Supreme Court: Contract Denying Interest On Security Deposit Not Against Public Policy

How to interpret this clause?

"19. Security deposit shall carry no interest:- The security deposited by the Contractor/Contractors shall not carry any interest. It shall be refunded to the Contractor within three months from the date of expiry or sooner determination of the contract.”

The High Court, both single judge bench and division bench, held Clause 19 to be unsustainable in law and against public policy.

The Supreme Court rejected this holding -

"The public policy cannot be pressed into service to set at naught the commercial contract which expressly denies interest on security deposit. Such a stipulation is neither immoral nor unlawful nor can it be classified as unsustainable in the legal sense."

IN THE SUPREME COURT OF INDIA

Civil Appeal Nos. 3145-3146 of 2012

Decided On: 13.07.2026

State of Haryana and Ors. Vs. Jai Durgaa Finvest P. Ltd.

Hon'ble Judges/Coram:

Surya Kant, C.J.I. and V. Mohana, J.

Author: V. Mohana, J.

Citation: MANU/SC/0690/2026

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Supreme Court: What are exceptions to the principle of Res Judicata on issue of law?

 34.1. The general Rule is that all issues that arise directly and substantially in a former suit or proceeding between the same parties are res judicata in a subsequent suit or proceeding between the same parties. These would include issues of fact, mixed questions of fact and law, and issues of law.

34.2. To this general proposition of law, there are certain exceptions when it comes to issues of law:

34.2.1. Where an issue of law decided between the same parties in a former suit or proceeding relates to the jurisdiction of the court, an erroneous decision in the former suit or proceeding is not res judicata in a subsequent suit or proceeding between the same parties, even where the issue raised in the second suit or proceeding is directly and substantially the same as that raised in the former suit or proceeding. This follows from a reading of Section 11 of the Code of Civil Procedure itself, for the Court which decides the suit has to be a court competent to try such suit. When read with Explanation I to Section 11, it is obvious that both the former as well as the subsequent suit need to be decided in courts competent to try such suits, for the "former suit" can be a suit instituted after the first suit, but which has been decided prior to the suit which was instituted earlier. An erroneous decision as to the jurisdiction of a court cannot clothe that court with jurisdiction where it has none. Obviously, a civil court cannot send a person to jail for an offence committed under the Penal Code. If it does so, such a judgment would not bind a Magistrate and/or Sessions Court in a subsequent proceeding between the same parties, where the Magistrate sentences the same person for the same offence under the Penal Code. Equally, a civil court cannot decide a suit between a landlord and a tenant arising out of the rights claimed under a Rent Act, where the Rent Act clothes a special court with jurisdiction to decide such suits. As an example, Under Section 28 of the Bombay Rent Act, 1947, the Small Cause Court has exclusive jurisdiction to hear and decide proceedings between a landlord and a tenant in respect of rights which arise out of the Bombay Rent Act, and no other court has jurisdiction to embark upon the same. In this case, even though the civil court, in the absence of the statutory bar created by the Rent Act, would have jurisdiction to decide such suits, it is the statutory bar created by the Rent Act that must be given effect to as a matter of public policy. [See, Natraj Studios (P) Ltd. v. Navrang Studios at SCR p. 482]. An erroneous decision clothing the civil court with jurisdiction to embark upon a suit filed by a landlord against a tenant, in respect of rights claimed under the Bombay Rent Act, would, therefore, not operate as res judicata in a subsequent suit filed before the Small Cause Court between the same parties in respect of the same matter directly and substantially in issue in the former suit.

34.2.2. An issue of law which arises between the same parties in a subsequent suit or proceeding is not res judicata if, by an erroneous decision given on a statutory prohibition in the former suit or proceeding, the statutory prohibition is not given effect to. This is despite the fact that the matter in issue between the parties may be the same as that directly and substantially in issue in the previous suit or proceeding. This is for the reason that in such cases, the rights of the parties are not the only matter for consideration (as is the case of an erroneous interpretation of a statute inter partes), as the public policy contained in the statutory prohibition cannot be set at naught. This is for the same reason as that contained in matters which pertain to issues of law that raise jurisdictional questions. We have seen how, in Natraj Studios, it is the public policy of the statutory prohibition contained in Section 28 of the Bombay Rent Act that has to be given effect to. Likewise, the public policy contained in other statutory prohibitions, which need not necessarily go to jurisdiction of a court, must equally be given effect to, as otherwise special principles of law are fastened upon parties when special considerations relating to public policy mandate that this cannot be done.

34.3. Another exception to this general Rule follows from the matter in issue being an issue of law different from that in the previous suit or proceeding. This can happen when the issue of law in the second suit or proceeding is based on different facts from the matter directly and substantially in issue in the first suit or proceeding. Equally, where the law is altered by a competent authority since the earlier decision, the matter in issue in the subsequent suit or proceeding is not the same as in the previous suit or proceeding, because the law to be interpreted is different.

IN THE SUPREME COURT OF INDIA

Civil Appeal No. 753 of 2026 

Decided On: 04.02.2026

Eminent Colonizers Private Limited Vs. Rajasthan Housing Board and Ors.

Hon'ble Judges/Coram:

J.B. Pardiwala and K.V. Viswanathan, JJ.

Author: K.V. Viswanathan, J

Citation: 2026 INSC 116, MANU/SC/0116/2026.

Read full judgment here: Click here.

