A ₹425 Crore Customs Penalty Falls Because Its Case Law Was Hallucinated by AI

Welcome to this week’s issue of the Indian Legal Brief (ILB). Here are the judgments, orders, regulatory changes, and developments that matter to your practice — without the noise.

A full five-day week, and a heavy one. Justices Datta and Nagu checked a revenue officer’s citations one by one and found the precedents did not exist — ₹425 crore undone by the same rot the Court condemned in Pooja Ramesh Singh in July, this time in a departmental order the High Court had let stand. The Chief Justice’s bench spent the week on institutions rather than disputes: it closed every student-protest FIR in the country under Article 142, moved the district judiciary’s retirement line to 62, told the Bar Council of India it has no writ over law students, and set a clock for its own reconstitution. Justices Pardiwala and Chandran ran the commercial table — clearing-corporation powers, an insolvent builder’s penalties, a six-fold penalty enhancement undone. And in Bombay, a division bench quashed a policy that let the State walk away from sewer deaths. Here’s what happened.

Supreme Court Highlights

Customs: A ₹425 Crore Penalty Falls Because Its Case Law Was Hallucinated by AI

Bench: Justices Dipankar Datta and Sheel Nagu — September 2, 2026

An Additional Commissioner of Customs held that a consignment of natural diamonds had been misdeclared as lab-grown to attract a lower tariff, and on 8 October 2025 imposed a penalty of roughly ₹425 crore under Section 114 of the Customs Act, 1962. The order was fortified with authority. The Gujarat High Court declined to interfere. In Vijay Ghanshyam Gadiya v. Union of India, 2026 INSC 947, the Supreme Court set aside both.

The reason was not the tariff classification. It was the authority. The Bench verified the cited judgments and articles individually and found that some did not exist at all, and that others, which did exist, said nothing resembling the proposition attributed to them.

“Some of the case laws relied upon by the second respondent, which do exist, do not lay down the ratio deduced therefrom and it appears to be a hallucination of AI.”

The Court was careful to separate the tool from the abdication. Machine assistance in preparing an order is not the vice; substituting it for the act of deciding is.

“AI may well serve as training wheels but entrusting it with the pilot’s seat would be both imprudent and dangerous.”

“Assistance can never be substituted for adjudication,” the Bench added. The penalty order and the High Court’s judgment were quashed, and the matter remitted for fresh consideration by a different officer.

Why it matters: Two months after Pooja Ramesh Singh v. Jammu and Kashmir Bank Ltd, 2026 INSC 668 set aside tribunal orders built on six invented precedents, the same rot is found in a departmental adjudication — and this time the High Court had already declined to interfere. The verification method matters as much as the outcome — the Court simply looked up every case. Any order, award or pleading whose authorities have not been checked against the reports is now vulnerable on a ground that requires no expertise to run and no merits argument to win. Check your citations before your opponent does.

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Criminal Law: Every Student-Protest FIR in the Country Quashed Under Article 142

Bench: Chief Justice Surya Kant and Justices Joymalya Bagchi and V. Mohana — September 1, 2026

The FIRs that followed the July protests over the NEET-UG 2026 paper leak — spread across states, most of them against students — are gone. Invoking Article 142, the Supreme Court directed that every FIR registered anywhere in India over protest incidents between 20 and 25 July “should not be pursued or investigated and must be treated as closed for all intents and purposes,” and barred every State and Union Territory from registering fresh FIRs over the same window. The relief ran pan-India although only the Centre and four States had applied for it.

One carve-out survived. The Delhi Police may pursue a single FIR against 2,873 individuals identified at Jantar Mantar with serious criminal antecedents, whose alleged roles in offences involving bodily harm or destruction of property remain open to investigation.

The Bench also recorded the Solicitor General’s statement that a policy for compensating the families of students who died by suicide after the NEET-UG 2026 cancellation will be framed within three months — and confined its own order firmly to its facts, directing that it “shall not be treated as a precedent.”

