Legal Updates (June 15 – June 20, 2026)
CASE UPDATES
Where the complainant fails to prove, through a witness with direct knowledge, the transaction that led to execution of the cheque and the passing of consideration, the initial burden necessary to invoke the presumptions under Sections 118 and 139 of the NI Act remains undischarged
The Kerala High Court in the case of Shijosh vs State of Kerala [CRL.A NO. 1403 of 2008] dated June 09, 2026, has held that where the complainant fails to prove, through a witness with direct knowledge, the transaction that led to execution of the cheque and the passing of consideration, the initial burden necessary to invoke the presumptions under Sections 118 and 139 of the NI Act remains undischarged. In such a situation, the complainant is disentitled to the benefit of those presumptions, and a finding that the offence under Section 138 has not been proved beyond reasonable doubt cannot be faulted.
The Court underscored that the statutory presumptions under Sections 118 and 139 of the NI Act do not operate in the abstract. The complainant must first lay a credible factual foundation regarding the underlying transaction and the execution of the cheque. Where the person who actually advanced the money and maintained contemporaneous records is not examined, and the complainant lacks direct knowledge of the transaction, the prosecution may fail at the threshold itself.
The Court observed that in a prosecution under Section 138 of the NI Act, the complainant may avail the twin presumptions under Sections 118 and 139, but only after proving the transaction and execution of the cheque in a convincing manner. The Court specifically noted that this would necessarily include proof of the passing of consideration covered by the cheque.
The Court further held that such proof must come from a person having direct knowledge of the transaction and execution of the cheque, and that the evidence of a person without such direct knowledge would be insufficient for that purpose. On the complainant’s own showing, the money was paid by his father to the accused in five instalments, and the details were recorded by the father in a notebook which was not produced before the court.
On that basis, the Court found that the transaction and the passing of consideration were in fact between the complainant’s father and the accused, and that the complainant himself did not know the transaction or execution of the cheque, including the passing of consideration. The Bench therefore held that the competent person to depose on these aspects was the complainant’s father, who was not examined.
Mere fact that interest under a foreign judgment was awarded from a particular date does not by itself furnish a justifiable basis for treating that date as the date of default in the insolvency proceedings
The Bengaluru National Company Law Tribunal (NCLT) in the case of Reschtsanwalt Dr. Christian Bachmann vs Coffee Day Global Limited [IA(IBC)722/2025] dated June 01, 2026, has held that an amendment to the date of default in an insolvency petition may be permitted where the amendment is clarificatory, relevant to proper adjudication, and intended to align the pleading with the factual foundation already set out, provided it does not shift the cause of action, withdraw an admission, or cause irretrievable prejudice to the respondent.
The Tribunal further held that the mere fact that interest under a foreign judgment was awarded from a particular date does not by itself furnish a justifiable basis for treating that date as the date of default in the insolvency proceedings, and that questions concerning the substantive enforceability of the underlying Letter of Comfort, the foreign judgment, and authorization issues are not germane while deciding the amendment application and are to be addressed at the hearing of the main petition.
The Tribunal observed that the application may have been prompted by the objections raised by the respondent and could, in that sense, be regarded as belated, yet there was “absolutely no basis available” for treating Nov 27, 2020 as the date of default merely because the Vienna Commercial Court had awarded interest from that date.
The Tribunal further recorded the settled proposition of law on amendment of pleadings, namely that at the stage of considering an amendment application, the merits of the proposed amendment are not to be examined; rather, the inquiry is whether the amendment is relevant and aimed at placing facts necessary for real, effective and complete adjudication of the disputes, so long as it does not amount to withdrawal of admission or setting up an altogether new cause of action.
Applying that test, the Tribunal held that the proposed amendment appeared to align the date of default with the pleaded case and did not displace the respondent from its disclosed standpoint. The Tribunal expressly left issues regarding the efficacy of the Letter of Comfort, implementation of the foreign judgment, and authorization of the signatory to be considered at the stage of hearing of the main petition.
Where the arbitral award rejects the applicant’s substantive claim, directs return of the bank guarantee, and there exists a prior consent arrangement fixing the outer limit for continuation of that bank guarantee, the Court will not direct continuation of the security merely because a Section 34 challenge is pending
The Bombay High Court in the case of Oil and Natural Gas Corporation vs Swiber Offshore Construction PTE Limited [Comm Arbitration Petition No. 17832 of 2026] dated June 15, 2026, has held that although an unsuccessful party in arbitration may maintain a post-award petition under Section 9 of the Arbitration and Conciliation Act, 1996, such relief can be granted only in rare and compelling cases satisfying a higher threshold than an ordinary interim application. Where the arbitral award rejects the applicant’s substantive claim, directs return of the bank guarantee, and there exists a prior consent arrangement fixing the outer limit for continuation of that bank guarantee, the Court will not direct continuation of the security merely because a Section 34 challenge is pending, even if the opposite party is in liquidation and the challenge raises arguable issues.
