Supreme Court Affirms Companies as “Victims” Entitled to Appeal Acquittals Under Section 372 Code of Criminal Procedure, 1973

In a significant ruling, the Hon’ble Supreme Court in Asian Paints Limited v. Ram Babu & Another, 2025 INSC 828, has clarified that a complainant company qualifies as a “victim” under Section 2(wa) of the Code of Criminal Procedure, 1973 (CrPC) and is therefore entitled to directly appeal an order of acquittal under Section 372 CrPC.

While reaching this conclusion, the Supreme Court underscored that the proviso to Section 372 CrPC was introduced with the objective of strengthening the participatory rights of victims in the criminal justice system. Recognising that commercial entities may suffer real and substantial harm, financial loss, dilution of goodwill, reputational injury, the Court adopted a purposive interpretation ensuring that such entities are not deprived of statutory appellate remedies.

The Supreme Court also held that the High Court erred in concluding that only the individual authorised to file the complaint on behalf of the company could maintain the appeal. Overruling this view, the Supreme Court affirmed that the company itself, being the entity that suffers the consequences of the offence, is the true “victim” and may independently pursue an appeal against acquittal.

Crucially, the Court reiterated that once a complainant company qualifies as a “victim” under Section 2(wa), the statutory right of appeal under Section 372 CrPC becomes immediately available. In such circumstances, there is no requirement to obtain prior leave of the Court under Section 378 CrPC. The order of acquittal can therefore be directly challenged under Section 372 of the CrPC.

Authored By
Rajat Jain, Advocate
Email: [email protected]
Mobile No. 9953887311

Complainant in a cheque dishonor case under Section 138 of the Negotiable Instruments Act, 1881 (“NI Act”) qualifies as a ‘victim’ – Supreme Court

In a significant ruling, the Hon’ble Supreme Court in Celestium Financial v. A. Gnanasekaran & Ors., 2025 INSC 804, held that a complainant in a cheque dishonour case under Section 138 of the Negotiable Instruments Act, 1881 (“NI Act”) qualifies as a ‘victim’ under Section 2(wa) of the Code of Criminal Procedure, 1973 (“Cr.P.C”).

As a result, if a complaint under Section 138 of the NI Act is dismissed by the Magistrate or if inadequate compensation is awarded, the complainant is now entitled to directly file an appeal, without seeking prior leave of the appropriate High court.

Legal Position Prior to the Judgment:

Before this ruling, if a Magistrate dismissed a complaint under the NI Act and acquitted the accused, the complainant’s only remedy was to seek leave from the High Court under Section 378(4) of the Cr.P.C. Only upon grant of such leave could an appeal be entertained. If leave was denied, the complainant had no further recourse to appeal the acquittal. The only recourse left to the complainant, in such cases, was to challenge the High Court’s refusal to grant leave by filing a Special Leave Petition (“SLP”) before the Supreme Court.

Impact of the Judgment:

Following this judgment, a complainant in a cheque dishonour case whose complaint is dismissed or who receives inadequate compensation can now directly file an appeal before the Court of Session.

Authored By
Rajat Jain, Advocate
Email: [email protected]
Mobile No. 9953887311

Secretly recorded phone calls between spouses are admissible as evidence in divorce proceedings- Supreme Court

In a significant ruling, the Hon’ble Supreme Court in Vibhor Garg vs. Neha, 2025 INSC 829, held that secretly recorded phone calls between spouses are admissible as evidence in divorce proceedings, thereby settling the law amidst conflicting judgments by various High Courts.

In arriving at this conclusion, the Court observed that under Section 122 of the Indian Evidence Act, what is barred is the disclosure of a communication made by one spouse to the other through testimony in court. However, the communication itself as captured through other means is not inadmissible. The Court likened the recording device (such as a phone) to an eavesdropper, noting that the evidence obtained thereby does not fall within the scope of the statutory bar.

The Court further clarified that Section 122 contains an exception and it does not apply to litigation between the spouses. Thus, in matrimonial disputes, the protection ordinarily afforded to spousal communications is not available.

Additionally, the Court recognized that while the right to privacy may, in certain situations, be enforceable even against non-State actors, the statutory exception under Section 122 constitutes a valid legislative mechanism. In this context, the right to a fair trial also rooted in Article 21 of the Constitution, prevails over the right to privacy, which also emanates from Article 21.

The mere fact that a conversation was recorded without the consent or knowledge of the speaker does not, by itself, render the evidence inadmissible.