Why it matters: The Court has used Article 142 to wipe a nationwide category of prosecutions, which is exactly the kind of order the non-precedent caveat is designed to contain. Read it for what it does rather than what it holds: it ends the exposure of tens of thousands of students, and it leaves the Delhi carve-out as the only live proceeding — which is where the defence work now is.

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Judiciary: District Judges Are Not to Retire at 60 — the Line Moves Toward 62

Bench: Chief Justice Surya Kant and Justices Joymalya Bagchi and V. Mohana — September 1, 2026

In All India Judges Association v. Union of India, W.P.(C) No. 1022/1989 — the case that has shaped district judicial service for nearly four decades — the Court moved on superannuation. Every State and Union Territory was directed to decide, in consultation with its jurisdictional High Court, on raising the retirement age of judicial officers in the district judiciary to 62.

Where the enhancement has already been accepted — the Court was told this includes Telangana, Chhattisgarh, Tamil Nadu, West Bengal, Maharashtra, Madhya Pradesh, Karnataka, Sikkim and Puducherry — service rules are to be amended, and pending amendment the Court held that no judicial officer attaining 60 “shall superannuate, until they reach the age of 62, subject to the suitability assessment.” Officers who retired on or after 31 March 2026 and have not taken other employment may opt to rejoin, subject to a High Court suitability and performance assessment and to surrendering post-retiral benefits already drawn.

The Bench rejected the equivalence States had been running on: judicial officers enter service considerably later than other government servants, and because they are already on the rolls, continuing them costs the exchequer nothing extra.

Why it matters: Two years of judge-strength arithmetic changes at a stroke — vacancy projections, recruitment notifications and promotion timelines in every State that has accepted the enhancement now need redrawing, and the rejoinder option puts a cohort of recently retired officers back in play. For litigants, it is the most direct thing the Court has done about district-court pendency all year.

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Securities: A Clearing Corporation Cannot Order Restitution of Liquidated Collateral

Bench: Justices J.B. Pardiwala and K. Vinod Chandran — September 2, 2026

When Anugrah Stock & Broking collapsed — it had been running an unauthorised portfolio management scheme promising assured returns — the Professional Clearing Members holding its collateral liquidated securities worth ₹460.32 crore. Clients of the trading member who carried no debit balance of their own lost their securities in the sweep. NSE Clearing’s Member and Core Settlement Guarantee Fund Committee ordered restitution; the Securities Appellate Tribunal upheld it. In Edelweiss Custodial Services Ltd. v. NSE Clearing Ltd., 2026 INSC 941, the Supreme Court set both aside and allowed all four PCM appeals.

Two holdings do the work. First, on duty: a Professional Clearing Member is under no statutory obligation to verify the debit and credit positions of a trading member’s individual constituents before liquidating collateral — the regulatory architecture at the time gave it no visibility into them — and the absence of privity between the PCM and those constituents is a good answer to a restitution claim.

“There was no statutory violation committed by the PCM and their plea of having no privity of contract… is perfectly in order.”

Second, on power: Section 9(3)(b) of the Securities Contracts (Regulation) Act, 1956 forbids a stock exchange’s bye-laws from prescribing monetary penalties, and the Committee could not manufacture a restitution jurisdiction it had not been given.

Why it matters: The investor-protection route through the clearing corporation is closed — a client of a defaulting broker cannot recover from the clearing member that liquidated the pool. The remedy has to be found in the broker’s estate, in SEBI’s enforcement, or in a statutory amendment; and every settlement-guarantee committee order of this shape is now open to challenge for want of jurisdiction.

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Banking: SARFAESI Follows the Debt a Bank Buys From a Non-Notified NBFC

Bench: Justices Sanjay Kumar and Sanjeev Sachdeva — September 2, 2026

A home loan of ₹69.60 lakh was advanced by an NBFC that was not, at the time, a notified “financial institution” under Section 2(1)(m) of the SARFAESI Act — it was notified only on 27 August 2018. The account went bad, an arbitral award followed, and the debt was acquired by Kotak Mahindra Bank, to which SARFAESI plainly applies. Could the bank use the Act on a loan that was born outside it? In Kotak Mahindra Bank Ltd. v. Trupti Sanjay Mehta, 2026 INSC 943, the Court said yes.

