Legal Updates (Dec 1 – Dec 6, 2025)
CASE UPDATES:
1. Agreed contractual interest between parties of equal bargaining strength could not be termed unconscionable or contrary to public policy by the arbitrator
The Supreme Court in the case of BPL Limited vs Morgan Securities and Credits Private Limited [Civil Appeal Nos. 14565 – 14566 of 2025] dated December 04, 2025, has held that the agreed contractual interest between parties of equal bargaining strength could not be termed unconscionable or contrary to public policy. Accordingly, the Court dismissed BPL Limited’s challenge to an arbitral award directing payment of over ₹27 crore with contractual interest, holding that the 36% p.a. rate under the Bill Discounting facility was part of a voluntary commercial bargain and could not be interfered with.
The Supreme Court held that bill discounting is a short-term, high-risk commercial financing mechanism where elevated interest rates are neither unusual nor inherently unfair. The court held that the “maxim verba chartarum fortius accipiuntur contra proferentem” had no application because the sanction letters were clear, unambiguous commercial contracts negotiated between parties of equal bargaining strength, leaving no scope to construe any clause against the drafter.
The Court noted the Respondent’s explanation that its business model was posited on the grant of such unsecured facilities for very short periods of time, allowing rapid redeployment of funds, and that a default disrupted this cycle for decades, resulting in loss. This made the compensatory contractual requirement of compounding in the case of defaulters neither penal nor improper. It further emphasised that Section 31(7)(a) embodies party autonomy, which governs arbitral interest unless a non-derogable legal bar applies.
The Court further held that the contract deliberately offered a concessional rate as an incentive for punctual repayment. “Withdrawal of such concession and the consequential levy of a higher rate, with compounding, cannot be faulted as being penal.” Finding no violation of public policy or fundamental legal principles, the Supreme Court upheld the arbitral award in full.
2. Complaints arising from the dishonour of account payee cheques must be instituted only before the court that has jurisdiction over the branch of the bank where the payee maintains his account, even if the cheque is deposited at a branch different from the payee’s home branch
The Supreme Court in the case of Jai Balaji Industries vs Heg Limited [Transfer Petition (Criminal) No. 1099 of 2025] dated November 25, 2025, has held that the jurisdiction to try a complaint filed under Section 138 of the Negotiable Instruments Act (NI Act), 1881, in respect of a cheque delivered for collection through an account, i.e., an account payee cheque, is vested in the court within whose local jurisdiction the branch of the bank in which the payee maintains the account, i.e., the payee’s home branch, is situated.
The Court observed that the payee could not select the jurisdiction for trial of an offence under Section 138 of the NI Act by presentation of the cheque at a location of his choosing, though a cheque can be presented at any branch of the payee’s bank as per the NI Act for the purposes of commercial convenience. Since an offence under Section 138 could be said to be committed upon dishonour of a cheque by the drawee bank, such offence would be localised at the place where the drawee bank is situated. Therefore, only the court within whose territorial jurisdiction the drawee bank is situated was empowered to proceed against an accused person under Section 138.
The Court stated that Section 142 indicates that the jurisdiction to try the offence under Section 138 has been specified in two circumstances: first, when the cheque is delivered for collection through an account, and secondly, when the cheque is presented for payment otherwise through an account. The Explanation to Section 142(2)(a) further clarifies the question of jurisdiction by taking into account the realities of negotiating by way of cheques and the technological advancement in the field. However, the “making” of a cheque is complete only upon delivery of the same by the drawer. The act of “delivery” thus creates a relationship between the drawer and the payee. Such a relationship is what describes the entitlement of the payee to the amount of money for which the cheque is drawn and enables the payee to encash the same.
The Court observed that the nature of the cheque becomes crystallised as an account payee cheque once the drawer delivers it to the payee, who further delivers it to the bank in which he maintains his account. Once the cheque is delivered by the payee to his bank, the “making” of the cheque is said to be complete. The inclusion of the expression “for collection through an account” in Section 142(2)(a) of the NI Act is only to indicate the intention of the drawer to “make” the cheque in such a manner that it can only result in a transaction between the bank accounts of the drawer and the payee.
The Court explained that what Section 138 of the NI Act describes by use of the expression “on an account maintained by him with a banker” is a simpliciter relationship between a person and his banker. The inclusion of “branch” in Sections 142(2)(a) and (b) places an additional condition for determining the place where the payee or drawer maintains the account. This additional condition is placed on the relationship between a person and his banker in order to decide the question of jurisdiction and streamline the process of adjudication.
The Court observed that once it is identified that the cheque in question is an account payee cheque, the delivery must be to such branch in which the payee maintains the account as it is this branch of the bank that will receive the funds in the account maintained by the payee, from the drawee bank which will debit the drawer’s account to send such amount. However, the necessity of delivery of an account payee cheque to the home branch is only legal and not commercial.
