Week of Aug 10–16: No GST Arrest Without Serving the 'Reasons to Believe' Order

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 week in which the Court spent most of its energy fencing in power: the power to arrest under the GST law, the power to dismiss an employee over an old criminal case, the power of a Bar regulator to punish students, and the State’s power to keep an FIR alive for political ends. Parliament, meanwhile, rebuilt the tribunals architecture it lost in court four years ago, and closed its Monsoon Session with the Corporate Laws Bill still on the table. Friday alone produced three quashings — a Chief Minister, a Leader of the Opposition, and a comedian. Here’s what happened.

Supreme Court Highlights

Tax: No GST Arrest Without Serving the §69 ‘Reasons to Believe’ Order — Union of India v. Sunil Biyani

Bench: Justices Dipankar Datta and Sheel Nagu — August 12, 2026

The Directorate General of GST Intelligence was investigating a company for allegedly wrongful input tax credit claims and circular invoicing. Sunil Biyani, present when the premises were inspected, received three summonses, sought adjournments instead of appearing, and applied for anticipatory bail — rejected by the Sessions Court, and again by the Bombay High Court, which nonetheless shielded him from arrest for a week. The Union appealed that shield, and ended up with a judgment structuring its own arrest power.

Arrest under Section 69 of the CGST Act, 2017 is conditioned on the Commissioner recording “reasons to believe” that the person has committed a specified offence under Section 132. The Court held that recording them is not enough — the order must reach the person before the handcuffs do.

“The requirement of communication of the order passed under Section 69 of the CGST Act to the accused before he is arrested, has to be read into the statute and communication of such an order to the person sought to be arrested must be held to be mandatory.”

The Court reasoned that the Section 69 order is the foundation on which a person seeks anticipatory bail, and it would be an anomaly to hold that the very order need not be communicated at all. Communication may be electronic — email or SMS under Rule 8 of the CGST Rules — and, the Court noted, does not in any manner obstruct the department’s investigation. The reasons themselves must reflect application of mind to material evidence, and remain amenable to judicial review. Without communication, “question of arrest would not arise”. Reported as 2026 INSC 849 / 2026 LiveLaw (SC) 797.

Why it matters: This converts GST arrests from a surprise into a process. The department must now produce and serve its authorisation before acting on it, which gives the assessee a real window to test the recorded reasons and move for anticipatory bail. For defence counsel, the first demand in every Section 132 investigation is now the Section 69 order — and an arrest made without serving it is open to challenge at the threshold.

Securities: Trading on UPSI Is Presumed Insider Trading — Profit or Loss Irrelevant

Bench: Justices Sanjay Karol and Augustine George Masih — August 11, 2026

Between the June and September quarters of 2017, Tara Jewels Limited’s net losses swelled from ₹6.62 crore to ₹166.80 crore and net sales fell by roughly 69 per cent. Before those numbers reached the market, the chairman sold 30,93,948 shares — about 12.56 per cent of the company — followed by a further 29,75,000, while other promoters exited their holdings entirely. SEBI found insider trading; the Securities Appellate Tribunal set that finding aside. In SEBI v. Rajeev Vasant Sheth, the Supreme Court restored it.

“It is not in dispute that the respondents were in possession of UPSI. It is also not in dispute that the respondents had sold of large portions or the entirety of their shareholding while in possession of such UPSI.”

That, the Court held, is the whole enquiry. Under the SEBI (Prohibition of Insider Trading) Regulations, 2015, possession of unpublished price sensitive information coupled with trading while it remains undisclosed raises the presumption that the trade was informed by it. What the trader intended, what the proceeds were used for, and whether the trades yielded a profit are all beside the point — “less or no profit is of no consequence.” The promoters had avoided losses of about ₹1.38 crore, and the Court restored SEBI’s directions for disgorgement of the avoided losses with interest, along with the market restraint, while reducing the chairman’s monetary penalty from ₹25 lakh to ₹10 lakh. Reported as 2026 INSC 826 / 2026 LiveLaw (SC) 787.

