absent express statutory verification duties.

The order. The Supreme Court allowed the appeals, setting aside restitution orders totalling Rs 460.32 crore, Rs 22 crore, Rs 1.95 crore, and Rs 75.74 lakh. All Rs 1 lakh penalties were vacated, absolving the clearing members of any liability.

Section 11B, Securities and Exchange Board of India Act, 1992

Case

EDELWEISS CUSTODIAL SERVICES LIMITED vs NSE CLEARING LTD.

Citation

Supreme Court of India · C.A. No.-000031 - 2024 · 2026:INSC:941 · 02.09.2026

Bench

J.b. Pardiwala, K. Vinod Chandran

The dispute. Landowner MRR Setty purchased 28 guntas of Bengaluru land in 1929, obtained city survey allotments in 1974, and constructed apartments with municipal sanction by 2006. In 2014, revenue authorities issued a revision notice cancelling the survey allocation to re-examine alleged lake encroachment. The landowner challenged the notice before the Karnataka High Court.

The reasoning. The Section 56(3) proviso creates a mandatory three-year ceiling on revisionary powers, which neither inherent powers nor the Limitation Act can override.

For your practice. Challenge revenue revision notices issued beyond three years by invoking Section 56(3), precluding authorities from relying on inherent powers or the Limitation Act to revive.

The order. The Supreme Court allowed the appeals and quashed the revision notice dated 26 April 2014 concerning the appellants' property.

Section 56, Karnataka Land Revenue Act, 1964

Case

M.R.R. SETTY(DEAD) BY LRS vs GOVERNMENT OF KARNATAKA

Citation

Supreme Court of India · C.A. No.-012163-012164 - 2026 · 2026:INSC:944 · 02.09.2026

Bench

Sanjay Kumar, Sanjeev Sachdeva

The dispute. An infrastructure company imported video equipment under concessional customs duty before entering corporate insolvency. The customs department failed to submit claims during the insolvency process, but subsequently issued an order demanding differential duty, interest, and penalties. The company filed a writ petition before the High Court seeking to quash the customs demand following approval of its resolution plan.

The reasoning. Under Section 31(1) of the IBC, an approved resolution plan binds governmental authorities and extinguishes unsubmitted pre-insolvency claims.

For your practice. Corporate debtors can defeat post-resolution tax demands where authorities failed to lodge claims during insolvency, as approved plans permanently extinguish unfiled statutory.

The order. The High Court allowed the writ petition and quashed the Order-in-Original, nullifying the demand of Rs 5,89,366 differential customs duty, interest under Section 28AA, and a Rs 4,00,000 penalty without costs.

Section 31, Insolvency and Bankruptcy Code, 2016 (as amended 2019)

Case

JAIPRAKASH ASSOCIATES LIMITED vs THE OFFICE OF THE COMMISSIONER OF CUSTOMS AIR CARGO COMPLEX IMPORT & ors.

Citation

Delhi High Court · W.P.(C)-10387/2026 · 2026:DHC:7356-DB · 02.09.2026

Bench

Anil Kshetarpal, Shail Jain

The dispute. A contractor engaged a labourer to paint an electrical transformer structure at Campbell Bay. The worker suffered a fatal electric shock on site, prompting police to register a negligent homicide case against the absent contractor for failing to supply safety gear. The contractor petitioned the High Court in revision to quash the charge sheet pending before the Judicial Magistrate at Campbell Bay.

The reasoning. Criminal negligence requires an act or omission that serves as the direct causa causans of the death. Absent site presence or immediate supervisory control, a contractor's failure to provide safety gear does not establish that proximate causal nexus.

For your practice. Workplace death charges against contractors can be quashed where prosecutors show merely contractual safety lapses without an immediate causal link to the fatality.

The order. The High Court allowed the criminal revision, quashed First Information Report No. 14/2025 and the consequent charge sheet, and discharged the contractor from all proceedings before the trial court without costs.

Section 106(1), Bharatiya Nyaya Sanhita, 2023

Case

B. Veeraiah v. State

Citation

Calcutta High Court · CRR/37/2026 · 02.09.2026

Bench

Biswaroop Chowdhury

The dispute. A contractor agreed with a state power corporation to build and operate a coal transportation network under minimum guaranteed volumes. Project delays and regulatory caps triggered multi-crore claims for delay compensation, quantity shortfalls, and wrongful contract termination. After an arbitral tribunal awarded substantial damages, a Single Judge set aside the award for patent illegality, prompting this appeal.

The reasoning. Patent illegality requires a substantive legal error striking at the dispute's root, not a difference in contract interpretation.

For your practice. Parties cannot rely on post-contract regulatory shifts to escape contractual liabilities, as Section 34 courts will not rewrite contracts or upset reasoned arbitral awards.

