List of Current Affairs

Source: Supreme Court 

Why in News? 

A bench of Justice JB Pardiwala and Justice R Mahadevan held that the Magistrate is required to apply his mind before ordering an investigation under Section 156 (3) of Criminal Procedure Code, 1973 (CrPC).      

• The Supreme Court held this in the case of Om Prakash Ambadkar v. The State of Maharashtra (2025). 

What was the Background of Om Prakash Ambadkar v. The State of Maharashtra & Ors. Case?  

• The case involves Respondent No. 3, who is the original complainant, Adv. Nitin Devidas Kubade, a practicing advocate residing in Digras, Yavatmal. The appellant in this case is a police officer against whom the complaint has been filed. 
• The incident in question occurred on 31st December 2011 between 11:30 PM and 11:40 PM, during which the complainant was allegedly humiliated by the appellant, who is a policeman. 
• Following the incident, the complainant attempted to lodge an FIR at the Digras Police Station, but the police authorities refused to register his complaint. 
• In response to this refusal, the complainant sought support from the Bar Association, Digras, by submitting a formal grievance. Subsequently, he also submitted a report to the Superintendent of Police, Yavatmal, but the police authorities continued to avoid registering the FIR, allegedly because the accused individuals were police officers. 
• As a result of these unsuccessful attempts, the complainant filed an application under Section 156(3) of the Code of Criminal Procedure, 1973 (CrPC) before the Judicial Magistrate First Class, Digras. In this application, he requested the Magistrate to direct the police authorities to register the FIR based on his earlier complaint. 
• After reviewing the application, the accompanying reports, and legal submissions, the Judicial Magistrate First Class, Digras, found that there were prima facie allegations indicating the commission of cognizable offences under Sections 323, 294, 500, 504, and 506 of the Indian Penal Code, 1860 (IPC). 
• Consequently, the Magistrate directed the Digras Police Station to register the FIR and initiate an investigation as per Section 156(3) of the CrPC.  
• The appellant, aggrieved by the Magistrate’s order, filed an application under Section 482 of the CrPC before the High Court of Judicature at Bombay, Nagpur Bench, challenging the legality of the order.  
• However, the High Court, through its judgment dated October 16, 2019, dismissed the application and affirmed the order of the Magistrate, thereby upholding the directive to register the FIR and proceed with the investigation. 
• The appellant has now approached the Supreme Court by filing the present appeal against the judgment of the High Court.  

What were the Court’s Observations?  

• The Court held that ordinarily, Section 156(3) of the CrPC is invoked by the complainant when the police authorities decline to register a First Information Report (FIR). 
• However, it is the discretion of the concerned Magistrate whether to order police investigation under Section 156(3) of CrPC or take cognizance upon the complaint and issue process or dismiss the complaint under Section 203 of CrPC. 
• Once the order for police investigation is passed under Section 156 (3) of CrPC it becomes a police case and at the end of investigation the police may either file a chargesheet or closure report. 
• However, whenever an application for investigation is made under Section 156 (3) to the Magistrate it is his duty to apply his mind for the purpose of ascertaining if the allegations levelled constitute any cognizable offence or not. 
• The Court held that in the present facts the ingredients of the offence alleged are not at all made out. This reflects the mechanical manner in which the order for police investigation under Section 156 (3) has been passed. 
• In the light of the word ‘may’ used in Section 156 (3) of CrPC the Magistrate is required to apply his mind before ordering investigation under Section 156 (3) of CrPC. 
• The Court thus, held that in the facts of the present case continuance of investigation by the police will only be an abuse of process of law. 

What is the Difference between Section 156 of CrPC and Section 175 of BNSS?

What are the Safeguards Introduced by Section 175 of BNSS? 