“When the institution (bank) is one to which the SARFAESI Act is already applicable, acquisition of a non-performing secured loan account by such institution from an entity that does not come within the ambit of the SARFAESI Act, would immediately clothe the said loan account with the attributes of a ‘secured debt’ covered by the provisions of the SARFAESI Act.”

The character of the remedy attaches to the acquirer, not to the originator. The bank’s securitisation application was restored to the Debt Recovery Tribunal.

Why it matters: Portfolio sales out of non-notified lenders into banks and ARCs are a routine feature of the distressed-debt market, and the borrower’s standard objection — that the loan was never a SARFAESI debt — has been removed. Assignment diligence gets simpler for buyers; for borrowers, the defence has to move to the assignment itself.

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Tax: A Penalty Cannot Grow Six-Fold Because the Assessee Appealed

Bench: Justices J.B. Pardiwala and Ujjal Bhuyan — September 1, 2026

Between 1994 and 1997 Saudi Arabian Airlines deposited Foreign Travel Tax late on six occasions, by anything from one day to sixty-three. The penalty first imposed under Section 38(3) of the Finance Act, 1979 was ₹12,000. The airline pursued its statutory remedies; on remand the adjudicating authority reasoned that the original figure had ignored the statutory minimum, and raised the penalty to ₹71,29,140. In M/s Saudi Arabian Airlines v. Union of India, 2026 INSC 933, the Supreme Court quashed the lot.

Two propositions carried it. Delay in depositing a tax that was in fact deposited is not the same thing as a failure to pay. And the fact that a statute dispenses with mens rea does not convert a penalty into an automatic consequence.

“Automatic imposition of penalty and exclusion of mens rea are two different things… the power to impose penalty includes power not to impose penalty.”

The Court then applied the rule against reformatio in peius — a change for the worse — holding it a rule of fair procedure, part of natural justice, that a person must not be left worse off for having used a remedy the law gave them. Refund was ordered with 9 per cent interest within three months.

Why it matters: Enhancement on remand is a live risk in every indirect-tax and regulatory appeal, and it is the single most effective deterrent to appealing at all. A litigant now has a named principle to raise the moment an authority reopens quantum upward on its own remand — and revenue officers have a reason not to.

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Banking: RBI’s Power to Supersede a Co-op Bank Board Is Not Capped at Six Months

Bench: Justices Pamidighantam Sri Narasimha and Alok Aradhe — September 3, 2026

Article 243ZL(1) of the Constitution says the board of a co-operative society shall not be superseded for longer than six months. Section 36AAA of the Banking Regulation Act, 1949 lets the Reserve Bank supersede the board of a multi-State co-operative bank for considerably longer. The directors of Abhyudaya Co-operative Bank argued the constitutional cap must prevail. In Sandeep S. Ghandat v. Reserve Bank of India, 2026 INSC 955, the Court held it does not.

The answer turned on the third proviso to Article 243ZL(1). It is not, the Bench held, a proviso in the traditional sense — carving an exception out of the main clause — but an independent substantive provision that enlarges the Article by importing the Banking Regulation Act into the constitutional scheme for co-operative societies that carry on banking. The BR Act therefore applies to multi-State co-operative banks in full, and the six-month limit does not circumscribe Section 36AAA(1). The appeals were dismissed.

Why it matters: Every RBI supersession of a co-operative bank board since the 2020 amendments has carried this challenge in its pocket; it is now spent. Depositor-protection administrations can run their course, and the wider reading — that the third proviso is a substantive incorporation of the BR Act — will be argued in every future clash between Part IXB and banking regulation.

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Federalism: Sitting on Fishing Permits Is an Unwritten Ban

Bench: Justices Pamidighantam Sri Narasimha and Alok Aradhe — September 2, 2026

Purse seine fishing is prohibited inside Tamil Nadu’s territorial waters and permitted, under the Union’s 2025 Rules, in the Exclusive Economic Zone beyond them. The catch is that a vessel can only reach the EEZ by crossing the State’s waters, and the State controls the access pass. Of 257 applications, six had been granted; 226 were still “pending verification”. In Fisherman Care v. Government of India, 2026 INSC 937, the Court called that what it is.

