Newsletter October Disputes

INSIDE:

ARBITRATION

• Shubham Equipment Pvt. Ltd. & Anr. v. Rothwell Water Company Ltd. & Ors. 2026 INSC 1098

CIVIL LAW

• Rano Singh and Others v. Gurbax Singh (D) Th. LRs and Others, Civil Appeal No. 7025 of 2012

CRIMINAL LAW

• Ramkrushna Prahllad Dongardive v. The State of Maharashtra 2026 INSC 1099 (Criminal Appeal No. 1432 of 2019)

INSOLVENCY & BANKRUPTCY LAW

• Bank of India & Ors. v. S.M. Kamal Pasha & Ors. Civil Appeal No. 12045 of 2026

WHITE-COLLAR CRIMES

• Gopalakrishanan v. The State of Kerela, Criminal Appeal No. 5399 of 2025

ARBITRATION

Date: 08 October 2026

Case Name: Shubham Equipment Pvt. Ltd. & Anr. v. Rothwell Water Company Ltd. & Ors. 2026 INSC 1098

Forum: Supreme Court

The Supreme Court of India, by a common order passed by Hon’ble Mr. Justice Joymalya Bagchi, disposed of Arbitration Petition (Civil) Nos. 7 and 8 of 2025, filed under Section 11 of the Arbitration and Conciliation Act, 1996 (“1996 Act”), seeking the appointment of a Sole Arbitrator. Since both petitions involved the same parties and raised common questions of law and fact, they were adjudicated together.

Petitioner No. 1 i.e., Shubham Equipment Private Limited (“SEPL”), is an Indian company engaged in the business of cleaning drinking water tanks under the trade names ‘TANCLEAN’ and ‘SHUBHAM’. Petitioner No. 2 i.e., Mr. Sunil Suresh Uplap, is one of its principal promoters. Respondent No. 1 i.e., Rothwell Water Company Limited (“RWCL”), is a Korean company holding patents relating to the Biological Nutrient Removal Process in Wastewater Treatment. Respondent No. 2 i.e. Mr. Keonho Lee, is a principal promoter and the President of RWCL. Respondent No. 3 i.e., Rothwell Business International Private Limited (“RBIPL”), is a wholly owned subsidiary of RWCL, incorporated in India.

The disputes arose out of three agreements executed between the parties at different points in time:

1. Technical Collaboration Licence Agreement dated 30 January 2019 (“Licence Agreement”): RWCL granted SEPL and/or its affiliates an exclusive, non-transferable, royalty-bearing licence in respect of certain patents.
2. Joint Venture Agreement and Share Holding Agreement dated 01 October 2021 (“JVA”): The agreement contemplated the incorporation of Rothwell Water (India) Private Limited (“RWIPL”) for undertaking sewage treatment plant projects under the brand ‘ROTHWELL’. Article 43 of the JVA provided for arbitration seated in Mumbai, governed by Indian law, with English as the language of arbitration. Article 25 contained an entire agreement clause.
3. Memorandum of Understanding dated 1 February 2023 (“MoU”): Under the MoU, SEPL was entrusted with liaison, customs clearance and logistical services, with Clause 9 providing for arbitration seated at Mumbai. On 11 October 2024, SEPL terminated the JVA, alleging breach of the non-compete covenant under Article 24.1 by incorporation of RBIPL and technical defaults by RWCL, resulting in alleged losses of INR 20 crore. SEPL also raised claims under the MoU concerning decanter systems supplied to JWIL Infra Limited, asserting outstanding dues of INR 4,24,35,647. RWCL and Mr. Lee disputed the claims and, by their letter dated 28 October 2024, contended that the disputes were governed by the Licence Agreement, which provided for arbitration seated in Seoul under Korean law. Subsequently, on 28 November 2024, the Petitioners invoked arbitration under the JVA and the MoU, whereas RWCL invoked arbitration under the Licence Agreement by notice dated 8 August 2025, also disputing RBIPL’s participation as a non-signatory. Upon failure of mediation, the Petitioners approached the Hon’ble Supreme Court under Section 11 of the Arbitration and Conciliation Act, 1996, seeking appointment of an arbitrator.