• The following are the new changes which are introduced in the form of safeguards to prevent abuse of process of law: 
  • Firstly, the requirement of making an application to the Superintendent of Police upon refusal by the officer in charge of a police station to lodge the FIR has been made mandatory, and the applicant making an application under Section 175(3) is required to furnish a copy of the application made to the Superintendent of Police under Section 173(4), supported by an affidavit, while making the application to the Magistrate under Section 175(3). 
  • Secondly, the Magistrate has been empowered to conduct such enquiry as he deems necessary before making an order directing the registration of FIR. 
  • Thirdly, the Magistrate is required to consider the submissions of the officer in charge of the police station as regards the refusal to register an FIR before issuing any directions under Section 175(3). 
• It is to be noted that Section 175 (3) of BNSS is a result of law laid down by the judicial decisions over the years. 
• In the case of Priyanka Srivastava v. State of U.P. (2015) the Court held that prior to making an application to the Magistrate under Section 156(3) of the CrPC. the applicant must necessarily make applications under Sections 154(1) and 154(3). 
  • It was further observed by the Court that applications made under Section 156(3) of the CrPC must necessarily be supported by an affidavit sworn by the applicant. 
  • The reason given by the Court for introducing such a requirement was that applications under Section 156(3) of the CrPC were being made in a routine manner and in a number of cases only with a view to cause harassment to the accused by registration of FIR. 

Source: Supreme Court 

Why in News? 

A bench of Justice BR Gavai and Justice SVN Bhatti held that if the forfeiture of earnest money under a contract is reasonable, then it does not fall within Section 74 of the Indian Contract Act, 1872, inasmuch as, such a forfeiture does not amount to imposing a penalty.         

• The Supreme Court held this in the case of Godrej Projects Development Limited v. Anil Karlekar (2025). 

What was the Background of Godrej Projects Development Limited v. Anil Karlekar Case?  

• Booking of Apartment: 
  • On 10^th January 2014, the Complainants booked an apartment in the "Godrej Summit" project at Sector 104, Gurgaon, Haryana, submitting ₹10,00,000 as application money. 
• Allotment of Apartment: 
  • On 20^th June 2014, the Appellant allotted Apartment No. C-1501 (14th floor, Tower ‘C’) to the Complainants. 
  • An Apartment Buyer Agreement was executed between the parties. 
• Completion & Occupation Certificate: 
  • On 20^th June 2017, the Appellant obtained the Occupation Certificate from the Director, Town & Country Planning Department, Haryana. 
• Offer of Possession: 
  • On 28^th June 2017, the Appellant offered possession of the apartment. 
  • The Complainants declined possession, sought cancellation of the allotment, and demanded a full refund of the amount paid. 
• Legal Notice for Refund: 
  • On 29^th September 2017, the Complainants issued a legal notice to the Appellant seeking a refund of ₹51,12,310. 
• Consumer Complaint: 
  • On 14^th November 2017, the Complainants filed Consumer Complaint No. 262 of 2018 before the NCDRC, seeking:  
    • Refund of ₹51,12,310 with 18% interest per annum from the date of each payment till realization. 
• NCDRC Order: 
  • On 25th October 2022, the NCDRC directed the Appellant to:  
    • Deduct 10% of BSP (₹17,08,140) as cancellation charges. 
    • Refund the balance amount of ₹34,04,170 with 6% simple interest per annum from the date of each payment until refund, within three months. 
• Review Application Dismissed: 
  • On 5^th December 2022, the NCDRC dismissed the Review Application filed by the Appellant. 
• Appeal Filed: 
  • On 10^th January 2023, the Appellant filed the present appeal challenging the NCDRC’s order dated 25th October 2022. 
• Stay Order by the Supreme Court: 
  • On 24^th April 2023, the Court granted a stay on the impugned order, subject to the Appellant:  
    • Refunding the amount after deducting 20% as earnest money deposit. 
    • Paying 6% interest per annum from the date of contract cancellation. 
• The matter is now before the Supreme Court for the final decision.

What were the Court’s Observations?