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Gujarat HC: What is duty of the court when it comes to its knowledge that future maintenance right was relinquished on payment of illusory amount of maintenance?

 The principle underlying the lump sum payment as laid down by the Supreme Court in Bai Tahira's case (supra) can be equally applied to the facts and circumstances of this case. The basic principle is that the object of the lump sum payment to be made is to obviate the destitution of the divorcee and to provide her with the wherewithal to maintain herself. As laid down by the Supreme Court, there must be a rational relation between the sum so paid and its potential as provision for maintenance. In the instant case the petitioner-wife was forced to go to Court for claiming her maintenance. Under the circumstances, then prevailing she gave up her right to claim future maintenance "voluntarily" for lump sum amount and executed the deed of divorce. Now, when she has preferred an application for maintenance, it cannot be said that the application at the instance of the petitioner-wife claiming maintenance is not maintainable because she had surrendered her future right of maintenance. Whenever in application for maintenance it is contended that because lump sum amount is paid towards the claim of future maintenance and therefore the application is not maintainable, it would be the bounden duty of the Court to examine whether the lump sum amount of maintenance mentioned in the deed of divorce or claimed to have been paid otherwise, had any rational connection with the necessities of life to be provided for in future and was it not an illusory amount or was it sufficient amount to maintain herself for the entire life?{Para 7}

8. This principle has its roots in the public policy and the provisions of law. Underlying public policy, behind the provisions of law regarding maintenance is that one who is destitute should be provided maintenance by the person whose duty it is to maintain such person. This public policy cannot be circumvented and the object of law cannot be frustrated by making a payment of illusory amount of maintenance. As far as the surrender of future right to maintenance is concerned, answer is very simple. Agreement to surrender such right of future maintenance for illusory amount of maintenance would be unfair and unconscionable. Such agreement is entered into between two unequals. One (i.e. wife, child or parents, as the case may be) is destitute and helpless and another (i.e. husband, father or son as the case may be) relatively stronger and better placed in the society. Ordinarily this will be the position, though exception cannot be ruled out completely. In this background, if the amount determined for future maintenance is illusory, the agreement to surrender the right to maintenance also would be unlawful as it would be against the public policy and also unconscionable and unfair. 

 IN THE HIGH COURT OF GUJARAT

Decided On: 06.09.1985

Bai Laxmiben Vs. Bharatbhai Vechatbhai Patel and Ors.

Hon'ble Judges/Coram:

A.P. Ravani, J.

Citation: 1986 DMC 1 129,1986 CRI LJ 1418,1986 GLR 1 272,1985 SCC ONLINE GUJ 187, MANU/GJ/0123/1985.

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Bombay HC: Advocate Casting Aspersions On Woman's Character Upon Instructions From Client Is Discharging His Duty, Not Insulting Her Modesty

 Reliance is placed upon the decision in the case of Navin Parekh vs. Madhubala Shridhar Sharma & Ors. MANU/MH/0883/1992 : 1992 Mh.L.J. 1409, in the backdrop that the lawyer had forwarded certain letters on behalf of his client where it was alleged that he had acted in highly unprofessional and unethical manner and he was sought to be prosecuted for alleged defamation, since the words used in the letter were per se defamatory. It is in these facts, it was held that where a party on the basis of sufficient material arrives at a conclusion and states its case and the contemplated course of action in the legal correspondence, it would be wholly inappropriate to allege that an offence of defamation is committed. Justice M.F.Saldanha held that, "in the case of an Advocate where express malice is absent, a Court having due regard to public policy would be extremely cautious of depriving him of the protection of Exception 9 to Section 499 Indian Penal Code. The Trial Magistrates would be well advised to be doubly cautious while entertaining complaints against legal practitioners because the law does confer on them certain privileges which are necessary for the conduct of their professional duties. It is, therefore, only in that class of cases where those privileges have been virtually abused alone, the process should be issued. The obligation of making out a case that the accused, who is an advocate had not acted in good faith and that he had acted maliciously is, therefore, a condition precedent and in absence of this necessary ingredient, the prosecution cannot be sustained." {Para 21}

24. In any case, since we find that there was no intention on part of the Petitioner to insult her modesty, as he was only discharging his duty of defending his clients in the remand proceedings and even if he had cast aspersions upon her character, since they were based on the instructions received from his clients, which has reference in the complaint made on-line and its receipt in the police station is not denied, we deem it appropriate to extend the privilege of an Advocate to the present Petitioner and moreso, what we find is, the statement is not unconnected to the case, as it is the case of his client that by using the pressure tactics, they were being coerced to pay the money.

IN THE HIGH COURT OF BOMBAY

Criminal Writ Petition No. 3858 of 2024

Decided On: 09.12.2024

Ratnadeep Ram Patil Vs. The State of Maharashtra and Ors.

Hon'ble Judges/Coram:

Bharati H. Dangre and Manjusha Ajay Deshpande, JJ.

Author: Bharati H. Dangre, J.

 Citation: 2024:BHC-AS:48668-DB, MANU/MH/7471/2024.

Read full Judgment here: Click here.

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On Which grounds the personal law of a party can be ignored or superseded in India?

 In India, personal laws, including Mohammedan law (Islamic law), are applicable to individuals based on their religious or community affiliations. These personal laws govern various aspects of a person's life, such as marriage, divorce, inheritance, and other religious and family matters. However, there are instances when personal laws may be set aside or not applicable in favor of general laws or statutory provisions. Here are some examples of when personal laws may be ignored or superseded in India:

• Public Policy and Fundamental Rights: Personal laws in India, including Mohammedan law, must conform to the broader principles of public policy and fundamental rights enshrined in the Indian Constitution. If a personal law provision is found to be in violation of constitutional principles, it can be set aside or overridden.