Issues:

The principal issues before the court were:

1. Whether, at the stage of appointment of an arbitrator under Section 11 of the 1996 Act, the Court’s enquiry was confined to determining the prima facie existence of a valid arbitration agreement?
2. Whether the arbitration clause contained in the Licence Agreement, providing for arbitration in Seoul under Korean law, would prevail over the arbitration clauses contained in the JVA and the MoU?
3. Whether the alleged overlap between the disputes arising under the Licence Agreement, the JVA and the MoU, including the invocation of arbitration in Korea, constituted a ground to refuse reference to arbitration in India?
4. Whether RBIPL, being a non-signatory to the arbitration agreements, could be impleaded as a party to the arbitration proceedings?
5. Whether the Petitioners’ alleged failure to exhaust the mechanism for amicable resolution of disputes precluded the appointment of an arbitrator?

Submission of the Parties:

The Petitioners contended that the JVA and the MoU were independent agreements, distinct from the Licence Agreement, and contained separate arbitration clauses governing disputes arising thereunder. Reliance was placed on Article 25 of the JVA and Clause 10.8 of the MoU concerning the entire agreement and supersession of prior arrangements. It was further submitted that RBIPL, a wholly owned subsidiary of RWCL, had been incorporated in breach of the non-compete covenant under Article 24.1 of the JVA to unfairly compete with RWIPL and was, therefore, a necessary party to the arbitration. Accordingly, the Petitioners sought appointment of a Sole Arbitrator under the respective arbitration clauses of the JVA and the MoU.

The Respondents, while not disputing the existence of disputes, contended that the Petitioners had failed to exhaust the contractual mechanism for amicable resolution. It was further argued that the JVA and the MoU were intrinsically intertwined with the Licence Agreement, being the principal or “mother agreement”, and that Clause 12.1 thereof, providing for arbitration seated in Seoul under Korean law, governed the disputes. Reliance was also placed on the notice of arbitration dated 08 August 2025, issued in Korea concerning the alleged breach of the Licence Agreement’s exclusivity provisions. With respect to RBIPL, the Respondents contended that, being an independent legal entity and a non-signatory to the arbitration agreements, it could not be subjected to arbitration.

Observations of the Court:

The Hon’ble Supreme Court noted that the existence of arbitration agreements governing disputes under the JVA and the MoU was admitted by the parties. Relying upon Section 11(6-A) of the Arbitration and Conciliation Act, 1996, and In Re: Interplay Between Arbitration Agreements under the Arbitration and Conciliation Act, 1996 and the Indian Stamp Act, 1899, (2024) 6 SCC 1, the Court reiterated that judicial scrutiny at the referral stage is limited to examining the prima facie existence of an arbitration agreement, with all other issues being left for determination by the Arbitral Tribunal.

Independent Operation of the Licence Agreement, JVA and MoU

The Court observed that the Licence Agreement, JVA and MoU governed distinct contractual arrangements, concerning patent licensing, establishment of a joint venture and provision of logistical services, respectively. Accordingly, disputes arising under the JVA and MoU were prima facie governed by their respective arbitration clauses and not the dispute resolution mechanism under the Licence Agreement. This interpretation was further supported by Article 25 of the JVA and Clause 10.8 of the MoU.

Alleged Overlap with the Licence Agreement and Proceedings in Korea

The Court held that whether disputes under the JVA and MoU overlapped with those under the Licence Agreement, and the effect of the arbitration proceedings initiated in Korea, were matters falling within the jurisdiction of the Arbitral Tribunal. These contentions could not, by themselves, constitute grounds for refusing reference to arbitration at the threshold.

Status of RBIPL as a Non-Signatory

The Court held that the question of RBIPL’s participation in the arbitration, being a non-signatory to the contractual arrangements, particularly in view of its relationship with RWCL and the allegation of its incorporation in derogation of the JVA, was best left for determination by the Arbitral Tribunal. The Court further rejected the Respondents’ objection regarding non-exhaustion of the amicable resolution mechanism, noting that the mediation proceedings had failed to culminate in a settlement

Held:

The Supreme Court allowed both arbitration petitions and appointed Hon’ble Mr. Justice Ramesh Deokinandan Dhanuka, former Chief Justice of the Bombay High Court, as the Sole Arbitrator to adjudicate the disputes between the parties.

The judgment reaffirms the principle of minimal judicial intervention at the stage of appointment of an arbitrator under Section 11 of the 1996 Act. It underscores that, where multiple agreements contain separate arbitration clauses and prima facie govern distinct contractual arrangements, disputes arising exclusively under each agreement are ordinarily referable to the corresponding dispute resolution mechanism.

