A. Cover Story

[A.1] SC restricts the scope of writ jurisdiction in insufficiently stamped arbitration agreements

In Tarini Prasad Mohanty v. Sunflag Iron and Steel Company Ltd (May 27th, 2026), the dispute arose between Tarini Prasad Mohanty (Appellant, a mine owner) and Sunflag Iron and Steel Company Ltd. (Respondent, SISCO). The parties entered into an agreement for the sale of iron ore with supplementary agreements. When disputes arose, they were referred to a Sole Arbitrator. During the arbitration, Mohanty objected under Section 16 of the Arbitration and Conciliation Act, 1996, claiming the agreements were insufficiently stamped. The Arbitrator rejected this, holding the agreements were properly stamped.

Mohanty filed a writ petition under Articles 226/227 of the Constitution before the High Court. A Single Judge set aside the Arbitrator’s order, directing impounding of the documents.

SISCO challenged this via a writ appeal. The High Court’s Division Bench set aside the Single Judge’s order, holding that stamping objections should be raised under Section 34 post-award.

Mohanty then filed an appeal before the Supreme Court. The Supreme Court affirmed the Division Bench’s decision, emphasising minimal judicial intervention during arbitration and the curable nature of stamping defects. The issue wise analysis of the Supreme Court’s judgement has been done in the following paragraphs.

Issue No. 1: Whether a Single Judge was justified in exercising writ jurisdiction under Articles 226 and 227 to set aside an order passed by an Arbitrator under Section 16 regarding insufficient stamping of agreements?

Section 16(6) of the Arbitration and Conciliation Act, 1996 mandates that if a Section 16 objection is rejected, the challenge must await the final award and be raised under Section 34. The Supreme Court while analysing the provisions and relying on the Constitutional Bench’s decision in In re Interplay, held that the Single Judge exceeded jurisdiction by impounding the insufficiently stamped agreement. The Court clarified that non-stamping or inadequate stamping is a curable defect, not a fatal infirmity that renders an agreement void. It affects admissibility in evidence, not validity.

Further, Section 16 empowers the Arbitral Tribunal to rule on its own jurisdiction, including stamping objections. The Tribunal was competent to decide the issue. The remedy under Section 34 is adequate. The mine owner’s argument that Section 34 is circumscribed was rejected because the defect is curable, and the award (or lack of jurisdiction) can be challenged post-award.

Issue No. 2: Whether the Single Judge was justified in entering into the merits of the dispute and interpreting the nature of the agreements (conveyance vs. agreement to sell) while exercising writ jurisdiction during pending arbitration proceedings?

While relying on the judicial precedent in Bhaven Construction v. Executive Engineer, Sardar Sarovar Narmada Nigam Limited (2021), which held that interpretation of contracts is a matter of evidence and should generally not be undertaken in writ jurisdiction, the Court found the Single Judge’s approach procedurally improper. The court observed that arbitration proceedings were still pending, and parties had not yet led evidence. Determining the true nature of the agreements at this stage required extensive contractual interpretation and evidence, which is the domain of the Arbitrator. Thus, the Single Judge was not justified in interpreting the contracts or entering into the merits of the dispute. Such interpretation must be left to the Arbitrator during the proceedings, with any objections to the final decision available under Section 34.

B. Case Laws

[B.1] Bank has general lien to retain gold ornaments for housing loan after clearing of gold loan

As per Section 171 of the Indian Contract Act, the bank has a right of general lien over all goods and securities pledged or bailed to it to clear any unpaid debts owed by the same borrower, unless there is an express contract to the contrary. This provision was held in favour of the banks by the High Court of Andhra Pradesh in Balagam Sri Vijaya Bhargavi v. Regional Manager (July 16th, 2026).

As per the facts of the case, the petitioner availed a gold loan from the respondent bank by pledging gold ornaments. In response to the demand notice issued by the bank, the petitioner cleared the entire gold loan, and the loan account was closed. However, the petitioner was also a co-applicant of the housing loan availed by her husband, due to which the bank did not return the gold ornaments, contending that since the petitioner was a co-applicant in the housing loan, she was jointly and equally liable for repayment of dues in the said housing loan. For recovery of dues of the said housing loan, the bank had applied a general lien over ornaments.