Why it matters: The defence that a promoter sold for personal reasons — debt, diversification, liquidity — is now closed once possession of UPSI and the trade are established. Compliance officers should treat this as the operative standard for trading-window discipline, and anyone advising promoters of listed companies in distress should assume that a sale during an undisclosed deterioration will be presumed insider trading, whatever the motive.

Criminal Practice: An Immediate FIR for Every Missing Person, on Pain of Contempt

Bench: Justices Ahsanuddin Amanullah and R. Mahadevan — August 11, 2026

The case began with one father. G. Ganesh’s daughter went missing from Chennai in September 2011; the investigation passed through multiple agencies and was eventually closed as undetectable. His petition has since become the vehicle for nationwide directions on missing persons and trafficking, and this week it produced the sharpest of them.

On 22 May the Court had directed every State to register an FIR immediately upon information that a person is missing. Some States read “person” to mean children only. The bench was blunt about what it thought of that reading: the expression means every person, irrespective of age or gender, and the earlier order was clear and unambiguous. States and Union Territories that have not complied were warned that their Chief Secretaries and police chiefs will be summoned to explain why contempt proceedings should not issue.

The operational directions are equally concrete: FIRs in missing-person cases are to invoke the relevant Bharatiya Nyaya Sanhita provisions on kidnapping, abduction and trafficking; Anti-Human Trafficking Units are to be fully operational within four weeks; the national portals are to be integrated within six; and recovered persons are to be verified — including through Aadhaar — and safely restored. The matter is listed on 5 October. Reported as 2026 LiveLaw (SC) 782.

Why it matters: The routine police response to a missing adult — wait, register a diary entry, suggest the person left voluntarily — is now a contempt risk. Counsel assisting families should carry this order to the police station: it entitles them to immediate registration regardless of the missing person’s age, and it gives habeas corpus petitions a concrete non-compliance ground where registration was refused or delayed.

Quashing: Political Battles Are Not Fought in Court — Naidu’s Amaravati FIR Stays Quashed

Bench: Chief Justice Surya Kant and Justices Joymalya Bagchi and V. Mohana — August 14, 2026

The Court dismissed a challenge to the Andhra Pradesh High Court’s judgment of 15 July quashing the 2021 criminal case against Chief Minister N. Chandrababu Naidu and former minister Ponguru Narayana over alleged irregularities in the Amaravati land pooling scheme. The challenge came not from any farmer said to have been wronged, but from a former MLA of the rival YSRCP.

That provenance did much of the work. The Chief Justice observed that the proceedings had been initiated at the instance of a political rival, that no affected farmer had approached any court, and that political battles should not be fought in courtrooms. On the law, the case ticked several of the established quashing categories at once: the FIR disclosed no cognizable offence, the allegations were inherently improbable, statutory bars to prosecution stood in the way, and the proceedings were found to be manifestly mala fide — instituted, in the language the Court endorsed, with the transparent ulterior motive of political persecution. Aggrieved individuals, the bench added, can always approach the courts themselves.

Why it matters: Quashing doctrine has long listed mala fide prosecution as a ground while rarely applying it; this is a worked example at the highest level, with political rivalry treated as evidence of it. For anyone defending an FIR that surfaced after a change of government, the combination — rival-initiated complaint, no direct victim before the court, statutory bar — is now a template the Chief Justice’s bench has endorsed.

Speech: Savarkar Remarks Case Against Rahul Gandhi Fails for Want of §196 Sanction

Bench: Justices Dipankar Datta and Sheel Nagu — August 14, 2026

The Court quashed the criminal proceedings against Leader of the Opposition Rahul Gandhi over his November 2022 remarks on V.D. Savarkar, made at a rally in Akola during the Bharat Jodo Yatra. A complaint filed by an advocate in Lucknow had led a magistrate to take cognisance of offences principally under Sections 153A and 505 of the Indian Penal Code — promoting enmity between groups and statements conducing to public mischief.