• The Court first of all observed the terms of the contract in dispute.  
  • As per the agreement the complainant was required to pay earnest money deposit of 20% of the BSP. 
  • On the termination on account of buyer’s default the developer was entitled to forfeit the entire earnest money deposit and other dues including interest on delayed payments as specified in the Agreement. 
• It is to be noted that the respondent (complainant i.e. buyer) cancelled the deal since there was recession in the market. 
• The Court cited earlier cases where it was held that to justify the forfeiture of advance money being part of “earnest money” the terms of contract should be clear and explicit. However, it was clarified that if the payment is made only towards part payment of consideration and not intended as earnest money then forfeiture clause will not apply. 
• Further, the Court held that if the forfeiture of earnest money under the contract is not reasonable it does not fall within Section 74 of the Indian Contract Act, 1872 (ICA), as such an amount would not fall under the ambit of “penalty”. 
• However, if the forfeiture of earnest money is in the form of penalty, then Section 74 would be applicable. 
• In this line the NCDRC has in a series cases earlier held that 10% of BSP is a reasonable amount which is liable to be forfeited as earnest money. 
• Thus, the Court did not interfere with the direction of NCDRC for refund of amount in excess of 10% of the BSP. However, the Court held that the NCDRC was not justified in awarding interest on the amount to be refunded. 
• The Court further observed that the respondents sought cancellation of the allotment on the account of sharp decline in the prices of flats. Hence, it is possible that the respondent would have utilized the money for purchasing another property at a lower rate. 
• Thus, the Court partly allowed the appeal.

What is Earnest Money?

• In simple words earnest money is the amount payable as a specific form of security deposit made in some major transactions like real estate dealings. 
• In the case of Satish Batra v. Sudhir Rawal (2013) the Court held that earnest money is paid as a pledge for due performance of the contract, and it shall be forfeited in case of non performance of the contract by the depositor. 
• It is also the law that part-payment of purchase price cannot be forfeited unless it is a guarantee for the due performance of the contract. 
• The Court has further clarified that to justify the forfeiture of advance money being part of “earnest money” the terms of the contract should be clear and explicit. 
• However, if the payment is made only towards part payment of the consideration and not intended as earnest money then the forfeiture clause will not apply.

What is the Law on Forfeiture of Earnest Money and Section 74 of ICA ?

• In the case of Kailash Nath Associates v. Delhi Development Authority (2015) the Court held that Section 74 of ICA will apply to cases of forfeiture of earnest money under a contract.  
• However, if the forfeiture takes place under the terms and conditions of a public auction before agreement is reached, Section 74 would have no application. 
• Further, Delhi High Court in the case of Adani Enterprises v. Shri Somnath Fabrics Private Limited (2024) held that in the light of Section 73 and Section 74 of ICA the forfeiture of earnest money requires proof of actual loss. 

Source: Supreme Court  

Why in News? 

Recently, the bench of Justice Abhay S. Oka and Ujjal Bhuyan   has held that in an appeal under Section 37 of the Arbitration and Conciliation Act, the scope of review is even narrower if the arbitral award has already been upheld under Section 34. 

• The Supreme Court held this in the matter of M/s. C & C Constructions Ltd. v. IRCON International Ltd (2025). 
• Larsen Air Conditioning and Refrigeration Company v. Union of India, the Court stated that interference is permissible only in cases of patent illegality or denial of natural justice.  
• The case stemmed from a contractual dispute over delays in constructing Road Over Bridges, where the appellant's claims were rejected at multiple judicial levels before reaching the Supreme Court. 

What was the Background of M/s. C & C Constructions Ltd. v. IRCON International Ltd? 

• In June 2012, C & C Constructions Ltd. (the appellant) entered into an agreement with IRCON International Ltd. (the respondent) to construct five Road Over Bridges (ROBs) at different locations in Rajasthan. 
• The appellant claimed that the work at the sites was delayed due to reasons attributable to the respondent, specifically for three ROBs: LC-89, LC-228, and LC-108. 
• The appellant sought multiple extensions of time for project completion, initially with penalties and later without penalties, for the three ROBs. 
• During the extension requests, the appellant initially mentioned potential financial burdens resulting from delays but later agreed to remove such statements from their extension requests. 
• On multiple occasions, the respondent granted time extensions, with the appellant providing undertakings not to claim anything extra beyond escalation for work executed. 
• Despite these undertakings, the appellant submitted monetary claims on September 3, 2014, seeking compensation for delays, which the respondent rejected. 
• Two years after giving the undertakings, on January 25, 2017, the appellant invoked the arbitration clause and filed claims totaling Rs. 44.11 crores under 15 substantive heads. 
• The respondent contested these claims by invoking clause 49.5 of the General Conditions of Contract (GCC), which barred the contractor from claiming damages or compensation for delays. 