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Supreme Court reiterated that the courts should set aside arbitration awards only in exceptional circumstances

 Thus, it is clear that public policy of India is now constricted to mean firstly, that a domestic award is contrary to the fundamental policy of Indian law, as understood in paras 18 and 27 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49: (2015) 2 SCC (Civ) 204], or secondly, that such award is against basic notions of justice or morality as understood in paras 36 to 39 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] .

37. Insofar as domestic awards made in India are concerned, an additional ground is now available under sub-section (2-A), added by the Amendment Act, 2015, to Section 34. Here, there must be patent illegality appearing on the face of the award, which refers to such illegality as goes to the root of the matter but which does not amount to mere erroneous application of the law. In short, what is not subsumed within “the fundamental policy of Indian law”, namely, the contravention of a statute not linked to public policy or public interest, cannot be brought in by the backdoor when it comes to setting aside an award on the ground of patent illegality.
38. Secondly, it is also made clear that reappreciation of evidence, which is what an appellate court is permitted to do, cannot be permitted under the ground of patent illegality appearing on the face of the award.
39. To elucidate, para 42.1 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] , namely, a mere contravention of the substantive law of India, by itself, is no longer a ground available to set aside an arbitral award. Para 42.2 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] , however, would remain, for if an arbitrator gives no reasons for an award and contravenes Section 31(3) of the 1996 Act, that would certainly amount to a patent illegality on the face of the award.
40. The change made in Section 28(3) by the Amendment Act really follows what is stated in paras 42.3 to 45 in Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] , namely, that the construction of the terms of a contract is primarily for an arbitrator to decide, unless the arbitrator construes the contract in a manner that no fair-minded or reasonable person would; in short, that the arbitrator's view is not even a possible view to take. Also, if the arbitrator wanders outside the contract and deals with matters not allotted to him, he commits an error of jurisdiction. This ground of challenge will now fall within the new ground added under Section 34(2-A).
41. What is important to note is that a decision which is perverse, as understood in paras 31 and 32 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] , while no longer being a ground for challenge under “public policy of India”, would certainly amount to a patent illegality appearing on the face of the award. Thus, a finding based on no evidence at all or an award which ignores vital evidence in arriving at its decision would be perverse and liable to be set aside on the ground of patent illegality. Additionally, a finding based on documents taken behind the back of the parties by the arbitrator would also qualify as a decision based on no evidence inasmuch as such decision is not based on evidence led by the parties, and therefore, would also have to be characterised as perverse.”

24. This Court has in several other judgments interpreted Section 34 of the 1996 Act to stress on the restraint to be shown by courts while examining the validity of the arbitral awards. The limited grounds available to courts for annulment of arbitral awards are well known to legally trained minds. However, the difficulty arises in applying the well-established principles for interference to the facts of each case that come up before the courts. There is a disturbing tendency of courts setting aside arbitral awards, after dissecting and reassessing factual aspects of the cases to come to a conclusion that the award needs intervention and thereafter, dubbing the award to be vitiated by either perversity or patent illegality, apart from the other grounds available for annulment of the award. This approach would lead to corrosion of the object of the 1996 Act and the endeavours made to preserve this object, which is minimal judicial interference with arbitral awards. That apart, several judicial pronouncements of this Court would become a dead letter if arbitral awards are set aside by categorising them as perverse or patently illegal without appreciating the contours of the said expressions.

25. Patent illegality should be illegality which goes to the root of the matter. In other words, every error of law committed by the Arbitral Tribunal would not fall within the expression ‘patent illegality’. Likewise, erroneous application of law cannot be categorised as patent illegality. In addition, contravention of law not linked to public policy or public interest is beyond the scope of the expression ‘patent illegality’. What is prohibited is for courts to re-appreciate evidence to conclude that the award suffers from patent illegality appearing on the face of the award, as courts do not sit in appeal against the arbitral award. The permissible grounds for interference with a domestic award under Section 34(2-A) on the ground of patent illegality is when the arbitrator takes a view which is not even a possible one, or interprets a clause in the contract in such a manner which no fair-minded or reasonable person would, or if the arbitrator commits an error of jurisdiction by wandering outside the contract and dealing with matters not allotted to them. An arbitral award stating no reasons for its findings would make itself susceptible to challenge on this account. The conclusions of the arbitrator which are based on no evidence or have been arrived at by ignoring vital evidence are perverse and can be set aside on the ground of patent illegality. Also, consideration of documents which are not supplied to the other party is a facet of perversity falling within the expression ‘patent illegality’.

Supreme Court

JUSTICE L. NAGESWARA RAO JUSTICE S. RAVINDRA BHAT

Delhi Airport Metro Express Pvt. Ltd. Vs. Delhi Metro Rail Corporation Ltd.

Civil Appeal No. 5627 of 2021

9th September 2021

Citation: 2021 ALL SCR (ONLINE) 428

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Whether Indian court can refuse enforcement of an anti-suit injunction passed by a foreign court?

 In a standard essential patent (SEP) royalty rate-setting suit, preferred against the plaintiff before the Wuhan Intermediate People’s Court (hereinafter referred to as “the Wuhan Court”), the defendant moved an application, on 4th August, 2020, seeking an anti-suit injunction, restraining the plaintiffs from prosecuting the present suit before this Court.

