AKP Dispute Resolution Digest March 30, 2026
- AK & Partners
- Mar 30
- 6 min read
We are delighted to share this month's AKP Dispute Resolution Monthly Digest. Please feel free to write to us with your feedback at info@akandpartners.in.
1. Insolvency and Bankruptcy Law
1.1. Banking & Finance
1.1.1. Supreme Court holds creditor cannot appropriate pre-CIRP dues from a security deposit after the moratorium
The Supreme Court of India has held that a creditor cannot appropriate amounts lying as security deposit towards pre-CIRP dues of a corporate debtor once the moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 comes into effect. The case arose in the context of a creditor seeking to adjust pre-insolvency dues from a security deposit furnished earlier by the corporate debtor under a contractual arrangement. The creditor contended that such adjustment was permissible as the deposit was already in its possession. Rejecting this contention, the Supreme Court held that the moratorium under Section 14 creates a complete prohibition on recovery or enforcement of pre-CIRP claims, including indirect methods such as appropriation or set-off against deposits. The Court emphasised that permitting such unilateral adjustments would defeat the objective of maintaining the corporate debtor’s asset pool intact during the resolution process and would prejudice other creditors. The ruling reinforces the principle that all claims must be dealt with through the insolvency process and that creditors cannot bypass the statutory framework by resorting to contractual mechanisms during the moratorium period.
1.1.2. Supreme Court clarifies that primacy of CoC’s commercial wisdom does not exclude judicial scrutiny
The Supreme Court has clarified that while the commercial wisdom of the Committee of Creditors (CoC) enjoys primacy under the Insolvency and Bankruptcy Code, 2016, it does not render every CoC decision immune from judicial scrutiny. The issue arose in proceedings where parties challenged decisions taken by the CoC during the resolution process, arguing that the doctrine of commercial wisdom had been applied too broadly to shield all decisions from review. The Court observed that although courts do not sit in appeal over the commercial merits of CoC decisions, they are nevertheless empowered to examine whether such decisions comply with statutory requirements and are not arbitrary or in violation of the IBC framework. The Supreme Court clarified that judicial review remains available to ensure fairness, transparency, and compliance with the Code, and that the doctrine of commercial wisdom cannot be invoked as a blanket shield against scrutiny in cases involving procedural irregularities or legal infirmities. This ruling strikes a balance between deference to creditor autonomy and the need for judicial oversight to preserve the integrity of the insolvency process.
2. Negotiable Instruments Act
2.1. Banking & Finance
2.1.1. Supreme Court holds dishonour of post-dated cheque alone insufficient to infer dishonest intention for offence of cheating
The Supreme Court has held that mere dishonour of a post-dated cheque, by itself, is insufficient to infer dishonest intention so as to attract the offence of cheating under Section 420 of the Indian Penal Code. The case arose from criminal proceedings initiated against an accused on the basis that post-dated cheques issued towards repayment of dues were dishonoured, and such dishonour was alleged to constitute cheating. The complainant contended that issuance of cheques followed by dishonour demonstrated fraudulent intent at inception. Rejecting this argument, the Supreme Court clarified that the offence of cheating requires mens rea at the time of inducement, i.e., a dishonest intention existing at the inception of the transaction. The mere fact that a cheque issued subsequently is dishonoured does not, by itself, establish such intention. The Court emphasised that dishonour of cheques is specifically governed by the statutory framework under Section 138 of the Negotiable Instruments Act, 1881, and criminal prosecution for cheating cannot be sustained in the absence of independent material demonstrating fraudulent intent at the time the transaction was entered into. This ruling prevents misuse of criminal proceedings under cheating provisions in purely commercial disputes arising from cheque dishonour and reinforces the distinction between contractual breach and criminal liability.
3. Insurance Law
3.1. Commercial Insurance
3.1.1. Supreme Court Rejects Insurance Claim on Proof of Deliberate Fraud
The Hon’ble Supreme Court rejects fraudulent fire insurance claim; reiterates fraud vitiates all contracts. In United India Insurance Co. Ltd. vs Sayona Colours Pvt. Ltd., Civil Appeal No. 6100 of 2024, the Hon’ble Supreme Court set aside the National Consumer Dispute Redressal Commission (NCDRC) order, which had partly allowed an insurance claim arising out of a fire incident. The insurer alleged deliberate arson, supported by forensic and surveyor reports indicating kerosene traces and fabricated supplier invoices. The Court held that the proximity between the enhancement of insurance coverage and the incident, coupled with falsified records and forensic evidence, established a fraudulent claim. It reiterated that fraud vitiates all proceedings and no benefit can arise from a wrongful act. The NCDRC’s approach of granting partial relief despite clear fraud was held legally unsustainable. The appeal was allowed, and the claim was rejected in its entirety.