What were the Court’s Observations? 

• The Court noted that the appellant's claims were directly contradictory to the earlier undertakings provided on 14th January, 2015, wherein they agreed not to make claims other than escalation. 
• The Court observed that the appellant had repeatedly acted upon clause 49.5, seeking time extensions on three separate occasions, which implied an acceptance of the contract's terms. 
• The Court stated that the appellant could not raise new contentions regarding the validity of clause 49.5 at the Supreme Court stage, as these were not raised in earlier legal proceedings. 
• The Court states that the limited scope of interference under Section 37 of the Arbitration Act, which restricts the appellate court's review of arbitral awards. 
• The Court rejected the appellant's argument of clause 49.5 being waived by the respondent, noting that the respondent's communications did not suggest any such waiver. 
• The Court stressed that the arbitrator must decide according to contract terms, and a reasonable interpretation of contract terms does not automatically render the award challengeable. 
• The Court observed that any illegality challenging an arbitral award must be fundamental and go to the root of the matter, not be trivial. 

What is Section 37 of the Arbitration and Conciliation Act,1996? 

• Section 37 of the Arbitration and Conciliation Act, 1996, is a crucial procedural provision that delineates the specific circumstances under which appeals can be filed against certain arbitration-related orders. 
• The section provides a limited and carefully circumscribed right of appeal, explicitly stating that appeals can only be made from designated orders and not from any other arbitration-related decisions. 
• The first category of appealable orders includes judicial decisions such as: 
• Refusing to refer parties to arbitration under Section 8 
• Granting or refusing interim measures under Section 9 
• Setting aside or refusing to set aside an arbitral award under Section 34 
• The second category of appealable orders pertains to specific arbitral tribunal decisions, including: 
• Accepting jurisdictional objections under Section 16 
• Granting or refusing interim measures under Section 17 
• To prevent prolonged litigation, the Act explicitly prohibits second appeals from orders passed in the first appeal under Section 37, thereby creating a stringent limitation on repeated judicial interventions. 
• However, the provision safeguards the fundamental right to approach the Supreme Court, ensuring that the prohibition on second appeals does not completely extinguish the right to seek the highest judicial review. 
• The section is designed to balance the principles of minimal judicial interference in arbitration proceedings with the need to provide reasonable judicial oversight to protect parties' interests. 
• By specifying precise grounds for appeal, Section 37 aims to maintain the efficacy and expediency of arbitration as an alternative dispute resolution mechanism. 
• The carefully crafted language of Section 37 reflects the legislative intent to promote arbitration as a swift, efficient, and less procedurally cumbersome method of resolving commercial disputes. 

What was the Landmark Case Larsen Air Conditioning and Refrigeration Company v. Union of India? 

• The Court established that the jurisdiction under Section 34 of the Arbitration Act is limited and extremely circumscribed, permitting interference with an arbitral award only on specific grounds of patent illegality that fundamentally affect the core of the matter. 
• The Court clarified that while an arbitrator must decide in accordance with the contract terms, a reasonable interpretation of contract terms by the arbitrator does not automatically render the award liable to be set aside. 
• The Court identified two primary grounds for challenging an arbitral award: patent illegality that goes to the root of the matter, and denial of natural justice, emphasizing that the illegality must be substantive and not trivial. 
• In appeals under Section 37, the appellate court has a narrower scope of review, which is restricted to examining the findings in an award only if it has been upheld or substantially upheld under Section 34.