The Court observed that after an arbitral award has been rendered, a petition under Section 9 stands on a different footing, and the principles applicable to post-award relief require a higher threshold to be met. Thus, the Court held that an unsuccessful party is not barred from seeking relief under Section 9, but such relief cannot be granted in a routine manner. Apart from a prima facie case, balance of convenience, and irreparable injury, the applicant must show exceptional circumstances such that refusal of interim protection would result in a situation which cannot later be corrected even if the challenge succeeds.
The Court noted that ONGC had raised arguable grounds in its Section 34 challenge, including contentions relating to Clause 6.3.2, the Tribunal’s approach to proof of actual loss, and the findings on delay and categories of loss. However, the Court held that these were matters for examination in the Section 34 proceedings and that an arguable challenge by itself was insufficient for grant of post-award interim relief under Section 9. The Court was thus unable to conclude that ONGC had shown such an exceptionally strong prima facie case that the award could virtually be disregarded for the purpose of interim protection.
A significant factor weighed against ONGC was the existence of the Consent Terms governing continuation of the bank guarantee, which ONGC had not adequately disclosed in the present petition. The Court observed that these Consent Terms directly concerned the duration of the bank guarantee after the award and that fairness required disclosure of such an arrangement while seeking discretionary relief. The omission was held to be material, as ONGC was effectively seeking enlargement of its rights beyond the period consciously agreed by the parties, rather than mere preservation of an existing arrangement.
The Court further observed that the plea of urgency was weakened by ONGC’s conduct. Although ONGC was aware from the outset of the issue concerning continuation of the bank guarantee and had already sought such relief in its Section 36(3) application, it filed the present Section 9 petition only on 15 May 2026 and served it on 1 June 2026, shortly before expiry of the guarantee on 15 June 2026.
The Court also held that although Swiber’s liquidation and ONGC’s apprehension regarding recovery were relevant factors, the bank guarantee could not be treated as a general security for all claims of ONGC against Swiber. It was furnished specifically in connection with liquidated damages under Clauses 6.3.2 and 6.3.4, and liquidation by itself was insufficient to elevate the case to the category of a rare and compelling case contemplated in Home Care Retail Marts (P) Ltd. v. Haresh N. Sanghavi [2026 SCC OnLine SC 670].
Applying this principle, the Court held that ONGC had failed to establish exceptional and compelling circumstances justifying post-award interim protection under Section 9, and accordingly dismissed the petition seeking continuation, renewal, extension or substitution of the bank guarantee, while keeping all questions in the pending Section 34 and Section 36 proceedings expressly open.
If the plaintiff is the prior adopter, prior user, and prior registrant of an identical word mark and device mark, and the defendants subsequently adopt the same dominant mark without any apparent explanation, the plaintiff is entitled to interim protection against infringement and passing off
The Delhi High Court in the case of Motherson Through Its Partners vs Motherson Industries [CS(COMM) 623/2026] dated May 29, 2026, has held that where the plaintiff is the prior adopter, prior user, and prior registrant of an identical word mark and device mark, and the defendants subsequently adopt the same dominant mark without any apparent explanation, the plaintiff is entitled to interim protection against infringement and passing off. The Court applied the principle that prior adoption and registration entitle the trademark proprietor to injunction, and concluded that, because the plaintiff’s registered trademark included the word mark itself, Section 29(3) of the Trade Marks Act would justify a presumption of likelihood of confusion.
The Court observed, that upon visual examination of the rival marks, that the plaintiff’s word mark “MOTHERSON” and device mark appeared on the defendants’ impugned marks and were identical in their dominant and prominent feature. The Court noted that although the defendants’ marks contained additional elements such as abbreviations and the word “INDUSTRIES,” the dominant part remained “MOTHERSON,” and that this would be what struck the public at first instance.
The Court also observed that the plaintiff’s registrations dated back to 2005 and its use was claimed from 1975, whereas the defendants had only sought registration in 2024 and 2025 on a “proposed to be used basis.” On that basis, the Court held it safe to infer that the plaintiff was the prior adopter, prior user, and prior registrant of the mark “MOTHERSON” and its variants.
The Court further noted that even though the defendants’ goods fell in a different class, there was nothing on record to explain how or why the defendants had coined the word “MOTHERSON” as their trademark. It accepted that the plaintiff had demonstrated long and continuous use and that “MOTHERSON” functioned as a source identifier exclusive to the plaintiff. Since the plaintiff held registration not only for the device but also for the word mark, the Court observed that Section 29(3) would aid the plaintiff and that confusion on the part of the public would be presumed.
