Legal News for May 2026

Wife’s parental wealth irrelevant in fixing maintenance: Bby HC

The Nagpur bench of Bombay High Court last month ruled the financial position of a wife’s parents is irrelevant in determining maintenance, setting aside an Akola family court order after finding that key evidence on wife’s income and procedural safeguards was overlooked.Justice Urmila Joshi Phalke, while allowing a criminal revision application, clarified that maintenance must be rooted in the financial capacity and needs of the spouses. “What must be assessed is whether the claimant spouse has sufficient independent income to sustain herself,” the court said, underscoring that interim maintenance depends on financial necessity rather than family background.

The matter was remanded to the family court, Akola, for fresh adjudication with liberty to both parties to adduce evidence. Pending reconsideration, the court directed the husband to pay interim maintenance of 10,000 each to the wife and child and to deposit 3 lakh in stages, ensuring they are not deprived of support.

The case arose from a challenge by a Baroda-based man employed in South Africa against a Nov 2023 order directing him to pay 18,000 per month to his wife and 10,000 to their minor daughter. The high court found the family court failed to consider material indicating the wife was a practising lawyer with independent earnings.

Despite records of her enrolment with Bar Association and appearances in multiple cases “this aspect was not considered by the family court while calculating the amount of maintenance,” the judge observed, calling for a reassessment based on complete evidence.

The ruling emphasised that courts must strike a balance by evaluating the husband’s financial status, the standard of living the wife was accustomed to in her matrimonial home, and factors like reasonable needs, independent income, assets, dependents and liabilities. It further noted that essential expenses, including food, clothing, shelter, education and medical needs must guide the determination.

Justice Joshi Phalke held a wife’s earning status alone cannot disentitle her from maintenance, stating key question is whether her income is sufficient to maintain same standard of living. Court also flagged lapses, noting the family court modified maintenance amount without issuing notice to the husband. At same time, it rejected husband’s claim of lack of opportunity, observing he failed to cross-examine the wife. Relying on SC’s ruling in Rajnesh vs. Neha, court reiterated maintenance aims to prevent destitution and must be determined through balanced assessment.

Bank can tag borrower a/c fraud without hearing: SC

The Supreme Court, issued a decision regarding the classification of bank

accounts as fraud. The apex court ordered that banks are not obligated to grant customers a personal oral hearing before declaring their accounts as fraud. However, prior to labelling them, banks must provide customers with a forensic audit report.

The ruling follows submissions made earlier this year by the Reserve Bank of India (RBI) and State Bank of India (SBI), which argued that conducting personal hearings in every case would not be feasible given the scale of fraud in the banking system.

Earlier, appearing for SBI, solicitor general Tushar Mehta had told the court that the volume of fraud cases has risen sharply, making individual hearings difficult to implement. He said that introducing such a requirement could disrupt the process of identifying and declaring fraudulent accounts.

The court was informed that around 60,000 instances of bank fraud were recorded over the past two financial years, involving Rs 48,244 crore. Breaking down the figures, Mehta said there were 36,060 cases in 2023–24 and 23,953 in 2024–25. The amount involved in 2024–25 stood at Rs 36,014 crore, reflecting a 194 per cent increase from Rs 12,230 crore in the previous year.

A bench of Justices J B Pardiwala and K V Viswanathan had earlier questioned the absence of personal hearings, noting that such a step is generally linked to principles of natural justice. In response, Mehta maintained that banks do not offer personal hearings in these situations, as it may defeat the purpose of the classification process. He added that there could also be circumstances where providing such hearings is not possible.

Success of out-of-court deal under IBC depends on framework, implementation

The out-of-court settlement proposed under Insolvency and Bankruptcy Code will reduce the load on NCLT and help promoters to turn around assets without getting into prolonged legal battle.

The recently amended IBC Act has introduced various modes for out-of-court settlement including “debtor-in-possession and creditor-in-control” model with formal out-of-court.

Himanshu Dubey, Partner, S&A Law Offices, said the move is an alternative pathway for resolution of genuine business failures, with the aim of facilitating faster and more cost-effective insolvency resolution with minimal business disruption.

The criteria for Creditor-initiated Insolvency Resolution Process (CIIRP) is yet to be notified but it would be interesting to see whether defaulted promoters can avail this benefit, he said.

The amendment is not a government concession of institutional weakness, but a legislative effort to reduce the burden on an already stretched tribunal system while preserving all existing remedies, he added.

The Lok Sabha recently passed the Insolvency and Bankruptcy Code (Amendment) Bill, 2025, effecting a major overhaul of insolvency framework since the Code’s enactment in 2016.

The government has introduced a new framework for group and cross-border insolvency.

The much-awaited cross-border framework is a step towards aligning India with international best practices and improving the recognition of Indian insolvency proceedings in foreign jurisdictions.

Sukrit Kapoor, Partner, King Stubb & Kasiva, Advocates and Attorneys, said as the rules for group insolvency are yet to be framed it would be ideal for the drafters to ensure that the Indian insolvency regime is on a par with the global insolvency frameworks.

The cross-border and group insolvency framework success will depend on efficient implementation, stronger judicial infrastructure and effective coordination between domestic and foreign insolvency authorities, he added.

Amit Kumar Nag, Partner, AQUILAW said Indian tribunals will be better positioned to align parallel insolvency processes across jurisdictions by enabling recognition of foreign proceedings and introducing a Centre of Main Interest-based model.

The framework’s success is contingent upon effective reciprocity and cooperation from foreign courts, without which coordination may remain more aspirational than real in certain cases, he added.

The amendment also makes it mandatory for cases to be admitted in 14 days, which will have 150-day timelines for new resolution mechanisms.

Jayesh H, Co-Founder at Juris Corp, said the amended law requires time-bound orders to be passed once default is established. It also stipulates that filings previously made to Information Utilities are to be considered as establishing the default.

A lot also depends on whether the Supreme Court gives supremacy to Time Value of Money or like in the past, ends up treating the statutory stipulation as Directory and not Mandatory, he added.