Importantly, the Court declined to determine conclusively, at the referral stage, the alleged overlap between the agreements or the arbitrability of claims against a non-signatory. By relegating these questions to the Arbitral Tribunal, the judgment reinforces the distinction between the Court’s limited referral jurisdiction and the tribunal’s adjudicatory jurisdiction over the scope and ambit of the disputes referred to it. 

CIVIL LAW

Date: 16 October 2026

Case Name: Rano Singh and Others v. Gurbax Singh (D) Th. LRs and Others, Civil Appeal No. 7025 of 2012

Forum: Supreme Court

The present appeal was preferred by the legal heirs of late Shri Sohan Singh, challenging the judgment of the Delhi High Court dated 02.02.2012, which had affirmed the dismissal of their suit for possession by the Trial Court. The dispute concerned Plot No. 8, Friends Colony, New Delhi, admeasuring approximately 4,132 sq. yds., along with the superstructure thereon.

Sohan Singh became a member of the Nathu Ram Friends Colony Co-operative Housing Building Society Ltd. (“Society”) on 16.01.1950 and was allotted the suit property under an Agreement to Sell dated 14.01.1952. The agreement stipulated that construction on the plot was to be completed within three years, failing which he would forfeit his right to obtain a sale of the property. Although Sohan Singh paid the sale consideration and other charges, he failed to fulfil the construction obligation within the stipulated period.

By a letter dated 04.10.1954, Sohan Singh requested the Society to transfer the plot in favour of Defendant No. 1, Gurbax Singh, describing him as his nephew. The Society subsequently transferred the property in favour of Defendant No. 1 through a registered Sale Deed dated 03.12.1960. Defendant No. 1 thereafter constructed a two-storeyed residential property and remained in possession.

The Plaintiffs alleged that the transfer was fraudulent and collusive, asserting that Sohan Singh had entrusted the construction and management of the property to Sobha Singh, who acted as his agent. They further relied upon a Society resolution dated 30.08.1959, allegedly recognising Sohan Singh's ownership.

The Plaintiffs instituted a suit for possession and mesne profits in 1975. The Trial Court dismissed the suit, holding, inter alia, that the Plaintiffs were barred by limitation and estopped from challenging the transfer. The Delhi High Court affirmed the dismissal, leading to the present appeal before the Supreme Court.

Issues:

The principal issues before the Supreme Court were:

1. Whether the suit for possession instituted in 1975 was barred by limitation, and whether the Agreement to Sell dated 14.01.1952, in the absence of a registered Sale Deed, conferred any enforceable right, title or ownership upon Sohan Singh?
2. Whether the suit for possession simpliciter was maintainable, and whether the Plaintiffs had established grounds for declaratory or other relief, including fraud and collusion, estoppel, acquiescence and protection under Section 53A of the Transfer of Property Act, 1882?

Submission of the Parties:

The The Plaintiffs contended that Sohan Singh had entrusted Sobha Singh, with whom he shared close personal and commercial relations, with the management and construction of the suit property, acting as his agent. They further alleged that the Society had recognised Sohan Singh’s ownership by resolution dated 30.08.1959 but fraudulently transferred the property to Defendant No. 1 under a Sale Deed dated 03.12.1960. On limitation, the Plaintiffs asserted that the suit was within time, having pursued remedies before the Registrar of Co-operative Societies, and relied upon Poona Ram v. Moti Ram (2019) 11 SCC 309, Narasamma v. A. Krishnappa (2020) 15 SCC 218 and Umadevi Nambiar v. Thamarasseri Roman Catholic Diocese (2022) 7 SCC 90. They also invoked Section 53A of the Transfer of Property Act, 1882, claiming protection on the basis of part-performance.

Per Contra, Defendant No. 1 contended that Sohan Singh had failed to fulfil the contractual obligation to construct the property within three years and had voluntarily requested, by letter dated 04.10.1954, that the Society transfer the plot in his favour. Acting upon the request, Defendant No. 1 claimed to have taken possession, cleared outstanding dues and constructed the property from his own funds, thereby acquiring absolute ownership. It was further contended that the suit was barred by limitation, since the Plaintiffs had knowledge of the alleged fraud and transfer by 1960, rendering the claims under Articles 54, 59 and 64 of the Limitation Act, 1963, time-barred. Defendant No. 1 also challenged the maintainability of the suit for possession simpliciter in the absence of a prayer for declaration of title or cancellation of the Sale Deed and alternatively pleaded adverse possession and estoppel. Reliance was placed on Anathula Sudhakar v. P. Buchi Reddy (2008) 4 SCC 594, Prem Singh v. Birbal (2006) 5 SCC 353 and Dhurandhar Prasad Singh v. Jai Prakash University (2001) 6 SCC 534.