“Not processing the applications in time, virtually amounts to imposing an unwritten ban, which is impermissible in law.”

There is no conflict between the Union’s Sustainable Harnessing of Fisheries in the EEZ Rules, 2025 and the Tamil Nadu Marine Fishing Regulation Rules, 2020, the Bench held: they are “two distinct legal regimes, operating in two regulatory provinces”. Tamil Nadu was directed to frame rules designating a transit channel under Rules 15(5) and 15(6) of its 2020 Rules, taking the Expert Committee’s final recommendations into account, and to clear pending access-pass applications in time.

“For effective and efficient implementation of these rules and regulations, it is necessary for the Union and the State to abide by the principle of cooperative federalism.”

Why it matters: Administrative slowness has been recharacterised as a substantive prohibition, which is a transplantable holding. Wherever a State’s permitting counter stands between a citizen and a Union entitlement — mining transit, inter-State movement, coastal access — an unexplained backlog is now itself the actionable wrong, without needing to prove a policy of obstruction.

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Motor Accidents: Functional Disability Is Measured in the Open Labour Market

Bench: Justices S.V.N. Bhatti and N.V. Anjaria — September 3, 2026

The claimant was riding pillion towards Gurgaon on 10 April 2011 when a heavy goods vehicle struck the motorcycle. The rider died at the spot. She survived with pelvic fractures, post-traumatic bilateral cortical blindness assessed at 100 per cent visual disability, and — as AIIMS later certified — a permanent colostomy. Her employer kept her on in an accommodated role. The High Court used that to fix functional disability at 80 per cent. In Reliance General Insurance Company Ltd. v. Priyanka Das, 2026 INSC 950, the Supreme Court restored it to 100.

The reasoning is the useful part. Functional disability asks what the claimant can earn in the open, competitive labour market — not whether one employer has chosen to retain her in a specially created position. Corporate compassion is not a measure of earning capacity, and it should not operate to reduce the tortfeasor’s liability. Compensation was enhanced to ₹3,77,84,297 with interest at 7.5 per cent per annum from the date of the claim petition.

Why it matters: Insurers routinely lead evidence of continued employment to argue down functional disability, and tribunals routinely accept it. The Court has now separated the two questions, and the award — one of the largest in a motor accident claim — gives high-earning claimants with catastrophic injuries a clear multiplier-and-assessment template.

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Criminal Procedure: §362 Does Not Strip the High Court of the Power to Recall

Bench: Justices Prashant Kumar Mishra and Shree Chandrashekhar — September 2, 2026

The FIR was registered on 17 September 2004. The trial court acquitted the accused of murder and dowry death but convicted them under Section 201 Part II IPC for causing the disappearance of evidence. Long afterwards, an inquiry by the Juvenile Justice Board established that one of them had been under eighteen on the date of the occurrence. The Madhya Pradesh High Court considered itself powerless: the judgment was final, Section 362 CrPC barred alteration, and the matter had once travelled to the Supreme Court. In Mahavir @ Avnish v. State of Madhya Pradesh, 2026 INSC 942, that was held to be wrong.

“The High Court has undoubted jurisdiction to recall its own order or judgment which results in miscarriage of justice.”

The bar in Section 362 does not reach an order passed without jurisdiction, the Bench held, and cannot extinguish the inherent power a High Court needs to correct a jurisdictional error, a breach of natural justice, fraud or a mistake. A claim of juvenility survives every stage of the proceeding; the conviction was quashed.

Why it matters: Section 362 is the standard answer to any recall application in a criminal matter, and it has been narrowed to what it actually says. Where the original order was without jurisdiction — juvenility being the clearest example, but not the only one — the High Court’s inherent power is intact, and finality is not a reason to leave an illegal conviction standing.