Thus, the Court restrained the defendants, their directors, wholesalers, distributors and others acting for them from using, manufacturing, selling, exporting, importing, offering for sale, or distributing any goods or products bearing the plaintiff’s registered trademark “MOTHERSON” and device mark in any manner whatsoever, including on their website or advertising material, insofar as such use may amount to infringement of the plaintiff’s trademark.
A trade mark proprietor cannot assume that a platform is under a continuing court-mandated obligation to proactively police all visible uses of its marks unless the operative part of the order expressly imposes such an obligation
The Delhi High Court in the case of DRS Logistics vs Google India Pvt Ltd [CS(COMM) 1/2017] dated June 15, 2026, has held that a trade mark proprietor cannot assume that a platform is under a continuing court-mandated obligation to proactively police all visible uses of its marks unless the operative part of the order expressly imposes such an obligation. The Court has drawn a clear distinction between: (i) judicial directions dealing with the use of trade marks as keywords in online advertising; and (ii) platform-policy enforcement concerning use of trade marks in visible fields such as Ad-Text, Ad-Title and URL.
The Court observed that the principal question was whether the earlier directions were confined to use of the subject marks as keywords, or whether they also extended to use of the subject marks in Ad-Text, Ad-Title or URL, and further whether defendant nos. 1 and 3 were under a proactive obligation to ensure that such use did not occur without any complaint from the plaintiffs. The Court held that the operative portions of the earlier judgments required defendant nos. 1 and 3 to investigate complaints made by the plaintiffs alleging use of the subject marks and their variations as keywords, to review the overall effect of the advertisement, and to remove or block such advertisements if infringement or passing off was found. It noted that, although the plaintiffs had sought broader reliefs, the directions ultimately granted were limited to complaints regarding use of the subject marks as keywords.
The Court further observed that the plaintiffs had, in the earlier proceedings, confined their submissions to the issue whether providing the proprietor’s trade mark as a keyword to a third party would amount to infringement, after the statement recorded on behalf of defendant nos. 1 and 3 that third parties were not permitted to put / publish / refer to the trade mark in Ad-Text / Ad-Title as per policy.
The Court nevertheless observed that defendant nos. 1 and 3 remained bound by the statement recorded in the judgment dated 30.10.2021 that the subject marks would not be permitted to be used in Ad-Text, Ad-Title or URL in terms of the policy, but that this did not translate into a judicial direction imposing a proactive monitoring obligation. Rather, grievances regarding such use were to be governed by the defendants’ policy, under which, upon receipt of a complaint, the complaint would be examined and appropriate action taken.
The Court also observed that contempt jurisdiction can be invoked only in relation to explicit or plainly self-evident directions, and where two interpretations are possible and the conduct is not wilful, contempt is not maintainable. Since the advertisements / URLs complained of had already been taken down pursuant to the plaintiffs’ notice and subsequent Court orders, and since the operative part of the judgments did not extend to proactive policing of Ad-Text, Ad-Title or URL, no wilful disobedience was made out.
The Court stated that the operative directions in the judgments dated Oct 30, 2021 and Aug 10, 2023 were confined to requiring defendant nos. 1 and 3 to investigate complaints made by the plaintiffs regarding use of the subject marks as keywords, to review the overall effect of the advertisement, and to restrain / remove / block advertisements if infringement or passing off was found; those judgments did not impose a proactive obligation on defendant nos. 1 and 3 to monitor and prevent use of the subject marks in Ad-Text, Ad-Title or URL of third-party advertisements without any complaint from the plaintiffs.
The Court further held that, while defendant nos. 1 and 3 remained bound by their recorded statement that use of the subject marks in Ad-Text, Ad-Title or URL would not be permitted in terms of their policy, any grievance in that regard was to be addressed under the policy framework upon notice by the plaintiffs, and not through contempt on the footing that the earlier judgments had expressly directed proactive enforcement. Therefore, no wilful disobedience of the earlier judgments was established and the contempt application was dismissed.
If multiple cheque dishonour prosecutions arise out of a single transaction, and continued custody for default in payment of fine becomes excessively disproportionate, the High Court may equalise the aggregate default sentence to the period already undergone, without extinguishing the complainant’s right to recover the fine
The Karnataka High Court in the case of Dinesh Malpani vs State of Karnataka [Criminal Petition No.5718 of 2026] dated June 04, 2026, has held that imprisonment in default of payment of fine under Section 138 of the Negotiable Instruments Act is coercive and not substantive in character. Therefore, where multiple cheque dishonour prosecutions arise out of a single transaction, and continued custody for default in payment of fine becomes excessively harsh and disproportionate, the High Court may, in exercise of its jurisdiction, moderate and equalise the aggregate default sentence to the period already undergone, without extinguishing the monetary liability or the complainant’s right to recover the fine in accordance with law.