75. Viewed thus, and in the backdrop of Indian Law, the operation of the order, dated 23rd September, 2020, of the Wuhan Court, would violate public policy in this country. No considerations of comity can, therefore, stand in the way of restraining its enforcement.

Negation of jurisdiction

76. There is, in my view, another, and somewhat more serious, objection, to the order, dated 23rd September, 2020, of the Wuhan Court, which directly involves the principle of comity of courts. By conditioning the continuance of the prosecution, by the plaintiffs, of the proceedings before this Court, with a penalty of about ₹ 1 crore per day, the Wuhan Court has effectively rendered it impossible for the plaintiff to continue to prosecute these proceedings. The inexorable sequitur is that this Court is also divested of the opportunity of adjudicating on the dispute, brought before it by the plaintiffs, which it has, otherwise, the jurisdiction to hear and decide. The order of the Wuhan Court, therefore, directly negates the jurisdiction of this Court, and infringes the authority of this Court to exercise jurisdiction in accordance with the laws of this country. It is not open to any Court to pass an order, prohibiting a court, in another country, to exercise jurisdiction lawfully vested in it. Any such decision would amount to a negation of jurisdiction, which cannot be countenanced.

78. For all the above reasons, I am of the view that a clear case, for grant of ad interim injunction, in terms of prayer (i) in para 33 of the present application, is made out.

79. Resultantly, notice shall issue on this application, returnable on 25th November, 2020. The defendants are at liberty, should they so choose, to file any further, or supplementary, response to prayer (i). Pending hearing and decision of the present application, the defendants shall be restrained from enforcing, against the plaintiff, the order, dated 23rd September, 2020, passed by the Wuhan Intermediate People’s Court, in the anti-suit injunction application, preferred by the defendants before it.

 IN THE HIGH COURT OF DELHI AT NEW DELHI

 I.A. 8772/2020 in CS(COMM) 295/2020

INTERDIGITAL TECHNOLOGY CORPORATION  Vs XIAOMI CORPORATION 

CORAM:

HON'BLE MR. JUSTICE C. HARI SHANKAR

Pronounced on : 9th October, 2020

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Whether Advocates can do money lending business with their client?

Admittedly, the respondent is a practicing Advocate and he appeared on behalf of the petitioner in S.T.C.No.1293 of 2016 on the file of the learned Judicial Magistrate No.4, Salem and also in S.T.C.No.106 of 2018 on the file of the learned Judicial Magistrate No.1, Salem. While being so, he is barred from having any business transactions or loan transactions with his client viz., the petitioner herein.

8. In this regard, the learned counsel appearing for the petitioner relied upon the judgement reported in (2018) 1 SCC 638 in the case of B.Sunitha Vs. State of Telengana, in which the Hon'ble Supreme Court of India held as follows :-

"12. One of the issues was dealt with by a single Bench Judgment of the Madras High Court in C. Manohar versus B.R. Poornima. R. Banumathi, J (as her Lordship then was) held that no presumption could arise merely by issuance of a cheque that amount stipulated in the cheque was payable towards fee. In absence of independent proof, issuance of cheque could not furnish cause of action under Section 138 of the Act in the context 4 J.S. Vasu versus State of Punjab (1994) 1 SCC 184, para 20 5 (2004) Crl.L.J 443 of an advocate or client. The observations relevant in the context are as follows :

13. The Bombay High Court in Re: KL Gauba6 held that fees conditional on the success of a case and which gives the lawyer 6 AIR 1954 Bom 478 an interest in the subject matter tends to undermine the status of the profession. The same has always been condemned as unworthy of the legal profession. If an advocate has interest in success of litigation, he may tend to depart from ethics.

14. In the matter of G.Senior Advocate of the Supreme Court, this Court held that the claim of an advocate based on a share in the subject matter is a professional misconduct. In VC Rangadurai versus D. Gopalan, it was observed that relation between a lawyer and his client is highly fiduciary in nature. The advocate is in the position of trust.

15. Rule 20 of Part VI, Chapter II, Section II of the Standard of Professional Conduct and Etiquette reads as follows :

“An advocate shall not stipulate for a fee contingent on the results of litigation or agree to share the proceeds thereof.”

16. Thus, mere issuance of cheque by the client may not debar him from contesting the liability. If liability is disputed, the advocate has to independently prove the contract. Claim based on percentage of subject matter in litigation cannot be the basis of a complaint under Section 138 of the Act.

17. In view of the above, the claim of the respondent advocate being against public policy and being an act of professional misconduct, proceedings in the complaint filed by him have to be held to be abuse of the process of law and have to be quashed."

In the above judgment the Hon'ble Supreme Court of India held that the action of the Advocate is against public policy and an act of professional misconduct.

The proceedings under his complaint is felt to be abuse of process of law and have to be quashed. In the case on hand, when there is a specific bar for doing money lending business that too with his own client, the act of the respondent is amount to professional misconduct. Therefore, the entire proceedings initiated as against the petitioner is nothing but clear abuse of process of law and the complaint itself is liable to be quashed.