The disposal turned on a threshold requirement rather than the speech itself. Section 196 of the Code of Criminal Procedure bars a court from taking cognisance of a Section 153A offence without the previous sanction of the government. The State of Uttar Pradesh confirmed before the bench that no sanction had ever been granted. That admission ended the case: the complaint and the magistrate’s orders were set aside.

Why it matters: Sanction is the most underused defence in speech prosecutions. Complaints under Sections 153A and 505 — and their Bharatiya Nyaya Sanhita successors, which carry the same requirement — are routinely entertained by magistrates without anyone asking whether the government has sanctioned cognisance. This judgment is a reminder to make that the first question in every such brief, because the absence of sanction is fatal however far the proceedings have travelled.

Comedy, Closed: FIRs Against Samay Raina and Four Others Quashed After Amends

Bench: Chief Justice Surya Kant and Justices Joymalya Bagchi and V. Mohana — August 14, 2026

The Court quashed all FIRs against comedian Samay Raina and four others — Vipul Goyal, Balraj Paramjeet Singh Ghai, Sonali Thakkar and Nishant Jagdish Tanwar — arising from remarks about persons with disabilities made on the show India’s Got Latent.

The route to that relief is the interesting part. Rather than adjudicate the remarks, the Court had earlier put the respondents to terms: demonstrate amends to the community the jokes were said to demean. The bench recorded that they had complied — among other things by organising a chess tournament for specially-abled players in March, an event that drew wide coverage and raised the profile of organisations working with persons with disabilities, including those supporting people with spinal muscular atrophy. Calling them bright youngsters and appreciating the effort, the Court closed every case against them.

Why it matters: This is a restorative disposition in a speech prosecution — relief conditioned on demonstrated amends rather than an adjudication of the content. For clients facing multi-State FIRs over offensive content, it is now a citable model: consolidate before the Supreme Court, propose concrete remedial work, and convert the proceeding from punishment into compliance. What it deliberately does not produce is a precedent on where the line for comedy actually lies.

Service Law: No Dismissal for Suppressing Antecedents Without an Enquiry — Shatrughn Yadav v. FACT

Bench: Justices Sanjay Karol and Augustine George Masih — August 12, 2026

A technician with Fertilizers and Chemicals Travancore Ltd. was terminated for suppressing his criminal antecedents in verification — a case he did not know existed when he made the declaration. The Supreme Court set the termination aside and ordered reinstatement with consequential benefits and 50 per cent back wages.

The judgment does two things. First, it holds that a person cannot be guilty of suppressing what he did not know: an undisclosed case the employee had no knowledge of is not suppression at all. Second, and of wider application, it holds that even where antecedents surface, dismissal is not the reflex.

“Termination is therefore not an automatic consequence of the disclosure of criminal antecedents; rather, the specific case of the employee must be considered, and the employer must apply its mind before arriving at a decision.”

Before terminating, the employer must hold an enquiry directed at two questions — whether the suppression was deliberate, and whether the nature of the offence and of the employment make the employee’s continuation unfeasible — and must record findings on both. Reported as 2026 LiveLaw (SC) 789.

Why it matters: Verification-form terminations are a staple of public-sector litigation, and employers routinely treat discovery of an old case as self-executing cause. This decision makes the enquiry itself the condition of validity: a termination order that does not examine deliberateness and unfeasibility is exposed. On the employee side, ignorance of the case at the time of declaration is now a complete answer.

Torts: Electrocution Attracts Strict — Not Absolute — Liability

Bench: Justices Sanjay Karol and N. Kotiswar Singh — August 12, 2026

Two Karnataka cases travelled up together: a man died on contact with an 11 kV transmission line, and another suffered grievous injuries from a 66 kV line while trying to retrieve a cricket ball. In both, the Karnataka High Court — at single-judge and division-bench level — had awarded compensation in writ proceedings on the footing that the power utility’s liability was absolute. In Karnataka Power Transmission Corporation Ltd. v. Rekha, the Supreme Court set those orders aside.