Observations of the Court:

The The Hon’ble Supreme Court observed that the suit was ex facie barred by limitation under Articles 54, 59 and 64 of the Limitation Act, 1963, as the claims for specific performance and cancellation of the Sale Deed dated 03.12.1960 were time-barred, and no dispossession was established. The Court reiterated that an Agreement to Sell does not confer title under Section 54 of the Transfer of Property Act, 1882, and that a suit for possession simpliciter was not maintainable in the absence of appropriate declaratory relief, relying on Anathula Sudhakar v. P. Buchi Reddy (2008) 4 SCC 594. It further applied the principles of estoppel under Section 115 of the Indian Evidence Act, 1872, and Pratima Chowdhury v. Kalpana Mukherjee (2014) 4 SCC 196, rejected the allegations of fraud and collusion for want of evidence, and held that the requirements of part-performance under Section 53A of the Transfer of Property Act had not been satisfied.

Held:

The Supreme Court dismissed the appeal and upheld the judgments of the Courts below, holding that the suit for possession was barred by limitation; an Agreement to Sell, in the absence of a registered Sale Deed, does not confer title or ownership; and a suit for possession simpliciter is not maintainable where a registered instrument creates a substantial cloud over the Plaintiff's title, necessitating appropriate declaratory relief. The Court further held that Sohan Singh’s conduct attracted the principles of estoppel and acquiescence, that the allegations of fraud remained unsubstantiated, and that the requirements of Section 53A of the Transfer of Property Act had not been satisfied.

The judgment reiterates the settled principles governing transfer of immovable property, limitation and proprietary estoppel. It clarifies that an Agreement to Sell does not confer title and that a suit for possession must be accompanied by appropriate declaratory relief where the Plaintiff's title is seriously disputed. It further underscores that a party cannot resile from an unequivocal representation after inducing another to alter their position, and that protection under Section 53A is conditional upon fulfilment of its statutory requirements.

CRIMINAL LAW

Date: 08 October 2026

Case Name: Rammkrushna Prahllad Dongardive v. The State of Maharashtra 2026 INSC 1099 (Criminal Appeal No. 1432 of 2019)

Forum: Supreme Court

The appeal arose from the Appellant’s conviction under Section 409 of the Indian Penal Code, 1860 (“IPC”), for alleged misappropriation of telephone charges amounting to INR 8,73,737 during his tenure as a Cashier-cum-Counter Clerk in the Telephone Department, Aurangabad. While the Trial Court acquitted him for want of sufficient evidence and non-production of material departmental records, the Bombay High Court reversed the acquittal and sentenced him to one year of rigorous imprisonment with a fine of INR 5,000. Before the Hon’ble Supreme Court, the Appellant challenged the reversal, contending that the prosecution had failed to establish entrustment, dishonest misappropriation or criminal intent, and that the High Court had erroneously drawn an adverse inference from his failure to explain the documents allegedly seized from his residence.

Issues:

The principal issues before the Supreme Court were:

1. Whether the High Court was justified in reversing the acquittal, contrary to the settled principles governing appellate interference, and in shifting the burden of proof upon the Appellant?
2. Whether the prosecution had established the essential ingredients of criminal breach of trust under Section 409 IPC, including entrustment and dishonest misappropriation, in light of the non-production of material departmental records and the failure to duly prove the seizure of documents relied upon?

Submission of the Parties:

The Appellant contended that the High Court had erred in reversing the acquittal merely on the possibility of an alternative view of the evidence, contrary to the principles laid down in Chelloor Mankkal Narayan Ittiravi Nambudiri v. State of Travancore-Cochin, AIR 1953 SC 478. It was further submitted that the prosecution had failed to establish entrustment of INR 8,73,737 or dishonest misappropriation, particularly in the absence of material departmental records, including cashbooks, daily registers and audit reports. Reliance was placed on R. Venkatakrishnan v. Central Bureau of Investigation, 2009 INSC 1037, and it was contended that the High Court had erred in drawing an adverse inference against the Appellant for failing to explain documents whose seizure was itself disputed.