Thus, the Court concluded that the deeming fiction in the Explanation to Section 142(2)(a) of the NI Act ensures that even if a cheque is delivered to a branch other than the home branch for commercial convenience, it shall be considered to have been delivered to the home branch for the legal purpose of determining jurisdiction.
3. Only CCI can determine the monopolistic position under Section 19(4)(g) of the Competition Act enjoyed by any business goliath that may be attributable to a singular or pluralistic league of factors, and the TRAI is handicapped statutorily in doing so
Emphasising that the Competition Commission of India (CCI) is the only agency competent to determine the ‘monopolistic’ and ‘dominant position’ of any enterprise, the Kerala High Court in the case of Jiostar India vs CCI [Writ Appeal No. 1551 of 2025] dated December 03, 2025, has held that the monopolistic position under Section 19(4)(g) of the Competition Act enjoyed by any business goliath may be attributable to a singular or pluralistic league of factors, which the TRAI is handicapped statutorily in doing. Only the CCI can determine whether any enterprise/ entity actually enjoys a dominant position in the market or not.
Accordingly, the High Court dismissed Jiostar’s appeal against the CCI probe and upheld the single judge’s verdict allowing the CCI to continue its investigation into allegations that the broadcaster favoured Kerala Communicators Cable Ltd (KCCL) in the pricing of channels.
The Court explained that the width of the powers lodged with the CCI is indicative of the Parliamentary intent of bringing about sweeping changes in the economy which were necessitated owing to transition of the market from a licence/ permit raj to liberalisation in the late 1990s and from the opening up of the Indian territories to the international market owing to globalisation and trans-border/ trans-country businesses and investments in the country.
The Court also highlighted that Section 19(4) of the Competition Act is further indicative of the wide amplitude of powers vested with the CCI to reckon ‘all’ or ‘any’ of the factors whilst arriving at the finding as to whether any enterprise (like the SIPL in the instant case) enjoys a dominant position or not. So, when Section 19(4)(g) declares ‘monopoly’ or ‘dominant position’ as a trigger for ascertaining whether anti-competitive practices have been adopted or competition is being adversely affected, it is the CCI that can take into consideration singular or plural factors for such a determination.
The Court observed that the parallel enquiry or proceedings can continue under both the Competition Act as well as the TRAI Act under their respective enactments. If the grievance relates simpliciter to the licensing regulations or broadcasting regulations, without having any overtones of the subject matter of the Comp. Act, then TRAI must proceed with the inquiry, and CCI must keep its hands off. However, if the grievance stems from and raises the dispute falling within any of the categories of anti-competitive practices, then CCI can proceed with the inquiry regardless of the overlap with the powers and functions of TRAI under the TRAI Act.
Highlighting the scope of ample powers of the CCI which it possesses to pass an order of inquiry under Section 26(1) of the Competition Act on the complaint/ information of ADNPL if it is prima facie satisfied that anti-competitive practices have been resorted to by SIPL under the provisions of the Competition Act, the Court rejected the contention of the appellant SIPL that CCI could not have even formed a prima facie opinion or passed an order under Section 26(1) of the Competition Act. Thus, the CCI is entitled under law to proceed further with the matter after passing out the impugned order under Section 26(1) of the Competition Act and that ADNPL cannot be relegated to raise its dispute or grievance before the TRAI. However, under Section 21-A, the CCI should, if found appropriate at the relevant stage must invite comments, opinions and consult the TRAI in view of the nature of allegations relatable to and touching upon the provisions of Regulation 7(3) and (4) of the TRAI Regulations, 2017.
4. An order passed by a Real Estate Regulatory Authority (RERA) does not amount to a civil court decree and cannot be executed through civil execution proceedings. RERA orders must be enforced only through the statutory recovery mechanism provided under the RERA Act
The Karnataka High Court in the case of Mantri Developers vs Snil Pathiyam Veetil [W.P. Nos. 17821/2025] dated October 31, 2025, has held that an order passed by a Real Estate Regulatory Authority (RERA) does not amount to a civil court decree and cannot be executed through civil execution proceedings.
The statutory scheme shows that RERA is a ‘self-contained code’ whose decisions do not conform to any of the requirements of a decree as defined in Section 2(2) CPC, and therefore, its orders cannot be executed as civil decrees. Accordingly, the RERA orders must be enforced only through the statutory recovery mechanism provided under the RERA Act.
The Court observed that the order of the Adjudicating Officer or the order of the Appellate Tribunal, constituted under the RERA Act, does not assume the mantle of a decree, within the contemplation of Section 2(2) of the CPC. Therefore, such an order/orders cannot traverse the path of execution delineated under Order XXI of the CPC.
Further, the proceedings before the RERA are not conceived in the mould of a civil suit, though the RERA Act provides the procedure to be followed, as if it were a civil Court and therefore, cannot culminate in a decree in the classical sense. Accordingly, the Court held that the applications so filed by the petitioner invoking Section 47 of the CPC to hold that the concerned Executing Court did not have jurisdiction were in tune with the law.