Other Notable SC Orders This Week

• Acquittal after a “shoddy investigation” (September 3) — Justices Pardiwala and Chandran set aside a kidnapping and murder conviction in Kondapaka Sridhar v. State of Telangana, 2026 INSC 951, holding that the case rested on the uncorroborated testimony of a single witness and on confessional statements, with Section 106 of the Evidence Act misapplied to fill the gap the prosecution had left.
• An undertaking must be solemn and express (September 1) — In Ras Al Khaimah Investment Authority v. Matrix Pharmacorp Pvt. Ltd., 2026 INSC 932, the Court upheld the dismissal of a contempt petition, holding that only a solemn, express assurance intended to be acted on by the Court can found contempt; it separately directed the judgment debtors to furnish a further ₹200 crore of security with the Registry.
• Stop staying trials mechanically (August 31) — High Courts were cautioned against the routine stay of trials through a mechanical invocation of revisional jurisdiction.
• Pending cases alone cannot support externment (August 31) — The mere pendency of multiple criminal cases is not by itself a basis for an externment order.
• The informant’s consent is not needed to quash a settled case (August 31) — Where parties have compounded their dispute, quashing does not depend on the complainant-informant’s concurrence.
• NCTE may call for annual appraisals (September 3) — The Council’s and its executive committee’s power to require annual Performance Appraisal Reports from teacher education institutes was upheld.
• No re-test in NEET-PG 2026 (September 3) — The plea was dismissed with costs, with the Court critical of both the petitioner and counsel.
• Ethanol labelling plea declined (August 31) — Justices M.M. Sundresh and Prasanna B. Varale refused to entertain a petition seeking mandatory display of ethanol percentage on every petrol nozzle and invoice, and a public vehicle-compatibility database for E20 fuel.

Insolvency & Corporate

Homebuyers Cannot Be Charged as CIRP Cost for the Builder’s Delay

Bench: Justices J.B. Pardiwala and K. Vinod Chandran — September 3, 2026

Lotus Boulevard and Lotus Panache, in Sectors 100 and 110 of Noida, were to have been finished in 2016. The developer, Granite Gate Properties, went into insolvency instead; the homebuyers pooled their own money and built the projects out under a “Pool and Build” arrangement. NOIDA then sought its time-extension charges for the delay — and in July 2025 the NCLAT directed that they be treated as CIRP costs. In The Authorised Representative for Granite Gate Properties Pvt. Ltd. v. New Okhla Industrial Development Authority, 2026 INSC 952, the Supreme Court struck that direction down.

Time-extension charges are penal in character. Their purpose is to punish a defaulting lessee and deter delay, and that purpose cannot be served by collecting them from the successful resolution applicant and the homebuyers, who caused none of the delay and who are the only reason the project exists. NOIDA’s own appeal — seeking charges beyond the lease’s three-year window and out to the tenth year — was rejected. The Bench also declined to let the authority hide behind its commercial role, observing that NOIDA, though engaged in a commercial venture, cannot be divorced from the essential welfare purpose it exists to serve.

Why it matters: Stalled-project resolutions live or die on the CIRP-cost line, because everything in it is paid in priority out of a pot the homebuyers have usually refilled themselves. Splitting penal levies from genuine process costs raises the recovery in every builder insolvency where a development authority is a creditor — and there are hundreds in the NCR alone.

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A Five-Member NCLT Bench Stays Subhash Chandra’s ₹6.5 Crore Repayment Plan

NCLT Special Bench (President Justice (retd.) Anupinder Singh Grewal presiding) — September 1, 2026

The order we reported last week has not survived a fortnight. On 25 August a third-member majority approved the personal insolvency repayment plan of Zee founder Subhash Chandra — ₹6.5 crore against admitted claims of ₹22,006.57 crore. On 1 September a newly constituted five-member Special Bench of the NCLT, headed by the Tribunal’s President, stayed that order, holding that the earlier proceedings had not produced a definitive majority view, and listed the plan to be heard afresh on 23 September.