Per Contra the State submitted that entrustment stood established and that the delayed deposit of INR 3,88,035, coupled with the non-deposit of INR 4,75,702, demonstrated the Appellant’s culpability. It further contended that the Trial Court had failed to properly appreciate the documentary evidence, particularly Exhibits 7 to 9, and the handwriting expert’s opinion, and that the ingredients of Section 409 IPC had been established beyond reasonable doubt.

Observations of the Court:

The Hon’ble Supreme Court held that an appellate court, while reversing an acquittal, must accord due weight to the reinforced presumption of innocence and the Trial Court’s assessment of evidence, and cannot interfere merely because an alternative view is possible, as reiterated in Chelloor Mankkal Narayan Ittiravi Nambudiri (supra). It further held that conviction under Sections 405 and 409 IPC requires proof of entrustment and dishonest misappropriation, which the prosecution failed to establish owing to the non-production of material departmental records, warranting an adverse inference under Section 114(g) of the Indian Evidence Act, 1872. The Court also found that the seizure under Exhibit-86 was not duly established, the evidentiary value of Exhibits 8 and 9 remained unproved, and the High Court had erroneously shifted the burden of proof upon the Appellant, contrary to Rabindra Kumar Dey v. State of Orissa. Relying on Sunder Singh v. State of Uttar Pradesh and State of Punjab v. Balbir Singh, the Court observed that procedural irregularities in seizure, though not independently fatal, assumed significance when considered cumulatively with other evidentiary deficiencies. Lastly, relying on Mukesh Kumar Yadav v. The State (UT of Andaman & Nicobar Islands) Etc., the Court reiterated the requirement of a separate hearing on sentence where an appellate court reverses an acquittal and records conviction for the first time. Since the conviction itself was unsustainable, no further consequence arose from the sentencing infirmity.

Held:

The Hon’ble Supreme Court held that the prosecution had failed to prove entrustment of the alleged amount to the Appellant and had adduced no evidence sufficient to establish dishonest intention or misappropriation. The non-production of material departmental records, the deficiencies in proving the seizure and the impermissible shifting of the burden of proof further undermined the prosecution’s case.

The Court accordingly allowed the appeal, set aside the Bombay High Court’s judgment dated 12 October 2017 and restored the Trial Court’s order of acquittal dated 20 February 2002. The Appellant was acquitted of the offence punishable under Section 409 of the IPC, and his bail bonds were cancelled.

The judgment reiterates that conviction for criminal breach of trust requires proof of entrustment and dishonest misappropriation. It underscores that non-production of material records may warrant an adverse inference and that disputed evidence must be duly proved. The decision further reaffirms that appellate courts must exercise restraint in reversing acquittals, respecting the reinforced presumption of innocence and the prosecution’s burden to prove guilt beyond reasonable doubt. 

INSOLVENCY & BANKRUPTCY LAW

Date: 26 October 2026

Case Name: Bank of India & Ors. v. S.M. Kamal Pasha & Ors. Civil Appeal No. 12045 of 2026

Forum: Supreme Court

The present appeal concerned whether the Committee of Creditors (“CoC”), having approved a Resolution Plan by the requisite majority under the Insolvency and Bankruptcy Code, 2016 (“IBC”), could subsequently seek its withdrawal before the National Company Law Tribunal (“NCLT”) on the grounds of delay in implementation and improvement in the financial position of the Corporate Debtor (“CD”).

The CoC contended that the CD’s financial position had substantially improved during the pendency of the proceedings, resulting in an unintended windfall for the Successful Resolution Applicant (“SRA”), which would consequently be required to infuse a substantially lower amount than originally contemplated under the Resolution Plan. The Resolution Professional (“RP”) accordingly filed an application seeking withdrawal of the Resolution Plan, which was unanimously approved by the CoC.

The erstwhile promoter and holding company of the CD independently sought termination of the Corporate Insolvency Resolution Process (“CIRP”), proposing a One-Time Settlement (“OTS”) for the admitted liabilities. The SRA opposed both applications, relying upon the binding nature of the Resolution Plan.

The NCLT allowed the withdrawal application. However, the National Company Law Appellate Tribunal (“NCLAT”) set aside the decision, holding that the CoC lacked jurisdiction to withdraw its approval of the Resolution Plan. It nevertheless directed the NCLT to consider the holding company’s OTS proposal and the contentions of the SRA while adjudicating the pending applications.