The Court drew the doctrinal line cleanly. Electricity transmission is an inherently dangerous activity, so a utility can be held liable without proof of negligence — but the standard is strict liability, under which the recognised exceptions (an act of God, the act of a third party, the claimant’s own conduct) remain available. Absolute liability, the no-exceptions standard, was not the applicable rule. The Court added a procedural holding with equally practical bite: where the facts are genuinely disputed — how the contact occurred, whether the victim contributed — a writ petition for compensation is not maintainable, and the claim must be adjudicated where evidence can be led. Reported as 2026 INSC 847 / 2026 LiveLaw (SC) 799.

Why it matters: For power utilities, the exceptions are back on the table, and a defence of third-party interference or contributory conduct is worth pleading again. For claimants, the message is forum selection: an undisputed-facts case can still go by writ, but anything contested belongs in a civil suit or statutory forum from the start — a writ filed to save court fees now risks dismissal after years of proceedings.

Other Notable SC Orders This Week

West Bengal SIR appeals (August 11) — Hearing Adhir Ranjan Chowdhury’s petition, the Chief Justice’s bench declined to fix a timeline for the appellate tribunals deciding voter-roll appeals — the Calcutta High Court has noted roughly 34 lakh appeals pending — and instead sought the ECI’s data on disposals. Listed 25 August with the other SIR matters.
UAPA trial delay (August 12) — On bail pleas in the Karnataka PFI conspiracy case, the Chief Justice’s bench called the prosecution’s plan to examine witnesses from a list of 707 — 50 of them against the applicant Shahid Khan, in custody since September 2022 — “absurd as a fairytale”, observing the State cannot have the luxury of prolonging a trial for years while a citizen languishes in jail.
Karur appointments revived (August 14) — Justices J.B. Pardiwala and K. Vinod Chandran stayed the Madras High Court judgment of 27 July that had quashed Tamil Nadu’s compassionate appointments to families of the 41 killed in the Karur stampede, issuing notice on the State’s challenge. The 32 appointment orders survive for now.
Cancer as a notifiable disease (August 11) — The Court directed States to consider declaring cancer a notifiable disease, which would mandate registration and reporting of every diagnosis.
Two seven-judge listings (August 12) — The reference on legislative privileges versus free speech arising from the 2003 Tamil Nadu Speaker matter goes before seven judges on 6 October; a seven-judge bench takes up States’ power to impose additional sales-tax levies on 22 September.

Insolvency & Corporate

IBC: Uncrystallised Damages Are Not Operational Debt, and Limitation Is Not Elastic — Velagala v. Sravanthi Infratech

Bench: Justices J.B. Pardiwala and Manoj Misra — August 12, 2026

An EPC contract worth ₹827 crore for a 225 MW gas-based power station in Andhra Pradesh went wrong in the familiar way: claims, counter-claims, and — six years after the money stopped moving — a Section 9 application under the Insolvency and Bankruptcy Code. The Supreme Court used the appeal to restate two propositions that operational creditors persistently test.

First, a claim for damages arising from breach of contract is not an operational debt until it has been crystallised by adjudication. Until a court or arbitral tribunal quantifies it, it is a disputed claim, and the NCLT is not the forum to liquidate it. Second, limitation under Article 137 of the Limitation Act — applied to the Code by Section 238A — runs from the default, and the default occurs at a singular point in time. The debt here had crystallised in early 2012, when the billing break-up was acknowledged; the application came in October 2018, and the continued subsistence of the contract did not generate a fresh cause of action or keep the claim alive. The Code, the Court held, cannot give a new lease of life to time-barred debts. Reported as 2026 INSC 835 / 2026 LiveLaw (SC) 793.

Why it matters: The judgment closes the two doors through which stale contractual disputes enter the NCLT: dressing unliquidated damages as operational debt, and treating a long-running contract as a rolling limitation period. Operational creditors should sue or arbitrate first and invoke the Code only on a crystallised, in-time default; corporate debtors resisting a Section 9 petition now have a single citation for both objections.

