Supreme Court Weekly Digest December 1 - 10, 2025

Administrative Law – Illegality and Irrelevant Considerations – Executive instructions mandating unnecessary requirements for statutory benefits are illegal – The Supreme Court set aside a Government Memorandum requiring an additional recommendation from the Assistant Registrar for stamp duty exemptions for Cooperative Societies - Held, executive actions that impose unnecessary, excessive, or redundant requirements must be set aside as illegal if they are based on irrelevant considerations or offer no value addition to the transaction. Adarsh Sahkari Grih Nirman Swawlambi Society Ltd. v. State of Jharkhand, 2025 LiveLaw (SC) 1175 : 2025 INSC 1389 Arbitration and Conciliation Act, 1996 — Section 34 and 37 — Excepted Clauses — Prohibited Claims — Party Autonomy — Reference to Larger Bench - Arbitral Tribunal bound by contractual bars — Whether a prohibitory clause applies only to the department or also to the Arbitrator — Reconsideration of Bharat Drilling & Foundation Treatment Pvt. Ltd. v. State of Jharkhand - Supreme Court has referred the decision in Bharat Drilling & Foundation Treatment Pvt. Ltd. v. State of Jharkhand to a larger bench for reconsideration - Observed that Bharat Drilling is not an authority for the proposition that an "excepted clause" or a prohibited claim in a contract applies only to the employer and not to the Arbitral Tribunal - Held that party autonomy is the "brooding and guiding spirit" and "backbone" of arbitration - An arbitrator is bound by the procedures and limitations agreed upon between the parties - If a contract specifically declares that "no claim shall be entertained" for certain losses, the Arbitral Tribunal cannot allow such claims in violation of the contract - Jurisdiction relating to the grant of interest is sourced from Section 31(7) of the Arbitration and Conciliation Act, 1996, and stands on a different footing from contractual clauses prohibiting specific substantive claims - Under the 1996 Act, Section 31(7)(a) restricts the power to grant pre-reference and pendente lite interest the moment the agreement bars payment of interest - Noted that the approach in Bharat Drilling is not in tune with recent principles emphasizing party autonomy and the binding nature of contract clauses. [Relied on Cox and Kings Ltd. v. SAP India Private Ltd., (2024) 4 SCC 1; In Re: Interplay Between Arbitration Agreements Under Arbitration and Conciliation Act, 1996 and Stamp Act, 1899, 2023 SCC OnLine SC 1666; Paras 7-10] State of Jharkhand v. Indian Builders Jamshedpur, 2025 LiveLaw (SC) 1173 : 2025 INSC 1388 Central Excise Act, 1944 - Section 2(f) – Manufacture - Continuous Manufacturing Process/Clubbing of Activities – Held, the CESTAT erred in focusing on the distinct legal identities of two units while ignoring the fact that they were together involved in an integral and continuous process of manufacture - The conversion of grey fabrics into cotton fabrics involved a series of distinct, interlinked processes - Since all these activities were integral processes in the conversion of grey fabrics into cotton fabrics, the separate legal/operational identity of the Units (distinct partners, machinery, separate job work bills, and payments) was held to be immaterial - The entire activity amounted to "manufacture" for the purposes of Section 2(f) of the Act of 1944 - Manufacturers cannot claim central excise duty exemption for processed cotton fabrics if power is used at any stage of the manufacturing chain, even when the work is carried out through separate units - To claim excise duty exemption for 'cotton fabrics' processed without the aid of power or steam, the manufacturing stages must be completely independent; if the final product cannot emerge without each interlinked process, including those involving power, the exemption cannot be availed - Appeal allowed. [Relied on Standard Fireworks Industries, Sivakasi and another Vs. Collector of Central Excise (1987) 1 SCC 600; CCE Vs. Rajasthan State Chemical Works (1991 INSC 235); Impression Prints Vs. CCE (2005 INSC 377); Paras 9-14] Commissioner of Customs v. Narsibhai Karamsibhai Gajera, 2025 LiveLaw (SC) 1161 : 2025 INSC 1374 Code of Criminal Procedure, 1973 (CrPC); Section 321 – Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS); Section 528 – Held, no prosecution against a sitting or former Member of Parliament (MP) or Member of Legislative Assembly (MLA) shall be withdrawn without the leave of the High Court - The Public Prosecutor must file the application, which should disclose all reasons that weighed with them to put forward the application, along with the records of the case, before the High Court for permission to withdraw the prosecution - The High Court must exercise its judicial mind and give a reasoned order, granting or denying such permission - The function of the Court in granting consent is a judicial one, described as ...

Supreme Court Weekly Digest December 1 - 10, 2025

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