The petitioner filed a writ petition contending that since the gold loan amount was completely paid, the banker-customer relationship in the context of security had come to an end and the bank could not exercise a general lien over gold ornaments. Further, the unilateral withholding of gold ornaments without notice to the borrower before invoking the general lien was bad in law, and the petitioner had never given any authorisation to the bank to hold gold given to secure loan transactions of her husband for the purpose of any other loan availed in which the petitioner stood as a co-applicant or guarantor.

The court held that, as per Section 171 of the Indian Contract Act, there was no express contract to the contrary to avoid the applicability of general lien. Thus, the bank was within its authority to exercise the general lien. Rather, in this case, there was Clause No.11 of the Gold Loan Pledge Form dated 11.12.2023, where the petitioner had agreed to keep gold ornaments as security for the due discharge of all debts due to the bank, either already granted or to be granted, borrowed either solely or jointly.

[B.2] Central Government can initiate actions suo motu or on basis of an application

In a significant ruling delivered on July 24, 2026, the Delhi High Court clarified a critical aspect of rectifying a company’s name. The Court held that the Central Government’s power under Section 16(1)(a) of the Companies Act, 2013 is not invalidated simply because the action was triggered by an application from an aggrieved party rather than a suo motu (on its own) initiative.

This judgment resolves a conflict with a previous Madras High Court decision and strengthens the regulatory framework for preventing confusingly similar company names.

As per the facts of the case, a conflict arose between two DNA testing companies: DNA Forensics Test Solutions (P.) Ltd (Petitioner), and DNA Forensics Laboratory Pvt. Ltd (Respondent / Complainant). Both companies operated in the exact same field. The Complainant filed an application alleging that the Petitioner’s name was identical to or too closely resembled its existing name. Based on this application, the Regional Director passed an order under Section 16(1)(a) directing the Petitioner to change its name.

The Petitioner challenged this order, arguing that Section 16(1)(a) is a suo motu power that must be exercised by the Central Government on its own opinion. It cannot be triggered by an application. If applications could trigger Section 16(1)(a), then Section 16(1)(b) (which is specifically triggered by applications from trademark proprietors) would become redundant. The Petitioner relied on a 2022 Madras High Court judgment (T.T. Ltd v. Union of India) to support this view.

The High Court of Delhi dismissed the petition, establishing that the Central Government can indeed act on the basis of information received via an application without invalidating the proceedings.

The Court drew a vital distinction between the source of the information and the nature of the power. The Court observed, “The order being passed under Section 16(1)(a) of the Act, even though triggered by an application, cannot be considered to be invalid or without jurisdiction, for the simple reason that it was triggered on the basis of information given by an applicant.” The Court reasoned that the Central Government forms an opinion based on the information provided. Whether that information comes from a government officer or a third-party applicant is secondary. The power remains with the Central Government to decide whether to act.

As far as the redundancy of Section 16(1)(b) was concerned, the Court held that Section 16(1)(b) is naturally triggered by applications from trademark proprietors who are aggrieved by a name infringing their rights. Section 16(1)(a) is a wider power allowing the Central Government to act suo motu to prevent identical or near-identical names in existence.

The Court held that it is not expected that the registering authority can check every newly registered name against all existing names instantly. Therefore, when a previously registered company is aggrieved, it is logical to allow it to bring the issue to the regulator’s attention. To say the regulator cannot act on such information would be “curtailing and binding the hands of the regulator to an extreme and illogical extent.”

The Delhi HC also distinguished the earlier Madras High Court ruling (T.T. Ltd.). The Court observed that the Madras Court had ruled against an application under Section 16(1)(a) in a specific context. In that case, the company had been registered long ago, and there was a bar of limitation. Moreover, the petitioner in that case had failed to get an injunction in a separate trademark suit.