Notably, the Court remarked:

“If the marriage has reached a stage where spouses are actively snooping on each other, that is in itself a symptom of a broken relationship and denotes a lack of trust between them.”

The Court clarified that a recorded conversation between spouses can be admitted into evidence in a divorce proceeding subject to the satisfaction of the three-fold test of relevance, identification and accuracy.

Authored By
Rajat Jain, Advocate
Email: [email protected]
Mobile No. 9953887311

Service of Notice under Section 35(3) of BNSS, 2023 / Section 41A of CrPC, 1973 via WhatsApp or Email Not Permissible

In a significant ruling, the Hon’ble Supreme Court in Satender Kumar Antil v. Central Bureau of Investigation and Anr., 2025 INSC 909, reiterated that police authorities cannot serve notices to accused persons through WhatsApp, Email, or other electronic means under Section 35 of the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS) or Section 41A of the Code of Criminal Procedure, 1973 (CrPC).

The Court held that service of a notice under Section 35 of the BNSS needs to be carried out in a manner that protects this substantive right of the individual, particularly because non-compliance with such a notice may result in arrest. The Legislature, in its wisdom, has specifically excluded notices under Section 35 of the BNSS from the modes of electronic service permitted under Section 530 of the BNSS. The Court observed that restrictions on electronic communication for such notices are intended to protect the fundamental right to life and personal liberty guaranteed under Article 21 of the Constitution.

Rejecting the State’s contention, the  Court clarified that Sections 63, 64, and 71 of the BNSS allow for the service of court-issued summons through electronic means only when safeguards such as the inclusion of the court’s seal are in place. These provisions, however, do not apply to notices under Section 35 of the BNSS, which are issued by police authorities and not by the courts. A summons issued by a court constitutes a judicial act, whereas a notice issued by an investigating agency is an executive act. Therefore, the procedure for judicial acts cannot be applied to executive actions.

Accordingly, if the police serve a notice under Section 35(3) of the BNSS or Section 41A of the CrPC through WhatsApp or Email, and subsequently take any coercive action based on alleged non-compliance, both the notice and such action can be challenged as being legally unsustainable and violative of due process.

Authored By
Rajat Jain, Advocate
Email: [email protected]
Mobile No. 9953887311

Defrauded Funds Cannot Be Considered as Taxable Income — PMLA Prevails Over Income Tax Act: Delhi High Court

In an interesting ruling, the Hon’ble Delhi High Court in the case of Asst. Commissioner of Income Tax v. State & Ors. [2025:DHC:8338] has held that funds obtained through fraud or deception cannot be treated as taxable income under the Income Tax Act, 1961, when proceedings under the Prevention of Money Laundering Act, 2002 (PMLA) are still pending. The decision came where the Court declined the Income Tax Department’s plea to release over INR 34.69 crore in fixed deposits seized during a tax raid on Stockguru India, a firm accused of operating Ponzi schemes.

Stockguru allegedly collected nearly INR 494 crore from unsuspecting investors by promising absurd returns of up to 220% in six months. In 2011, the Income Tax Department conducted raids, seizing approximately INR 34.69 crore in cash, which was later converted into fixed deposit receipts (FDRs). The Department then sought to appropriate these funds towards a tax demand of INR 345 crore for the relevant assessment years. However, the Enforcement Directorate (ED), which had initiated a money laundering case against the company and its directors, opposed the move, stating that the seized funds constituted “proceeds of crime” under the PMLA and could not be treated as legitimate income.

Upholding the trial court’s rejection of the IT Department’s application, the High Court observed that the seized funds represented money fraudulently collected from innocent investors and could not, therefore, fall within the definition of taxable income. The Court noted that such amounts appeared, prima facie, to have been generated through fraudulent investment schemes and could not be characterised as income earned from any lawful trade or business. It further noted that treating these amounts as income before the conclusion of the PMLA trial would prejudice the rights of the victims and compromise the objectives of the money laundering law.

Importantly, the Court reaffirmed that the PMLA, being a subsequent special legislation with an overriding clause, prevails over the Income Tax Act in matters involving proceeds of crime. It clarified that unless it is established that the funds constitute legitimate income, no tax liability can arise, and the question of recovery under the Income Tax Act does not even begin. The primary objective of the PMLA is to trace, attach, and eventually restore proceeds of crime to rightful claimants and the same takes precedence over revenue collection.

The judgment serves as an important reminder that when the legality of funds is under criminal scrutiny, revenue authorities cannot prematurely treat such amounts as taxable income.

Authored By
Rajat Jain, Advocate
Email: [email protected]
Mobile No. 9953887311