 Madras High Court

Ilakkia Raja vs T.Umamaheswaran on 29 July, 2020

                                                                          CORAM: MR.JUSTICE G.K.ILANTHIRAIYAN

   

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Supreme Court: Award passed in domestic Arbitration after 2015 Amendment can be set aside on ground of patent illegality

Pursuant to the recommendations of the Law Commission, the 1996 Act was amended by Act 3 of 2016, which came into force w.e.f. 23.10.2015. The ground of "patent illegality" for setting aside a domestic award has been given statutory force in Section 34(2A) of the 1996 Act. The ground of "patent illegality" cannot be invoked in international commercial arbitrations seated in India. Even in the case of a foreign award under the New York Convention, the ground of "patent illegality" cannot be raised as a ground to resist enforcement, since this ground is absent in Section 48 of the 1996 Act. The newly inserted Sub-section (2A) in Section 34, reads as follows:

(2A) An arbitral award arising out of arbitrations other than international commercial arbitrations, may also be set aside by the Court, if the Court finds that the award is vitiated by patent illegality appearing on the face of the award:

Provided that an award shall not be set aside merely on the ground of an erroneous application of the law or by reappreciation of evidence.

20. In Ssangyong Engineering and Construction Company Limited19, this Court was considering a challenge to an award passed in an international commercial arbitration, between the Appellant - company a foreign entity registered under the laws of Korea, and the Respondent, a Government of India undertaking. In paragraph (19) of the judgment, this Court noted that the expansive interpretation given to "public policy of India" in the Saw Pipes (supra) and Western Geco International Limited20 cases, which had been done away with, and a new ground of "patent illegality" was introduced which would apply to applications Under Section 34 made on or after 23.10.2015. In paragraphs (36) and (37) of the judgment, this Court held that insofar as domestic awards are concerned, the additional ground of patent illegality was now available Under Sub-section (2A) to Section 34. However, re- appreciation of evidence was not permitted under the ground of "patent illegality" appearing on the face of the award.

21. In paragraphs (39) and (40) of Ssangyong Engineering (supra), the Court reiterated paragraphs (42.2) and (42.3) of Associate Builders (supra) wherein, it was held that the construction of the terms of a contract is primarily for an arbitrator to decide, unless the arbitrator construes a contract in a manner which no fair minded or reasonable person would take i.e. if the view taken by the arbitrator is not even a possible view to take. In paragraphs (39) and (40), the Supreme Court held as under:

39. To elucidate, para 42.1 of Associate Builders v. Delhi Development Authority MANU/SC/1076/2014 : (2015) 3 SCC 49, namely, a mere contravention of the substantive law of India, by itself, is no longer a ground available to set aside an arbitral award. Para 42.2 of Associate Builders v. Delhi Development Authority MANU/SC/1076/2014 : (2015) 3 SCC 49, however, would remain, for if an arbitrator gives no reasons for an award and contravenes Section 31(3) of the 1996 Act, that would certainly amount to a patent illegality on the face of the award.

40. The change made in Section 28(3) by the Amendment Act really follows what is stated in paras 42.3 to 45 in Associate Builders v. Delhi Development Authority MANU/SC/1076/2014 : (2015) 3 SCC 49, namely, that the construction of the terms of a contract is primarily for an arbitrator to decide, unless the arbitrator construes the contract in a manner that no fair-minded or reasonable person would; in short, that the arbitrator's view is not even a possible view to take. Also, if the arbitrator wanders outside the contract and deals with matters not allotted to him, he commits an error of jurisdiction. This ground of challenge will now fall within the new ground added Under Section 34(2-A).

(emphasis supplied)

22. The present case arises out of a domestic award between two Indian entities. The ground of patent illegality is a ground available under the statute for setting aside a domestic award, if the decision of the arbitrator is found to be perverse, or, so irrational that no reasonable person would have arrived at the same; or, the construction of the contract is such that no fair or reasonable person would take; or, that the view of the arbitrator is not even a possible view.

23. In the present case, the High Court has referred to the judgment in Associated Builders (supra) at length in paragraph (42) of its judgment dated 26.02.2019 and arrived at the correct conclusion that an arbitral award can be set aside Under Section 34 if it is patently illegal or perverse. This finding of the High Court is in conformity with paragraph (40) of the judgment of this Court in Ssangyong Engineering (supra).

IN THE SUPREME COURT OF INDIA

Special Leave Petition (C) Nos. 3584-85 of 2020

Decided On: 22.05.2020

Patel Engineering Ltd. Vs.  North Eastern Electric Power Corporation Ltd.

Hon'ble Judges/Coram:

R. Banumathi, Indu Malhotra and Aniruddha Bose, JJ.

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Whether a husband can enforce consent decree passed by Lok Adalat in which wife has waived her right to claim maintenance?

The consent decrees made by the courts are in effect of nothing but contracts with the seal of the court super-added to them. Accordingly, if the term of the contract is itself opposed to public policy then, such term, is void and unenforceable. If the term is severable then, only the term can be declared as void. If the term is not severable, then, perhaps, the entire contract may fall.

13. There are several rulings, which take the view that an agreement, in which the wife gives up or relinquishes her right to claim maintenance at any time in the future, is opposed to public policy and, therefore, such an agreement, even if voluntarily entered, is not enforceable. The two courts in the present case have basically relied upon such rulings and held that even if it is assumed that the parties had voluntarily agreed to give up their time to claim maintenance from each other, such agreement is opposed to public policy and, therefore, the same is not enforceable, or the same does not bar the maintainability of an application under Section 125 of Cr.P.C. There is no jurisdictional error in the view taken by these two courts so as to warrant interference under Article 227 of the Constitution of India.