The appellate track paused accordingly. On 2 September, told of the stay by Solicitor General Tushar Mehta — appearing for the dissenting lenders, among them LIC Housing Finance, Canara Bank and Union Bank — the NCLAT kept the creditors’ appeal pending rather than deciding it.

Why it matters: The substantive question that made the approval notorious — whether votes held by entities connected to the debtor can carry a plan under Sections 105 to 114 — will now be decided by a five-member bench of the Tribunal rather than reached on appeal. For personal-guarantor practice, that is the more consequential forum: an NCLT larger-bench view will bind every adjudicating authority in the country from the day it is delivered.

At the Bar

Bar Councils Have No Disciplinary Power Over Law Students

Bench: Chief Justice Surya Kant and Justices Joymalya Bagchi and V. Mohana — September 3, 2026

On 13 August the Chairman of the Bar Council of India directed that the 2026 graduating batch of NALSAR University of Law, Hyderabad, should not be enrolled by any State Bar Council, and sought an inquiry against the students and faculty, over a campaign the students had run against the Chief Justice attending their convocation. In Mihira Sood v. Bar Council of India, W.P.(C) No. 1040/2026, the Supreme Court held the directions to be without authority of law and made its interim protection absolute.

The statutory line is enrolment. Until a law graduate is registered as an advocate, the Bar Councils have no jurisdiction over their conduct at all; disciplinary power over a student vests in the parent institution, or in whatever authority the institution’s regulations or bye-laws prescribe.

“BCI does not have jurisdiction [over students]… once a law graduate gets registered as an advocate, then BCI is statutory authority to regulate conduct. But not of students.”

Every communication of 13 August, and the modified communication that followed, was declared to be without authority of law.

Why it matters: The threat of withheld enrolment is the most powerful instrument the Bar Councils hold over anyone who has not yet joined the profession, and it has been used before against student speech. The jurisdictional line drawn here is clean and easy to plead, and it takes the instrument off the table entirely.

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The Court Sets a Clock for Reconstituting the Bar Council of India

Bench: Chief Justice Surya Kant and Justices Joymalya Bagchi and V. Mohana — September 2, 2026

The long-running reform of the Bar Councils moved from principle to timetable. Hearing M. Varadhan v. Union of India and Yogamaya M.G. v. Union of India, the Court requested the Chief Justices of the High Courts to complete the co-option of two women members to each State Bar Council within two weeks — the co-option limb of the 30 per cent women’s representation scheme, 20 per cent by direct election and 10 per cent by co-option, ordered on 4 August. Each State Bar Council must then notify its new composition within one week, and the newly constituted Councils “must elect their Chairperson, Vice Chairperson, other office bearers and the one representative to the Bar Council of India within three weeks from the notification of their composition.”

The Court also recorded an undertaking with implications beyond the election calendar: “Both the Attorney General for India and the Solicitor General for India shall be actively associated with every policy decision taken by the Bar Council of India.” Compliance returns on 17 September.

Why it matters: The BCI cannot be reconstituted until the State Councils are, and the sequence now has dates attached to every link. Practitioners standing for State Bar Council office should read the three-week clock as real; and the law officers’ association with BCI policy decisions is a structural change to how the regulator will make rules, not a courtesy.

Other Notable at the Bar

• Four High Courts to get new Chief Justices (August 31) — The Collegium recommended Justice Sanjay K. Agrawal (Chhattisgarh) as Chief Justice of the Rajasthan High Court, with an immediate transfer pending appointment; Justice Alpesh Yeshvant Kogje (Gujarat) for Madhya Pradesh; Justice Pushpendra Singh Bhati (Rajasthan) for Jammu & Kashmir and Ladakh; and Justice Krushna Ram Mohapatra (Orissa) for Chhattisgarh. The four Chief Justice recommendations made on 6 August remain un-notified, and the Supreme Court’s own four new seats are still unfilled.
• SCBA election complaints go back to the Election Committee (September 3) — The Court directed the Supreme Court Bar Association’s Election Committee to examine the complaints filed against the executive committee results, rather than deciding them itself.
• No CBI probe into the assault on the BCI Chairman (September 3) — The Court declined to entertain the plea and directed the petitioner to move the High Court.
• A legal notice is not the lawyer’s own act (Orissa HC, September 4) — An advocate cannot be prosecuted for a client’s conduct merely for having issued a legal notice on instructions.
• Concealment by counsel interferes with justice (Allahabad HC, September 1) — Active concealment of material facts by an advocate was held to interfere with the administration of justice.
• A grievances channel against the registry (August 31) — The Chief Justice constituted a committee to hear advocates’ complaints against the Supreme Court registry, on a petition seeking a formal mechanism.