Issues:

The principal issues before the Supreme Court were:

1. Whether the CoC could withdraw an approved Resolution Plan, or seek withdrawal of the CIRP under Section 12-A of the IBC, after approval by the requisite majority but before its confirmation by the NCLT, and whether its continuing role under Kalyani Transco v. Bhushan Power & Steel Ltd. conferred such power?
2. Whether delay in implementation, improvement in the Corporate Debtor’s financial position and the holding company’s OTS proposal could justify withdrawal of the approved Resolution Plan, and whether the NCLT could independently consider these factors while deciding the application for approval of the Resolution Plan?

Submission of Parties:

The appellants contended that the CD’s opening cash balance had increased from approximately INR 30 crores, at the time of approval of the Resolution Plan for INR 172.55 crores, to approximately INR 165 crores by the time the Supreme Court dismissed the erstwhile promoter’s SLP. It was argued that implementation would confer an unjustified windfall upon the SRA and undermine the IBC’s objective of maximisation of asset value. Relying on Kalyani Transco v. Bhushan Power & Steel Ltd. (2026) 6 SCC 431, the appellants submitted that the CoC retained its role until implementation of the Resolution Plan and disbursement to creditors.

Per contra, the SRA contended that the CoC-approved Resolution Plan was binding and could not be withdrawn on account of subsequent changes in the CD’s financial position or delays attributable to judicial proceedings. Relying on Ebix Singapore (P) Ltd. v. Committee of Creditors of Educomp Solutions Ltd. (2022) 2 SCC 401, it submitted that permitting withdrawal would undermine the finality of the resolution process. The holding company, on the other hand, contended that its proposed OTS would enable full recovery of admitted liabilities while preserving the CD as a profitable going concern. It further submitted that the Supreme Court had permitted it to raise these contentions before the NCLT, where IA No. 1679 of 2025 remained pending

Observations of the Court:

The Hon’ble Supreme Court, relying on Ebix Singapore, held that a Resolution Plan becomes binding upon the CoC and the SRA once approved by the requisite majority and that the IBC does not confer any independent right upon the CoC to subsequently withdraw or modify its approval. It clarified that Section 12-A permits withdrawal of the CIRP application only prior to CoC approval of the Resolution Plan. While acknowledging, in light of Kalyani Transco, that the CoC continues to have a role during implementation, the Court held that such role does not confer a power to withdraw an approved Plan. It further observed that delay attributable to judicial proceedings and improvement in the CD’s financial position, including increased cash reserves and profitability, could not independently justify withdrawal, although these factors were relevant to the NCLT’s consideration under Sections 30(2) and 31 of the IBC. Accordingly, the Court left it to the NCLT to examine the competing contentions, including the feasibility of revival, maximisation of asset value and the commercial considerations underlying the CoC’s decision, while determining the Resolution Plan’s statutory compliance.

Held:

The Supreme Court dismissed the appeal without interfering with the NCLAT’s order and reaffirmed the aforementioned principles. The Court clarified that its observations, except those concerning the binding nature of the Resolution Plan inter se the CoC and the SRA, were prima facie and would not govern the NCLT’s final adjudication. The NCLT was requested to decide the pending applications expeditiously, having regard to the delay already occasioned.

The judgment reinforces the sanctity and finality of a Resolution Plan once approved by the CoC, holding that the CoC cannot subsequently resile from its decision merely because of a change in the financial circumstances of the Corporate Debtor or the emergence of a more favourable commercial alternative. By extending the principles laid down in Ebix Singapore to the CoC itself, the Supreme Court has clarified that the binding nature of an approved Resolution Plan operates reciprocally upon both the CoC and the SRA, thereby preventing unilateral withdrawal or renegotiation outside the statutory framework of the IBC. The judgment also draws a clear distinction between the CoC’s continuing role in the implementation of a Resolution Plan and its inability to withdraw an already approved plan. At the same time, it preserves the NCLT’s obligation to independently examine statutory compliance under Sections 30(2) and 31 of the IBC, ensuring that the objectives of value maximisation and revival of the Corporate Debtor remain central to the insolvency resolution process.

WHITE COLLAR CRIME

Date:   28 October 2026                    

Case Name: V. Gopalakrishanan v. The State of Kerela, Criminal Appeal No. 5399 of 2025

Forum: Supreme Court

The Appellant challenged the Kerala High Court's judgment dated 29.01.2025, which upheld his conviction under Section 13(2) read with Section 13(1)(e) of the Prevention of Corruption Act, 1988 (“PC Act”), while reducing his sentence.