IN THE HIGH COURT OF BOMBAY

Writ Petition No. 3439 of 2016

Decided On: 21.12.2018

Ramchandra Laxman Kamble  Vs.  Shobha Ramchandra Kamble and Ors.

Hon'ble Judges/Coram:

M.S. Sonak, J.

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Whether Arbitrator can foist unilateral addition or alteration of a contract upon an unwilling party?

However, when it comes to the public policy of India argument
based upon “most basic notions of justice”, it is clear that this ground
can be attracted only in very exceptional circumstances when the
conscience of the Court is shocked by infraction of fundamental
notions or principles of justice. It can be seen that the formula that was
applied by the agreement continued to be applied till February, 2013 –
87
in short, it is not correct to say that the formula under the agreement
could not be applied in view of the Ministry’s change in the base
indices from 1993-94 to 2004-05. Further, in order to apply a linking
factor, a Circular, unilaterally issued by one party, cannot possibly bind
the other party to the agreement without that other party’s consent.
Indeed, the Circular itself expressly stipulates that it cannot apply
unless the contractors furnish an undertaking/affidavit that the price
adjustment under the Circular is acceptable to them. We have seen
how the appellant gave such undertaking only conditionally and
without prejudice to its argument that the Circular does not and cannot
apply. This being the case, it is clear that the majority award has
created a new contract for the parties by applying the said unilateral
Circular and by substituting a workable formula under the agreement
by another formula de hors the agreement. This being the case, a
fundamental principle of justice has been breached, namely, that a
unilateral addition or alteration of a contract can never be foisted upon
an unwilling party, nor can a party to the agreement be liable to
perform a bargain not entered into with the other party. Clearly, such a
course of conduct would be contrary to fundamental principles of
justice as followed in this country, and shocks the conscience of this
Court. However, we repeat that this ground is available only in very

exceptional circumstances, such as the fact situation in the present
case. Under no circumstance can any Court interfere with an arbitral
award on the ground that justice has not been done in the opinion of
the Court. That would be an entry into the merits of the dispute which,
as we have seen, is contrary to the ethos of Section 34 of the 1996
Act, as has been noted earlier in this judgment.

REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 4779 OF 2019

Ssangyong Engineering & Construction Co. Ltd.Vs  National Highways Authority of India (NHAI) 

R.F. NARIMAN, J.
Dated:May 08, 2019.

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Whether it is permissible to take legal plea at the stage of challenge to arbitration award U/S 34 of Arbitration Act?

We do not see any bar to plea of jurisdiction being raised by way of an objection Under Section 34 of the Act even if no such objection was raised Under Section 16.

The scheme of the Act is thus clear. All objections to jurisdiction of whatever nature must be taken at the stage of the submission of the statement of defence, and must be dealt with Under Section 16 of the Arbitration Act, 1996. However, if one of the parties seeks to contend that the subject matter of the dispute is such as cannot be dealt with by arbitration, it may be dealt Under Section 34 by the Court.

IN THE SUPREME COURT OF INDIA

Civil Appeal Nos. 8984-8985 of 2017

Decided On: 22.03.2018

Lion Engineering Consultants  Vs. State of M.P. and Ors.

Hon'ble Judges/Coram:

A.K. Goel, Rohinton Fali Nariman and U.U. Lalit, JJ.

Citation: (2018) 16 SCC 758

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Whether public policy of India referred in arbitration Act refers to law in force in particular state of India?

It was contended that unless the arbitration was held under the State Law i.e. the M.P. Act that it would be a violation of the public policy of India. This contention is misconceived since the intention of providing that the award should not be in conflict with the public policy of India is referable to the public policy of India as a whole i.e. the policy of the Union of India and not merely the policy of an individual state. Though, it cannot be said that the upholding of a state law would not be part of the public policy of India, much depends on the context. Where the question arises out of a conflict between an action under a State Law and an action under a Central Law, the term public policy of India must necessarily be understood as being referable to the policy of the Union. It is well known, vide Article 1 of the Constitution, the name 'India' is the name of the Union of States and its territories include those of the States.

IN THE SUPREME COURT OF INDIA

Civil Appeal Nos. 8984-8985 of 2017

Decided On: 22.03.2018

Lion Engineering Consultants  Vs. State of M.P. and Ors.

Hon'ble Judges/Coram:

A.K. Goel, Rohinton Fali Nariman and U.U. Lalit, JJ.

Citation: (2018) 16 SCC 758

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Whether a party can back out from mediation settlement after pocketing money under said settlement?

In this case, disputes involved in the suit had been referred to the Delhi High Court Mediation & Conciliation Centre vide order dated 5th May, 2011 within the meaning of Section 89(1)(d) and the settlement has been arrived at before the learned Mediator after comprehensive mediation sessions held as many as on eight occasions in the presence of the counsel for the parties and thereafter, parties had reached an amicable settlement, which has been reduced in writing by the learned Mediator and has been duly signed by not only the parties but their counsels as well on 5th August, 2011. Thereafter, Mediator has sent the 'Settlement Agreement' to the court. No such objection was raised either by Defendant No. 1 or her counsel immediately after the settlement was drawn and signed by the parties on 5th August, 2011. It is only when the matter has been taken up by the Court after about fifteen days the new counsel for Defendant No. 1 has tried to assail the settlement on flimsy grounds, even though Settlement Agreement had been acted upon, inasmuch as, Defendant No. 1 had accepted two post dated cheques bearing Nos. 520237 and 520238 from Defendant No. 2; Defendant No. 2 has also paid pay order for `15 lakhs to the Plaintiff in Court on 30th August, 2011.