From the High Courts

Manual Scavenging: Maharashtra Cannot Contract Out of Compensating Sewer Deaths

Bombay High Court (Justices Bharati Dangre and Manjusha Deshpande) — September 4, 2026

Government Resolutions of 2019 and 2025 divided sanitation workers who die or are injured in hazardous cleaning into two classes: those engaged by the State or a local authority, whom the State compensates, and those engaged by a private establishment or a housing society, whom it does not. In Shramik Janata Sangh v. State of Maharashtra, 2026 LiveLaw (Bom) 429, the division bench quashed the distinction as a violation of Article 14 — identical work, identical death, different consequence, turning only on who signed the contract.

“In the 21st Century, we boast about reaching the other side of the Moon, yet the hard reality stares us… the social evil of the caste system is still followed in our country.”

The Court directed the State and local authorities to compensate the dependants of victims immediately, at ₹30 lakh for each death, to identify every hazardous-cleaning death within six months, and to run rehabilitation without sector-based distinctions.

Why it matters: The outsourcing of sewer work to contractors and societies has been the practical answer to the 2013 Act’s liability scheme for a decade, and this removes it in Maharashtra. The Article 14 reasoning is portable to every State running the same two-tier compensation policy — and it lands while the Supreme Court’s manual-scavenging contempt proceedings against fifteen States are still open.

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Maternity Leave Cannot Cost a Woman Her Role, Her Grade or Her Promotion

Delhi High Court (Justice Sachin Datta) — August 31, 2026

A chartered accountant returned from maternity leave to find her responsibilities reduced. Her employer’s position was that her post, pay and title were intact. Justice Datta held that this misunderstands what the statutory protection protects.

A woman returning from maternity leave is ordinarily entitled to be restored to the post she held immediately before going on leave — and the protection extends to the substantive incidents of employment: the nature of her duties, her grade, her functional status, her position in the reporting hierarchy, her supervisory responsibilities, and her access to appraisal and promotion. A demotion that leaves the designation untouched is still a demotion.

The Court went further than the case required, directing the Centre to frame rules or issue directions within six months covering pregnancy-related accommodation, role protection, return-to-work parity, lactation support, timely grievance redressal, inspection standards, and safeguards against subtle workplace retaliation.

Why it matters: Post-maternity sidelining is almost never done by cutting pay, which is why the Maternity Benefit Act has been so hard to enforce. Naming reporting lines, supervisory scope and promotion access as protected incidents gives the claim something measurable to plead — and every employer with an India headcount now has six months before the Centre’s rules arrive.

Other Notable High Court Orders

• Reservation can pass through the mother (Madras HC, September 1) — The Court rejected the Puducherry government’s position that a community certificate follows the father’s nativity alone, calling it a patriarchal mindset inconsistent with equality, and directed the Revenue Department to issue SC, MBC and OBC certificates to children of native mothers.
• Grounds of arrest: the right pre-dates the judgment (Orissa HC, September 1) — Mihir Rajesh Shah on written grounds of arrest is not merely prospective; the right under Article 22(1) pre-existed the ruling that articulated it.
• NSA detention of a student activist quashed (Allahabad HC, September 2) — The detention order arising from the Noida protests was set aside.
• Personality rights against AI deepfakes (Bombay HC, September 3) — Justice Madhav Jamdar found a “very strong prima facie” case for actor Shruti Haasan and directed platforms to take down unauthorised merchandise, morphed images and sexually explicit deepfakes; eighteen defendants have six weeks to reply, with the matter listed on 3 December.
• 341 bailed, not released (Kerala HC, September 2) — Justices Raja Vijayaraghavan V and K.V. Jayakumar found 341 inmates recorded as granted bail but not released within seven days, with orders uploaded for only 60, and set a four-week deadline for API synchronisation and Legal Aid Portal integration across the judicial, police and prison databases.
• Hate-speech conviction set aside (Madras HC, September 1) — The conviction of BJP functionary H. Raja over remarks concerning Periyar and Kanimozhi Karunanidhi was set aside.
• Contempt against a Law Secretary (Bombay HC, September 3) — The Court initiated contempt proceedings against the Secretary of the State Law Department for shouting at judges.
• A restraint on political allegations (Delhi HC, September 3) — Politician K. Kavitha was restrained from publishing defamatory allegations against The Pioneer.