Arbitration: The Ninth Circuit Confirms Devas’s $562.5 Million Award Against Antrix

US Court of Appeals for the Ninth Circuit — August 12, 2026

The long-running enforcement campaign over the cancelled 2005 Devas–Antrix satellite agreement produced a significant foreign ruling this week: the US Court of Appeals for the Ninth Circuit affirmed the confirmation of Devas Multimedia’s $562.5 million ICC award against Antrix Corporation, ISRO’s commercial arm. Following the US Supreme Court’s 2025 holding that the Foreign Sovereign Immunities Act imposes no separate “minimum contacts” requirement, the Ninth Circuit held that the FSIA’s arbitration exception gave the Washington federal court jurisdiction even though the underlying dispute had no US commercial nexus. The district court’s judgment stands at roughly $1.29 billion with interest, and Devas’s counsel say the claim now exceeds $2 billion.

Why it matters: India’s domestic response to the Devas award — the fraud findings and the winding-up of Devas itself — has not stopped enforcement abroad, and the FSIA holding widens the US forum for award creditors of state-owned entities generally. Advisers to Indian PSUs with offshore assets or receivables should treat US enforcement exposure as live even where the underlying transaction never touched the United States.

At the Bar

Enrolment Is Not a Weapon: The BCI’s NALSAR Order Draws the Chief Justice’s Rebuke

Supreme Court — August 14, 2026

The week’s most extraordinary Bar story began with a student protest. Around 450 of NALSAR Hyderabad’s students campaigned against an invitation extended to Chief Justice Surya Kant, citing remarks he had made. The Bar Council of India responded with an order barring the university’s entire 2026 graduating batch from enrolling as advocates — collective professional disqualification as an answer to campus dissent. Amid the uproar that followed, the BCI withdrew the order, conceding that the vast majority of the students were innocent and should not suffer for the alleged misconduct of a few.

On Friday the Chief Justice addressed the episode from the bench, and sided with the students. The BCI’s action was “totally uncalled for”, he said, describing the protest as “a dialogue between students and me” and affirming that students have a right to protest. The bench made clear no punitive action should follow against the students; a separate plea seeks an inquiry into the BCI chairman’s authority to issue such orders at all.

Why it matters: Enrolment under the Advocates Act is an individual statutory entitlement, and the withdrawn order is the clearest recent illustration of why it cannot be wielded as collective punishment. The unresolved question — what jurisdiction the BCI has over law students, as opposed to enrolled advocates — is now squarely raised in the pending plea, and its answer will define the outer limit of the regulator’s disciplinary reach.

Co-option of Women Members: The Mechanics Get Contested

Supreme Court and Bar Council of India — August 11–14, 2026

Last week’s direction that High Court Chief Justices nominate two co-opted women members to every State Bar Council spent this week colliding with implementation. On 11 August the BCI directed all State Bar Councils to meet on the 16th and prepare panels of four women each, from which the Chief Justices would co-opt two. A day later it put that direction in abeyance — a Bar-prepared panel is a mechanism the Supreme Court’s order never contemplated, and it would have quietly returned the choice to the councils the order was designed to bypass.

The Court itself added two data points. It permitted the Kerala Bar Council’s elected members to place their suggestions before the High Court Chief Justice — engagement with the nomination, not control of it. And by week’s end, women candidates who had polled sixth and seventh in recent council elections had sought recall of the 4 August order, arguing that co-option should track electoral performance rather than nomination.

Why it matters: Who controls the pipeline is the whole question. If panels prepared by the elected councils re-enter the process, co-option reverts to patronage; if the Chief Justices nominate unassisted, the first round of nominations will set the template every other State follows. The recall petition adds a third model — co-option by vote share — and its fate will show how much of the original order the Court is willing to renegotiate.