4. Consumer Protection
4.1. Consumer Electronics
4.1.2. Consumer Commission holds Apple not Liable for Failure to Trace Stolen iPhone without “Find My” Activation
The Hon’ble Delhi District Commission dismisses claim against Apple; no liability for stolen device tracking without feature activation in Shan Mohmmed vs Apple India, CC/122/2023, the Hon’ble District Commission (South Delhi) dealt with a complaint alleging deficiency in service due to failure of the “iPhone findable after power off” feature after theft of the device. The Commission noted that the tracking functionality is contingent upon enabling the “Find My” feature and network connectivity. The complainant failed to establish that the feature was activated prior to theft. It was further held that no contractual or statutory obligation exists on the manufacturer to trace stolen devices, and law enforcement agencies bear such responsibility. Accordingly, the complaint alleging unfair trade practice and deficiency of service was dismissed for lack of proof.
4.2. Entertainment & Film Distribution
4.2.1. NCDRC Sets Aside Insurer’s Repudiation and Holds Broker-Mediated Communication Valid and Claim Maintainable
The Hon’ble National Consumer Dispute Redressal Commission (NCDRC) holds insurer’s repudiation unjustified, communication through broker valid in film distribution insurance policy. In M/s Asian Theatres Pvt. Ltd. vs Oriental Insurance Co. Ltd., CC/133/2013, the Hon’ble NCDRC examined repudiation of a “Distributors' Loss of Revenue Insurance Policy” taken for film exhibition losses. The insurer rejected the claim, citing breach of policy conditions, including non-intimation of release dates and alleged aggravation of loss. The Commission found that multiple communications regarding the postponement of release were duly made, including through the broker, and were acknowledged by an endorsement issued by the insurer. It held that communication via a broker, who facilitated the policy, cannot invalidate the claim, especially when receipt is admitted. Further, allegations of aggravation due to the producer’s conduct were not attributable to the distributor. The repudiation was held to be inconsistent with surveyor findings and contractual obligations.
5. Arbitration and Conciliation Act
5.1. Infrastructure
5.1.2. Supreme Court Holds Arbitral Award Void in Absence of Valid Arbitration Agreement in Octroi Collection Dispute
The Supreme Court of India dismissed a Special Leave Petition filed by MS Bharat Udyog Ltd. (formerly Jai Hind Contractors Pvt. Ltd.) against the Ambernath Municipal Council, thereby upholding the Bombay High Court’s decision to set aside an arbitral award relating to octroi collection rights. The dispute originated from a 1994 contract awarded through auction under the Maharashtra Municipal Councils Act, 1965. The contractor subsequently sought a reduction in the reserve price, which was rejected in accordance with State Government guidelines. The Court held that no valid arbitration agreement existed between the parties, as the contract provided for dispute resolution before designated administrative authorities rather than through arbitration. It was further clarified that unilateral appointment of an arbitrator without mutual consent rendered the proceedings void ab initio. Participation by the Municipal Council did not create estoppel, as jurisdictional objections had been raised in a timely manner.
6. Arbitration and Conciliation Act, 1996
6.1. Commercial Trade
6.1.2. Settlement Agreements Do Not Bar Reference to Arbitration at Referral Stage
The Delhi High Court has reiterated that settlement agreements do not automatically extinguish an existing arbitration clause at the referral stage. The petition was filed under Section 11(6) of the Arbitration and Conciliation Act, 1996 seeking appointment of a sole arbitrator in relation to disputes arising from a distribution agreement and subsequent settlement arrangements. The Court observed that issues such as novation or supersession of contracts involve mixed questions of fact and law which fall within the jurisdiction of the arbitral tribunal. Accordingly, the Court appointed a sole arbitrator under the aegis of the Delhi International Arbitration Centre and left all substantive issues to be determined during arbitral proceedings.
7. PMLA
7.1. Financial Services
7.2. Money Laundering Recognised as a Continuing Offence under PMLA
The Delhi High Court has clarified that the offence of money laundering under the Prevention of Money Laundering Act, 2002 constitutes a continuing offence so long as an individual retains or enjoys property derived from criminal activity. The Court emphasised that invocation of the PMLA in such circumstances does not amount to retrospective criminal liability in violation of Article 20(1) of the Constitution of India.
The judgment arose from proceedings concerning property allegedly acquired using proceeds of crime prior to the enactment of the PMLA. Setting aside an earlier order which had quashed the attachment, the Division Bench held that continued possession or use of tainted assets itself constitutes money laundering, thereby validating enforcement action under the statute.
Disclaimer
The note is prepared for knowledge dissemination and does not constitute legal, financial or commercial advice. AK & Partners or its associates are not responsible for any action taken based on its contents.
For further queries or details, you may contact:
Mr. Anuroop Omkar
Partner, AK & Partners
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