Legislative & Regulatory Watch

Three NGT Benches Go Dark on September 8 Unless the Court Extends Tenures

Supreme Court — August 31, 2026

The National Green Tribunal Bar Association told the Court on Monday that three benches, including the Southern and Western Zone benches, will stop functioning on 8 September. The arithmetic is unforgiving: the NGT Act does not permit a single-member bench, the Tribunal is running with four judicial and six expert members against a sanctioned strength of twenty each, and the stopgap extensions the Supreme Court granted earlier this year lapse on that date. The Court agreed to advance the hearing so that it falls before the cliff.

The timing is awkward for a different reason. The Tribunals Reforms Act, 2026 came into force on 25 August, and the National Tribunals Commission it creates — which is to run selections and appointments for the NGT among others — has not been constituted and has no rules. The architecture that was meant to fix tribunal vacancies is itself the reason there is no ordinary route to filling them.

Why it matters: Environmental litigants in the southern and western zones face a hard stop in days, and the fallback — video-linking members across zonal benches to make quorum — is already how the Tribunal has been limping along. Watch the 8 September order: it is the first practical test of whether the new Act’s transition can be managed by judicial stopgap or whether the Commission has to be constituted first.

Other Notable Regulatory Moves

• Nomination becomes mandatory in demat and mutual fund accounts (September 1) — Under SEBI’s circular of 29 May, every new single-holder demat account and mutual fund folio opened from 1 September must carry either a nomination — up to three nominees — or a signed opt-out declaration.
• SEBI consults on netting mutual fund cash-market obligations (September 4) — A proposal to let mutual funds net their fund obligations for cash market trades while securities settlement stays gross.
• ETF microstructure norms slip to September 7 — SEBI’s 28 August circular pushed the base price, price band, pre-open call auction and close-out framework for ETFs from 1 September to 7 September, after exchange feedback.
• The concessional NRI deposit window closed (August 31) — The temporary relaxation of FCNR(B) and NRE interest ceilings ended, so deposits placed from 1 September are priced on ordinary terms — the cliff the RBI created by its 25 August amendment directions.

What We’re Watching Next Week

• The NGT cliff (September 8) — three zonal benches stop functioning unless the Supreme Court extends member tenures first.
• Aravalli (September 7) — the ICFRE committee’s report on defining the range fell due on 31 August; the matter is listed before the Chief Justice’s bench.
• Madras High Court bye-elections (September 8) — final hearing on the five vacant Tamil Nadu seats, with the ECI on record that it will hold no bye-polls while the election petitions run.
• Shiv Sena symbol (September 15) — respondents’ submissions resume, with the Shinde faction arguing that the 2023 judgment did not rule out a legislative-majority test for identifying the real party.
• Compliance dates — Bar Council reconstitution returns 17 September; the digital-arrest status report is listed 16 September; the NCLT delays suo motu matter, now colliding with the commenced Tribunals Reforms Act, is listed 21 September.
• Subhash Chandra, round three (September 23) — the five-member NCLT bench hears the ₹6.5 crore repayment plan afresh.
• Still reserved — the two-child norm challenge, the Sabarimala nine-judge reference and the Jindal Poly Films recall order remain unpronounced.

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