The prosecution alleged that during the check period from 01.01.1993 to 16.01.2001, the Appellant, a Sub-Registrar, had acquired assets disproportionate to his known sources of income. The disproportionate assets were assessed at INR 5,25,129, representing 51.88% of his income. The Trial Court convicted him and imposed two years' rigorous imprisonment and a fine of INR 5,50,000. The High Court reduced the sentence to one year's rigorous imprisonment and a fine of INR 2,00,000, but maintained the conviction.

Issues:

1. Whether the prosecution had satisfactorily established the acquisition of disproportionate assets under Section 13(1)(e) of the PC Act;
2. Whether estimated household and non-verifiable expenses and the valuation of the building were correctly considered in computing disproportionate assets;
3. Whether the burden of satisfactorily accounting for disproportionate assets shifted to the accused upon the prosecution establishing the foundational facts; and
4. Whether the Appellant’s explanations regarding salary, GPF loans, rental income and chit fund remittances were sufficient to rebut the prosecution's case?

Submission of the Parties:

The Appellant submitted that the prosecution’s case was based on estimates rather than actual expenditure, particularly concerning household expenses and other non-verifiable items. He disputed the valuation of the building, alleging an excess assessment of INR 1,90,153, and challenged the computation of chit fund remittances and rental income. He further submitted that his and his wife’s salary income and GPF loans had not been duly accounted for.

The State relied upon the prosecution’s Basic Statements A to F, supported by documentary evidence, receipts, vouchers and the testimony of 45 witnesses. It maintained that the assets acquired during the check period substantially exceeded the Appellant’s known sources of income and that the unexplained disproportion had been duly established

Observations of the Court:

The Supreme Court observed that the 10% margin recognised in Krishnanand Agnihotri v. State of Madhya Pradesh, (1977) 1 SCC 816, was not an inflexible threshold. Relying upon B.C. Chaturvedi v. Union of India, (1995) 6 SCC 749, it held that the benefit could not be extended beyond 10%. In the present case, the disproportion of 51.88% substantially exceeded the permissible margin.

The Court rejected the challenge to household expenditure, noting that the prosecution's assessment was supported by the prevailing Consumer Price Index, whereas the Appellant’s estimates were unsupported by documentary evidence. Even after deducting ₹67,200 towards the disputed expenditure, the disproportion remained above 26%.

The challenge to the building valuation was also rejected. The Court found that Exhibit P58, relied upon by the Appellant, was merely a notebook containing sporadic entries and did not constitute reliable accounts. Even after deducting the alleged excess valuation of INR 1,90,153, the disproportion remained above 33%.

The Court further held that the discrepancies concerning chit fund remittances were negligible, while the claimed rental income and salary-related adjustments were unsupported by sufficient documentary evidence.

On the burden of proof under Section 13(1)(e) of the PC Act, the Court clarified that the prosecution must first establish the foundational facts concerning the accused’s known sources of income, assets and expenditure during the check period. Once disproportion is established, the evidentiary burden shifts to the accused to satisfactorily account for the excess through cogent and reliable material. The accused cannot discharge this burden through speculative or unsubstantiated explanations, particularly where the relevant facts lie within their special knowledge.

The Court also clarified that the prosecution is not required to undertake an unlimited or roving investigation into hypothetical sources of income. The accused must establish the legitimacy and availability of any alternative sources relied upon to explain the assets.

Held:

The Supreme Court dismissed the appeal, holding that the Appellant had failed to satisfactorily account for the disproportionate assets. Even after accepting his explanations on a demurrer, the disproportion remained above 26% of his income.

The Court accordingly upheld the conviction under Section 13(2) read with Section 13(1)(e) of the PC Act and maintained the sentence imposed by the High Court. The interim bail was vacated, and the Appellant was granted two weeks to surrender before the Trial Court to undergo the remaining sentence.

The judgment reiterates the evidentiary framework governing disproportionate assets cases under Section 13(1)(e) of the PC Act. It clarifies that once the prosecution establishes the foundational facts and demonstrates disproportionate assets, the burden shifts to the accused to provide a satisfactory and verifiable explanation. It also emphasises that unsupported estimates and hypothetical sources of income cannot displace cogent prosecution evidence, while reaffirming that the 10% margin is not an absolute threshold for determining criminal liability.