Other Notable at the Bar

Delhi Bar Council results unblocked (August 14) — The Chief Justice’s bench allowed declaration of the Bar Council of Delhi election results — held up since a counting-staffer was allegedly caught altering ballot preferences in April — subject to the outcome of the disputes before the election tribunals, which it asked to be decided preferably within three months. The BCD is to preserve the complete election record, and Delhi Police the original CCTV footage.
SCAORA restructures (August 13) — The Supreme Court Advocates-on-Record Association’s general body doubled membership fees and resolved to press for an end to the sequencing system and faster defect-marking in the Registry.
SCBA and the Meghalaya resolution (August 14) — The Supreme Court Bar Association urged the Meghalaya High Court Bar Association to withdraw its resolution against Advocate General Amit Kumar.

Legislative & Regulatory Watch

Parliament: The Tribunals Reforms Act Returns — With a National Tribunals Commission

Lok Sabha August 10, Rajya Sabha August 11, 2026

Parliament passed the Tribunals Reforms Bill, 2026, repealing the Tribunals Reforms Act, 2021 — parts of which the Supreme Court had struck down as offending the separation of powers and judicial independence — and replacing it with the architecture the Court has demanded for a decade: a National Tribunals Commission.

The Commission is to comprise a chairperson who is a former Supreme Court judge or High Court Chief Justice, two judicial members who are former High Court judges, and two technical members with twenty-five years’ experience in administration, finance, law or allied fields, each serving five years or until seventy. Its remit runs to conducting the selection process for tribunal vacancies, reviewing tribunal performance, overseeing inquiries into complaints against chairpersons and members, and maintaining a National Tribunals Data Grid. Tribunal chairpersons get five-year terms to an age cap of seventy, members to sixty-seven; a search-cum-selection committee recommends one candidate per vacancy with one on the waitlist, and the government must appoint within three months.

Why it matters: Every tribunal practice — NCLT, NCLAT, CESTAT, ITAT, the service and electricity tribunals — runs through the machinery this Act rebuilds, and the three-month appointment deadline is aimed at the vacancy paralysis the Supreme Court is separately hearing suo motu. The open question is whether an executive-appointed Commission satisfies the Madras Bar Association line of authority; expect the first constitutional challenge to test exactly that.

Parliament: The Session Closes — the Corporate Laws Bill Holds Over

Monsoon Session adjourned sine die August 13, 2026

The Monsoon Session, which began on 20 July, was adjourned sine die on 13 August after nineteen sittings, with twelve Bills passed by both Houses — among them the Tribunals Reforms Bill above, the Mines and Minerals (Development and Regulation) Amendment Bill and the Public Examinations (Prevention of Unfair Means) Amendment Bill. The President’s assent to the Supreme Court (Number of Judges) Amendment Act was also reported this week, completing the statute that fixes the Court’s sanctioned strength at thirty-eight.

The notable absence: the Corporate Laws (Amendment) Bill, 2026. The Joint Parliamentary Committee’s report — recommending adoption with modifications, including the shift of procedural offences from criminal prosecution to civil penalty — was presented on 3 August, but the revised Bill was not taken up before the House rose. It now waits for the winter session.

Why it matters: The decriminalisation and compliance relief the Bill promises slips by at least a quarter. Until it moves, the Companies Act’s existing prosecution exposure for procedural defaults remains the operative advice — do not let clients price in the JPC’s recommendations as if they were law.

What We’re Watching Next Week

Motor insurance compliance — the stakeholders’ affidavits under Thungala Dhana Laxmi fell due on 14 August; the review on 18 August will show whether IRDAI moves on the four-year and six-year mandates.
NEET protest FIRs — the detailed hearing on 18 August takes up withdrawal against the Centre’s 2,700-FIR carve-out for “serious antecedents”.
Judicial officers’ retirement age — the two-week window for States to decide on enhancement, in consultation with their High Courts, closes around 19 August.
SEBI’s transmission framework — the simplified securities-transmission regime is effective 22 August; watch RTA and depository readiness.
Two reserved judgments — the three-year practice rule review (reserved 28 July) and the two-child norm challenge with Javed in question (reserved 4 August) can both be pronounced any day.

That’s all for this week. If a colleague would find this useful, forward them this page — or better yet, ask them to subscribe.

No GST Arrest Without Serving the 'Reasons to Believe' Order