Dispute Resolution Quarterly Milestones (July-September 2026)

In Tejas J. Shah & Amisha T. Shah v Mantri Technology Constellations (P) Ltd.,¹ the Supreme Court held that the moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 (IBC) operates only against the corporate debtor and cannot be extended to its promoters, directors, group companies or landowners. The initiation of corporate insolvency resolution process (CIRP) against the developer company will no longer be a blanket defence that halts consumer claims against the wider promoter group.

The ruling is significant for homebuyers, investors and other stakeholders in the real estate sector, where projects are frequently structured through a web of special-purpose developers, holding companies and landowning entities.

The appellants, homebuyers in a Bengaluru project, had filed a consumer complaint before the National Consumer Disputes Redressal Commission (NCDRC) against the developer company and six other respondents comprising a group company, promoters, directors and landowners. After CIRP was initiated against the developer, the NCDRC adjourned the entire complaint indefinitely, taking the view that the alleged deficiency was attributable only to the developer and that proceedings could not be split.

Setting aside that order of the NCDRC, the Supreme Court held that the protective sweep of Section 14 is strictly statutory and cannot be enlarged to exclude remedies under the Consumer Protection Act. It also held that the question of whether the other respondents were in fact liable, which includes deciding on objections raised by respondents such as maintainability and absence of privity of contract, must be decided on the merits and cannot be foreclosed at the interlocutory stage by invoking the moratorium.

In National Skill Development Corpn. v Surya Wires (P) Ltd.,² the Supreme Court held that an arbitration clause in a principal loan agreement is incorporated by reference into a personal guarantee that is expressly made an integral and inseparable part of that agreement. This applies even if the guarantee itself contains no separate arbitration clause and the guarantor has not signed the loan agreement in his/her personal capacity. This ruling is relevant for lenders, financial institutions and public-sector funding agencies that structure disbursements through a composite set of loan documents, security documents and personal guarantees. It clarifies that the arbitration clause in the master agreement will apply to the entire package, allowing claims against the borrower and the guarantor to be consolidated in a single arbitral proceeding.

The dispute concerned loans extended by the appellant to a training partner under the Pradhan Mantri Kaushal Kendra Scheme, which were supported by personal guarantees from the Managing Director. When default was triggered, the arbitral tribunal and the High Court deleted the guarantor from the array of parties on the basis that the guarantee was a standalone instrument with no arbitration clause.

Reversing that view, the Supreme Court analysed the loan agreement’s definition clauses and found that the personal guarantee was expressly listed as a “Facility Agreement” and deemed to be part of the loan agreement “as if the provisions thereof were set out herein in extension”. Reading this with the fact that the documents had been executed together and the mandatory pre-disbursement nature of the guarantee, the Supreme Court held that the parties plainly intended the entire package of documents to operate as a single transaction. On this basis, the arbitration in the loan agreement was incorporated into the guarantee

The decision carries forward the Supreme Court’s ruling in Cox and Kings,³ where the Supreme Court affirmed the applicability of the ‘group of companies’ doctrine under Indian arbitration law, and signals that courts will take an increasingly commercial view of multi-contract transactions, provided the drafting of the principal agreement is found to be sufficiently clear.

In National Seeds Corpn. Ltd. v National Agro Seed Corpn. (India),⁴ the Supreme Court held that an award-debtor is not relieved of its liability to pay interest merely because it has deposited the awarded sum in court as a condition of a stay against the enforcement of the arbitration award under Section 36(3) of the Arbitration & Conciliation Act, 1996. For award-debtors, this is an important commercial warning that a deposit made purely to secure a stay, and then actively resisted at the withdrawal stage, will continue to attract interest at the awarded rate for the entire period until the amount is actually made available to the award-holder.

In this case, the appellant (i.e., the award-debtor) had deposited 50% of the principal sum in 2019 as a condition for staying the award, and the balance in 2022. However, it opposed subsequent applications by the award-holder for release of the funds, including at a stage when release was offered against the furnishing of security.

Rejecting the appellant’s reliance on earlier decisions treating a deposit as satisfaction of the award, the Supreme Court held that “a deposit is not synonymous with payment”. It was further clarified that even in cases where an award-holder is permitted to withdraw the amount upon furnishing security for it, interest would continue to accrue on the amount after the deposit. Interest will cease to run only where the deposit is made in accordance with Order XXI Rule 1 of the Code of Civil Procedure, 1908, which requires the award-holder to be free to withdraw the amount unconditionally.

The Supreme Court also flagged a broader problem of asymmetry in how different courts and tribunals administer, invest and release deposits made during the pendency of appeals, and formally requested the Law Commission of India to examine the issue and consult the Reserve Bank of India and relevant ministries to evolve a uniform legislative framework.

In Sanofi India Ltd. v Central Bureau of Investigation,⁵ the Supreme Court laid down a three-stage test for attributing the acts and criminal intent (‘mens rea’) of a natural person to a company. The Court clarified that the mere failure to identify or arraign an individual alongside the company is not, by itself, a ground to quash criminal proceedings against the company. The decision has implications for companies facing prosecution under criminal statutes requiring proof of mens rea, including the Prevention of Corruption Act, 1988 and the Bharatiya Nyaya Sanhita, 2023, particularly for larger companies where decision-making is layered and distributed across organisational structures.

The case arose from allegations that the appellant company had conspired with a public official to supply medicines to the Bhabha Atomic Research Centre at inflated rates and in excessive quantities, causing wrongful loss to the Government of India, and had paid illegal gratification to the official. No employee or officer of the company had been arraigned as an accused. The Karnataka High Court declined to quash the proceedings, holding that the company’s objections should be considered at trial. The company challenged this decision before the Supreme Court.

Drawing on English jurisprudence, the Supreme Court set out a sequential inquiry to determine when an individual’s acts and state of mind may be attributed to a company. First, the court examines whether the company’s constitutional documents or applicable company-law principles confer the relevant authority on the individual. Second, if such authority is not established, the court considers whether it was expressly or impliedly delegated to the individual with sufficient discretion and independence. The mere ability to execute instructions is insufficient; the individual must have meaningful authority over how the act is carried out.

If attribution cannot be established under either of these stages, the court considers whether the purpose of the relevant criminal statute would be frustrated if the individual’s acts and state of mind were not attributed to the company. If so, the court may formulate a special rule of attribution for that statutory provision.

The Supreme Court dismissed the appeal, leaving the trial court to apply this framework during the trial. The decision provides a structured approach to assessing corporate criminal liability and highlights the relevance of how authority and decision-making responsibilities are allocated within an organisation.