12. In my view, if such pleas are sustained the very sanctity and purpose of an amicable settlement through the process of mediation, would stand totally eroded. In Double Dot Finance Limited v. Goyal MG Gases Ltd. 2005 (2) AD Del 534 though that case arose out of the arbitration proceedings, a Single Judge of this Court has observed as under:

If such pleas are sustained, the sanctity and purpose of 'amicable settlements' between the parties would stand totally eroded. Amicable resolution of disputes and negotiated settlements is 'public policy in India'. Section 89 of the Code of Civil Procedure, Arbitration and Conciliation Act, 1996 as well as Legal Services Authorities Act, 1995 call upon the Courts to encourage settlements of legal disputes through negotiations between the parties. If amicable settlements are discarded and rejected on flimsy pleas, the parties would be wary of entering into negotiated settlements and making payments thereunder as a shrewed party after entering into a negotiated settlement, may pocket the amount received under it and thereafter challenge the settlement and reagitate the dispute causing immeasurable loss and harassment to the party making payment thereunder. This tendency has to be checked and such litigants discouraged by the Courts. It would be in consonance with public policy of India.

IN THE HIGH COURT OF DELHI

CS (OS) No. 2248/2010

Decided On: 01.09.2011

 Naveen Kumar Vs.  Khilya Devi and Ors.

Hon'ble Judges/Coram:

A.K. Pathak, J.

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Whether illegal arbitration award is against public policy of India?

It was also held by the District Judge that the arbitral award was not even against the public policy of India and merely because some illegality has been pointed out it cannot be held that the award is against the public policy.

13. We are in agreement with the findings of the District Judge and since no ground exists under Section 34 of the Act for setting aside the arbitral award without re-appreciation of evidence, we are of the opinion that the judgment and order passed by the District Judge is not illegal rather perfectly valid. 

IN THE HIGH COURT OF ALLAHABAD

F.A.F.O. No. 2188 of 2018

Decided On: 02.05.2018

 Nathu Ram Sahu Vs. Arbitrator/Collector and Ors.

Hon'ble Judges/Coram:

Pankaj Mithal and Rajiv Joshi, JJ.

Citation: AIR 2018(NOC) 880 ALL

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Whether maintenance can be denied to daughter due to agreement between her father and mother?

 As per Section 23 of the Indian Contract Act, 1872, any consideration or object of an agreement is unlawful, if it defeats the provisions of any law, or the court regards it as opposed to public policy. It cannot be disputed that a contract which has a tendency to injure public interests or public welfare is one against public policy. Where a contractual provision is against a specific statutory provision or if it would result in frustration of a right conferred by law, then it can be regarded as opposed to public policy. It shall not become valid even if the parties thereto agree to it. A statutory right which has been conferred on a person under public policy cannot be waived by the said person by an agreement. When the obligation on the father to maintain an unmarried daughter is recognised by a statute, it is a matter of public policy and not of an individual. The father cannot divest himself of his liability to maintain his child by an agreement with the mother of the child. It would definitely be the public policy that children should not be left dependent on public assistance or on charity. They should therefore be able to come to the court for maintenance, notwithstanding any agreement to the contrary.

35. In the aforesaid factual and legal situation, the contention of the appellant that, the compromise decree passed by the court in the litigations between the father and the mother would preclude the daughters from claiming maintenance from the father, cannot be countenanced. The right of the daughters to get maintenance from the father was not forfeited by virtue of the agreement/compromise entered into between the mother and the father.

IN THE HIGH COURT OF KERALA AT ERNAKULAM

Mat. Appeal No. 841 of 2014

Decided On: 08.10.2018

 Vikraman Nair Vs. Aishwarya and Ors.

Hon'ble Judges/Coram:

C.K. Abdul Rehim and R. Narayana Pisharadi, JJ.

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Whether court should decide issue of custody/visitation rights of minor children on basis of consent of parties?

Thus, it follows that the issue of custody of minor children cannot be decided by the Courts dealing with Petitions under the said Act or Petitions dealing with custody/visitation rights of children only on the basis of consensus or consent of the parties. Even under Rule 3 of Order XXIII of the Civil Procedure Code, 1908, a compromise can be recorded provided it is otherwise legal and is not against the public policy. In a case where contesting parties to a Petition under the said Act or under any other Enactment place compromise on record dealing with custody and visitation rights in relation to minors, the Court cannot the accept compromise mechanically. Before accepting the compromise and permitting parties to act upon the compromise, the Court has to apply its mind to the well settled law. What is paramount is what is conducive to the welfare of the children. Therefore, it is the duty of the Court to consider whether the compromise is for the welfare of the children. As stated earlier, the consent of the parties and even the personal law dealing with the issue of custody of children cannot and must not supersede paramount considerations laid down under Section 17 of the said Act. The Court has to be very cautious especially when parties by consent agree to disturb the custody of the children.

IN THE HIGH COURT OF BOMBAY

Family Court Appeal No. 76 of 2016

Decided On: 08.12.2016

Appellants: "A"

Vs.

Respondent: "B"

Hon'ble Judges/Coram:

Abhay Shreeniwas Oka and Anuja Prabhudessai, JJ.