[B.3] SAT upheld SEBI’s finding in ECL script manipulation case

The Securities Appellate Tribunal (SAT) Mumbai has largely affirmed SEBI’s findings in the Excel Castronics Limited (ECL) scrip manipulation case. In this case, SEBI’s investigation revealed that 21 connected entities within the ECL Group accounted for roughly 60% of the gross buy volume, engaged in 2,708 inter se trades with one another. These trades effectively manufactured liquidity to allow 10 connected allottees to exit at artificially inflated prices. Its price rocketed from ₹9.60 (April 2013) to a high of ₹490 (August 2014) before crashing to ₹162.30.

On appeal, the Tribunal held that where the parties’ connections (common mobile numbers, email IDs, addresses, and directorships) and their inter se trades are undisputed, an inference of concerted manipulation arises by preponderance of probability. The SAT rejected the defence that trades are anonymous on an electronic exchange when connected parties’ buy and sell orders sit pending for anywhere between 9 minutes and 6 hours before matching. The Tribunal also rejected the innocent beneficiary defence for independent directors who traded during the investigation period. However, SEBI’s case against the unrelated Tulsian family allottees was struck down as logically fragile, and a lone elderly lady who bought only 1,000 shares.

[B.4] NCDs issued in violation of legal provisions must be refunded and cannot be transferred

The Securities Appellate Tribunal in Katalyst Software Services Ltd v. Securities and Exchange Board of India (August 3rd, 2026) decided that repayment of money collected by issuing NCDs in violation of law is the only option available to the issuing company. The company cannot transfer such securities to a third company under the pretext that the third company will refund the money to the original investors.

As per the facts of the case, SEBI directed a company to refund the money collected through NCDs issued in FY 2017-18, with interest at 15 per cent per annum, as the issuance was in contravention of the Companies Act, ILDS Regulations and SEBI Act. However, in an appeal before the SAT, the company contended that Lakshdeep and Mackinon (two other companies) had agreed to acquire the outstanding NCDs as part of an arrangement to facilitate consolidation of debenture holdings and repayment to existing debenture holders. Thus, it may be permitted to carry out this arrangement.

The SAT while dismissing the appeal, held that the NCDs were rendered void and could not have been dealt with. Therefore, the contention that the two companies, Lakshdeep and Mackinon had come forward to help the appellant company by purchasing the NCDs is contrary to law and impermissible. Thus, the only option available to the appellant company was to make the repayment from out of its own source.

[B.5] Petitioner cannot seek MCA orders for SFIO investigation at preliminary stage

Section 212 of the Companies Act, 2013 empowers the Central Government to order an investigation by the SFIO if it thinks necessary, inter alia, in the public interest. In Mandke Foundation v. Union of India, the High Court of Delhi (July 29th, 2026) clarified the situations in which a person under investigation can seek the Government’s order passed under Section 212.

As per the facts of the case, the SFIO issued a notice to the Mandke Foundation (petitioner) seeking information on transactions with the companies under investigation. The SFIO told the Foundation that an investigation is happening into specific companies (Reliance Home Finance, Reliance Communications, etc.) and that the basis for summoning the information from the petitioner was their transactions with these companies. The categories of documents were clearly listed, and no prejudicial action was proposed against the petitioner.

When the petitioner filed a writ petition challenging this notice and seeking the MCA’s order for initiating the investigation, the Government objected to the disclosure, alleging MCA’s order contained sensitive information that could prejudice the ongoing investigation. Further, it was alleged that the notice already disclosed the necessary information.

The court ruled that a petitioner cannot demand the MCA Orders or the underlying material (the proof the MCA used to start the probe) at the very beginning of the investigation. The SFIO investigation was in its early fact-finding phase. The notice issued was just to gather information, not to prosecute anyone yet. Since the investigation is still gathering facts, the petitioner has not faced any prejudicial action (like prosecution or penalty) yet. Therefore, they have no enforceable right to see the MCA’s order initiating the investigation yet.