The order. The Division Bench set aside the Single Judge’s order and restored the arbitral award in full, directing NTPC to pay JITF Rs 424.08 crore for delays, Rs 356.31 crore for volume shortfalls, and Rs 1,108.93 crore for termination.

Section 34, Arbitration and Conciliation Act, 1996

Case

M/S JINDAL ITF LIMITED vs NTPC LIMITED & ors.

Citation

Delhi High Court · FAO(OS) (COMM)-45/2025 · 2026:DHC:7348-DB · 02.09.2026

Bench

C. Hari Shankar, Om Prakash Shukla

The dispute. A buyer obtained an ex-parte specific performance decree for ancestral land without an explicit deposit deadline. The lower courts rescinded the ex-parte decree and confirmed the subsequent sale, which the decree-holder challenged in second appeal.

The reasoning. Specific performance decrees are preliminary, preserving the court's Section 28 power to extend time or rescind the contract. Absent a stipulated deadline, the balance price must be deposited within a reasonable period, which a four-year delay violates.

For your practice. Decree-holders must deposit balance funds promptly or seek formal extensions, as unexplained delays entitle vendors to rescind decrees and convey valid title elsewhere.

The order. The High Court dismissed the second appeal without costs, confirming the rescission of the 1983 ex-parte decree and affirming the validity of the 1988 sale deed in favour of the purchasers.

Section 28, Specific Relief Act, 1963

Case

RAJESWARI vs SAMPOORNAM

Citation

Madras High Court · SA.2186/2004 · 01.09.2026

Bench

R.sakthivel

The dispute. The EPFO assessed Rs 3.52 lakh in provident fund dues against exporter M/s Creative Export for dyeing and fabrication charges paid to outside agencies. The EPF Appellate Tribunal set aside the assessment and ordered refund, prompting the Regional PF Commissioner to file a writ petition after two years.

The reasoning. Section 2(b) defines basic wages as emoluments earned by an employee in cash. External contractor charges cannot be treated as wages without a factual foundation identifying individual workers and proving their specific wage entitlements.

For your practice. Challenge PF assessments on third-party contractor expenses absent proof of wages paid to identifiable workers, and plead laches against stale departmental writ petitions.

The order. The High Court dismissed the writ petition without costs and affirmed the EPFAT orders. The assessment of Rs 3,52,492 was set aside, relieving the respondent of liability and confirming refund of its Rs 1,41,000 pre-deposit.

Section 2(b), Employees' Provident Funds and Miscellaneous Provisions Act, 1952

Case

REGIONAL PF COMMSSIONER BY AND ON BEHALF OF EMPLOYEES PF ORGANISATION vs M/S CREATIVE EXPORT

Citation

Delhi High Court · W.P.(C)-1915/2014 · 2026:DHC:7444 · 01.09.2026

Bench

Amit Mahajan

The dispute. Muthoot Finance sought fee quotations from debenture trustee IDBI Trusteeship for a proposed 982 crore rupee bond issue. IDBI quoted sharply escalated fees mandated by the Trustees' Association of India, warning that deviations would invite adverse repercussions and delaying the offering. Muthoot filed information alleging cartelisation before the Competition Commission.

The reasoning. The Commission held that collective floor pricing constitutes an anti-competitive agreement, with internal minutes and coercive emails proving concerted action.

For your practice. Sectoral oversight does not shield collective fee-fixing, requiring counsel to scrutinise trade association pricing circulars and warn participating executives against personal.

The order. The Commission directed the association and three debenture trustees to cease and desist, mandating compliance within eight weeks.

Section 3, Competition Act, 2002

Case

Muthoot Finance Limited vs Trustees' Association Of India

Citation

Competition Commission of India · Case No. 29 of 2021 · 02.09.2026

The dispute. Krish Road Carriers challenged an income tax reassessment order, contending that the statutory approval authorising the reopening notice was neither signed nor dated. The approving tax authorities had merely recorded unauthenticated initials without affixing manual or digital signatures. The CIT(Appeals) upheld the reassessment, prompting the assessee to challenge the jurisdictional validity of the notice before the ITAT.

The reasoning. The Tribunal held that Section 282A(1) mandatorily requires statutory documents to be signed manually or digitally prior to issuance.

Thus, the sanction granted u/s.151 of the Act without signing the same is invalid and therefore the Assessing Officer did not assume jurisdiction to issue notice u/s.148 of the Act.

For your practice. Tax counsel should inspect Section 151 approval records for valid signatures and dates.

The order. The Tribunal allowed the appeal, quashed the unsigned Section 151 sanction, set aside the reopening notice dated 22 March 2019, and cancelled the assessment order passed under Section 143(3) for Assessment Year 2012-13.

Section 151, Income-tax Act, 1961

Case

Krish Road Carriers Private ... vs Ito,Ward-14(4), Delhi

Citation

Income Tax Appellate Tribunal · ITA No.5505/DEL/2024 · 02.09.2026

Bench

S. Rifaur Rahman