The Court observed that Section 65 IPC, now mirrored in Section 8(3) BNS, embodies a restraint on sentencing power by providing that imprisonment in default of payment of fine cannot exceed one-fourth of the maximum term prescribed for the offence. The Court emphasized that the legislative intent behind the provision is that imprisonment in default is a coercive mechanism to secure payment and not a disproportionately oppressive penalty.
The Court further noted that Section 138 of the Negotiable Instruments Act prescribes a maximum punishment of two years’ imprisonment, or fine extending to twice the cheque amount, or both. Consequently, when read with Section 65 IPC and Section 8(3) BNS, the outer limit of imprisonment in default of payment of fine would be six months in each case. While examining the legal position, the Court reiterated that default imprisonment is not an additional punishment for cheque dishonour but a coercive and procedural consequence of non-payment. It also recognised the caution in these decisions against converting default imprisonment into a debtors’ prison model and against using it as a disguised method of enhancing substantive punishment.
Applying those principles, the Court held that the petitioner had demonstrated financial incapacity to satisfy the fine amounts and that his prolonged incarceration had caused hardship to his family. In these circumstances, continued detention in default of payment of fine was found to be disproportionate. At the same time, the Court clarified that the complainant’s and the State’s right to pursue recovery proceedings remained unaffected, and proceedings under Section 421(1) CrPC could continue independently.
Accordingly, the Court directed that the aggregate default sentence of imprisonment imposed upon the petitioner be proportionately staggered, moderated and equalised to the period of imprisonment already undergone by him in default of payment of fine.
Salary or employment-related claims can qualify as “operational debt” under Section 5(21) of IBC, but admissibility under Section 9 will still fail if the claimed default includes amounts arising during the Section 10A suspension period, if the creditor seeks to artificially cross the Section 4 threshold by adding unsupported interest
The New Delhi National Company Law Tribunal (NCLT) in the case of Devesh Bbyan vs Spicejet Ltd [C.P. (IB)-148/ND/2025] dated June 12, 2026, has held that employment dues do fall within the definition of “operational debt” under Section 5(21) of the IBC, and therefore, in principle, a petition under Section 9 may be filed on that basis. However, the Tribunal held that the petitioner’s claim included Rs. 47.52 lakhs for the period April 2020 to March 2021, which fell within the period protected by Section 10A, and such amount could not be considered for the purpose of the threshold for filing a petition under the IBC.
The NCLT reaffirmed that salary or employment-related claims can qualify as “operational debt” under Section 5(21), but admissibility under Section 9 will still fail if the claimed default includes amounts arising during the Section 10A suspension period, if the creditor seeks to artificially cross the Section 4 threshold by adding unsupported interest, or if the record discloses a plausible pre-existing dispute regarding liability or quantum.
The Tribunal observed that employment dues fall within the definition of “operational debt” under Section 5(21) of the IBC, since the provision expressly includes a claim in respect of employment, and therefore a petition under Section 9 can, in principle, be maintained for employment dues. The Tribunal then examined the petitioner’s own calculation sheet and noted that a sum of Rs. 47.52 lakhs was claimed for the period April 2020 to March 2021. Referring to Section 10A, the Tribunal observed that no application shall ever be filed for initiation of CIRP for defaults occurring during the protected period commencing March 25, 2020, and accordingly this amount could not be counted towards the threshold of Rs. 1 crore.
On the claim for interest, the Tribunal observed that the Operational Creditor had claimed Rs. 56.78 lakhs as interest at 24% per annum, but no agreement or other record establishing entitlement to such interest was produced. It also held that, in the absence of any agreement for interest, the interest amount could not be added for the purpose of meeting the threshold under Section 4 of the IBC.
The Tribunal further observed that there existed a pre-existing dispute between the parties regarding the quantum of employment dues. In the reply to the Section 8 notice, the Corporate Debtor had asserted novation of the contract, acceptance of revised terms, and that only Rs. 3.95 lakhs were payable as full and final settlement. The petitioner had not refuted these contentions in the petition, and the e-mail exchanges on record also indicated disagreement as to the amount payable. Thus, the Tribunal observed that for Section 9 purposes it is sufficient if there exists a plausible pre-existing dispute which is not spurious, hypothetical or illusory, and that such disputes on employment dues cannot be adjudicated in IBC proceedings.
On these findings, the Tribunal held that the alleged default was below Rs. 1 crore and that the dispute pre-dated the demand notice, and therefore dismissed the Section 9 petition as not admissible.
