Institute of Legal and Management Studies

India's federal judicial structure balances the Supreme Court's role as the apex interpreter of the Constitution with the High Courts' constitutional autonomy. On 04.08.2025, the Supreme Court, in M/s. Shikhar Chemicals v. The State of Uttar Pradesh & Anr. (Special Leave Petition (Crl.) No. 11445/2025), issued administrative directives to the Chief Justice of the Allahabad High Court, raising concerns about judicial overreach. This article examines the facts of the case, the Supreme Court's directions, and their implications for judicial federalism, arguing that such interventions undermine High Court autonomy and proposing reforms to address judicial errors within constitutional boundaries.

Facts of the Shikhar Chemicals Case

The case originates from a private complaint filed by Respondent No. 2, M/s. Lalita Textile Concern, against the petitioner, M/s. Shikhar Chemicals, in the Court of Additional Chief Judicial Magistrate-I, Kanpur Nagar (Complaint Case No. 113283/2023). The complainant, a yarn supplier, alleged that between April and July 2019, it supplied yarn worth Rs. 52,34,385/- to the petitioner, who paid Rs. 47,75,000/- via RTGS, leaving an unpaid balance of Rs. 4,59,385/-. Additionally, Rs. 7,23,711/- was claimed as interest at 8% per Yarn Committee regulations. The complainant attempted recovery through phone calls, GST notices, and legal notices, which were returned undelivered or refused. The GST department penalized the petitioner under Section 73(9) of the GST Act for fraudulent tax benefits. Alleging fraud, the complainant sought criminal action under Section 406 IPC (criminal breach of trust) after police refused to register an FIR, citing a civil dispute.

The Magistrate, after a Section 202 Cr.P.C. inquiry, issued process under Section 406 IPC, which the Allahabad High Court (Coram: Prashant Kumar, J.) upheld on 05.05.2025, reasoning that civil remedies would be too burdensome for the complainant. The petitioner challenged this order before the Supreme Court, arguing the dispute was civil, not criminal.

Supreme Court's Directions and Their Implications

The Supreme Court, on 04.08.2025, quashed the High Court's order, holding that a sale transaction does not constitute “entrustment” under Section 405 IPC, as per State of Gujarat v. Jaswantlal Nathalal [(1968) 2 SCR 408] and Delhi Race Club v. State of U.P. [(2024) 10 SCC 690]. It criticized the High Court's rationale as a misapplication of law, allowing criminal proceedings for a civil dispute. The Court issued the following directives (paras 23–26):

These directives, while aimed at correcting judicial error, encroach on the Chief Justice's administrative autonomy as the master of the roster, raising constitutional concerns.

Constitutional Status of High Courts: Autonomous Entities

High Courts are established under Article 214 and designated as courts of record under Article 215, with inherent powers, including contempt jurisdiction. Article 229 grants the Chief Justice exclusive control over administrative matters, including roster management. In State of Rajasthan v. Prakash Chand & ors [(1998) 1 SCC 1] and Asok Pande v. Supreme Court of India [(2018) 5 SCC 341], the Supreme Court affirmed the Chief Justice's sole authority over case allocation. The directives in Shikhar Chemicals undermine this autonomy, disrupting the federal judicial structure where High Courts are coordinate, not subordinate, to the Supreme Court.

Article 141 and the Limits of Supreme Court Authority

Article 141 mandates that the “law declared” by the Supreme Court is binding, but, as clarified in Indian Express Newspapers v. Union of India [(1985) 1 SCC 641], only the ratio decidendi constitutes binding precedent. Administrative directives, such as those in Shikhar Chemicals, fall outside Article 141's scope, lacking binding force. The Supreme Court's supervisory powers under Articles 136 and 142 allow correction of judicial errors but do not extend to dictating High Court administration, rendering these directives constitutionally questionable.

Per Incuriam and the Threat to Judicial Federalism

A judgment ignoring constitutional provisions or binding precedents is per incuriam The Shikhar Chemicals directives, lacking jurisdictional basis and contradicting State of Rajasthan v. Prakash Chand, are arguably per incuriam. By interfering in roster management, the Supreme Court risks centralizing judicial control, eroding the federal balance. In S.P. Gupta v. Union of India [(1981) Supp SCC 87], judicial independence was upheld as part of the basic structure, underscoring the need to protect High Courts from external administrative control.

Safeguarding Judicial Federalism

The Supreme Court's role as the Constitution's guardian requires it to exercise restraint, ensuring its actions uphold federalism. The Shikhar Chemicals directives, while correcting a judicial error, overstep into High Court administration, risking erosion of autonomy. Instead of centralized control, the judiciary should adopt reforms that foster accountability through training, peer review, and appellate scrutiny. By respecting constitutional boundaries and cultivating mutual respect, the judiciary can address errors while preserving its federal character and integrity.

Author is a Lawyer practicing at High Court of Kerala

Views Are Personal.

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