Citation: 2017(6) MHLJ 134

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Whether unjust arbitration award can be set aside by court?

We are not in agreement with the approach adopted by the learned single Judge. The dispute in question had resulted in a reasoned award. It is not as if the arbitrator has not appreciated the evidence. The arbitrator has taken a plausible view and, an in our view, as per us the correct view, that the very nature of job to be performed would imply that there has to be an area for unloading and that too in the vicinity of 5 kilometres as that is all that the Appellant was to be paid for. The route was also determined. In such a situation to say that the Respondent owed no obligation to make available the site cannot be accepted by any stretch of imagination. The unpreparedness of the Respondent is also apparent from the fact that even post termination it took couple of years for the work to be carried out, which was meant to be completed within 45 days. The ability of the Appellant to comply with its obligations were inter dependent on the Respondent meeting its obligations in time to facilitate appropriate areas for unloading of the earth and for its compacting. At least it is certainly a plausible view.

11. It has been opined by this Court that when it comes to setting aside of an award under the public policy ground, it would mean that the award should shock the conscience of the court and would not include what the court thinks is unjust on the facts of the case seeking to substitute its view for that of the arbitrator to do what it considers to be "justice." (Associate Builders v. Delhi Development Authority MANU/SC/1076/2014 : (2015) 3 SCC 49)

12. The approach adopted by the learned Additional District Judge, Chandigarh was, thus, correct in not getting into the act of re-appreciating the evidence as the first appellate court from a trial court decree. An arbitrator is a chosen Judge by the parties and it is on limited parameters can the award be interfered with. 

IN THE SUPREME COURT OF INDIA

Civil Appeal No. 20885 of 2017 

Decided On: 05.12.2017

 Sutlej Construction Limited Vs. Union Territory of Chandigarh

Hon'ble Judges/Coram:

Jasti Chelameswar and Sanjay Kishan Kaul, JJ.

Citation:(2018) 1 SCC 718

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Whether public policy for purpose of arbitration proceeding means only law laid down by parliament?

It was also contended by Shri Divan, that
the newly added ground that the Tribunal under
the Arbitration Act, 1996 had no jurisdiction
to decide the dispute in question because the
jurisdiction lay with the Tribunal under the
M.P. Act of 1983, was a question which can be
agitated under sub-clause (ii) of clause (b)
of sub-section (2) of Section 34 of the
Arbitration Act, 1996. This provision enables
the court to set- aside an award which is in
conflict with the public policy of India.
Therefore, it is contended that the amendment
had been rightly allowed and it cannot be said
that what was raised was only a question which
pertained to jurisdiction and ought to have
been raised exclusively under Section 16 of
the Arbitration Act, 1996, but in fact was a
question which could also have been raised
under Section 34 before the Court, as has been
done by the Respondent. This submission must
be rejected. The contention that an award is
in conflict with the public policy of India
cannot be equated with the contention that
Tribunal under the Central Act does not have
jurisdiction and the Tribunal under the State
Act, has jurisdiction to decide upon the
dispute. Furthermore, it was stated that this
contention might have been raised under the
head that the Arbitral Award is in conflict
with the public policy of India. In other
words, it was submitted that it is the public
policy of India that arbitrations should be
held under the appropriate law. It was
contended that unless the arbitration was held
under the State Law i.e. the M.P. Act that it
would be a violation of the public policy of
India. This contention is misconceived since
the intention of providing that the award
should not be in conflict with the public
policy of India is referable to the public
policy of India as a whole i.e. the policy of
the Union of India and not merely the policy
of an individual state. Though, it cannot be
said that the upholding of a state law would
not be part of the public policy of India,
much depends on the context. Where the
question arises out of a conflict between an
action under a State Law and an action under a
Central Law, the term public policy of India
must necessarily be understood as being
referable to the policy of the Union. It is
well known, vide Article 1 of the
Constitution, the name 'India' is the name of
the Union of States and its territories
include those of the States.”
8. Both stages are independent. Observations in
Paragraphs 16 and 17 in MSP Infrastructure (supra) do not,
in our view, lay down correct law. We also do not agree
with the observation that the Public policy of India does
not refer to a State law and refers only to an All India
law.
9. In our considered view, the public policy of India
refers to law in force in India whether State law or
Central law. Accordingly, we overrule the observations to
the contrary in Paragraphs 16 and 17 of the judgment in MSP
Infrastructures Ltd. (supra).
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOS. 8984-8985 OF 2017
 M/S LION ENGINEERING CONSULTANTS 
 Vs
 STATE OF M.P. & ORS. 
Dated:March 22, 2018.

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Whether award passed by arbitrator can be set aside on ground award was unjust?

 It has been opined by this Court that when it comes to setting aside of an award under the public policy ground, it would mean that the award should shock the conscience of the court and would not include what the court thinks is unjust on the facts of the case seeking to substitute its view for that of the arbitrator to do what it considers to be "justice." (Associate Builders v. Delhi Development Authority MANU/SC/1076/2014 : (2015) 3 SCC 49)

IN THE SUPREME COURT OF INDIA

Civil Appeal No. 20885 of 2017 (Arising from SLP (Civil) No. 14451 of 2015)

Decided On: 05.12.2017

 Sutlej Construction Vs. Union Territory of Chandigarh

Hon'ble Judges/Coram:

Jasti Chelameswar and Sanjay Kishan Kaul, JJ.

Citation:(2018) 1 SCC 718

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