REGULATORY UPDATES:
1. Liberalised Remittance Scheme (LRS)- Submission of ‘LRS Daily Return’ by Authorised Dealers- Category -II banks/ entities and Full-Fledged Money Changers
The Reserve Bank of India (RBI) vide its Notification No. RBI/2025-26/102 dated December 03, 2025, has introduced submission of the Liberalised Remittance Scheme (LRS) daily return by Authorised Dealer (AD) Category-II banks/entities and Full-Fledged Money Changers (FFMCs). Previously, only AD Category-I banks submitted daily LRS returns on the Centralised Information Management System (CIMS) and included LRS transactions of their attached AD Category-II banks and FFMCs.
From January 1, 2026, AD Category-II banks/entities and FFMCs will directly submit their own LRS daily returns, including nil reports, via CIMS, allowing them to monitor the cumulative PAN-wise LRS remittances of residents before approving new transactions. Consequently, they will no longer submit LRS transactions through AD Category-I banks.
The notification updates the Master Direction on reporting under the Foreign Exchange Management Act, 1999, and guides CIMS submission and support through the Foreign Exchange Department of regional RBI offices. The directions are issued under Sections 10(4) and 11(2) of FEMA, 1999.
2. RBI has updated references to the new KYC Directions, revisions to digital KYC and V-CIP provisions, and harmonised requirements for OVDs, mandatory documents, and due diligence procedures
The Reserve Bank of India (RBI) vide its Notification No. RBI/2025-26/101 dated November 28, 2025, has repealed the RBI Master Direction DBR.AML.BC.No.81/14.01.001/2015-16 dated February 25, 2016, and replaced it with the new “Reserve Bank of India (Commercial Banks – Know Your Customer) Directions, 2025”, effective immediately. All Payment System Providers and Participants must now align their KYC, AML, and CFT compliance processes with the updated 2025 framework.
The Notification also amends several existing regulatory instructions under the Payment and Settlement Systems Act, 2007, ensuring uniformity across prepaid payment instruments, payment aggregators, AePS operators, domestic money transfer frameworks, and TReDS platforms.
The key changes include updated references to the new KYC Directions, revisions to digital KYC and V-CIP provisions, and harmonised requirements for OVDs, mandatory documents, and due diligence procedures. The updated regulatory structure aims to streamline compliance, enhance customer verification standards, and ensure consistency across all payment systems.
3. RBI updates the KYC Rules for Authorised Persons under FEMA
The Reserve Bank of India (RBI) vide its Notification No. RBI/2025-26/99 dated November 29, 2025, has revised the KYC compliance framework for all Authorised Persons (APs) dealing in foreign exchange, money changing, overseas investments, remittances, and MTSS operations.
With the earlier 2016 KYC Master Direction now replaced, APs must follow entity-specific KYC directions applicable to them. Those regulated by the Department of Regulation (“DoR”) must comply with their respective KYC frameworks, while APs not regulated by DoR must adhere to the “RBI (Non-Banking Financial Companies – Know Your Customer) Directions, 2025.”
The Notification also requires APs to ensure that their agents, sub-agents, and franchisees follow the same updated norms. The directions have been issued under FEMA sections 10(4) and 11(1), and related Master Directions, including those on money changing, overseas investment, remittance facilities, and MTSS, are being amended.
4. Reserve Bank of India (Commercial Banks – Undertaking of Financial Services) (Amendment) Directions, 2025
The Reserve Bank of India (RBI) vide its Notification No. RBI/DOR/2025-26/135 dated December 05, 2025, has updated the Master Directions on financial services to clarify the roles of banks and their group entities in conducting financial and non-financial activities, including agency business, referral services, lending, and investment management.
The Key provisions specify that core banking functions and acceptance of time deposits must be undertaken departmentally, while mutual fund, insurance, pension, and portfolio management services must be conducted via group entities. The directions impose prudential investment limits: a single bank may invest up to 10% in any entity, and aggregate investments, including group and overseas entities, may not exceed 20%, with prior approval required for higher exposures.
Specific restrictions on Asset Reconstruction Companies, Alternative Investment Funds, and Real Estate/Infrastructure Investment Trusts are detailed. Compliance deadlines require submission of action plans by March 31, 2026, with full conformity by March 31, 2028, ensuring enhanced regulatory oversight and risk management across bank groups.
5. Reserve Bank of India (Payments Banks – Undertaking of Financial Services) (Amendment) Directions, 2025
The Reserve Bank of India vide its Notification No. RBI/DOR/2025-26/137 dated December 05, 2025, has updated the framework for Payments Banks following the entity-wise Master Directions released on November 28, 2025. The amendments, developed after public consultation and stakeholder feedback, clarify the definitions and permissible activities for Payments Banks engaging in third-party financial products.
The amendment introduces a revised definition of Agency Business, allowing banks to act as agents of third-party product or service providers (TPPSPs) for regulated financial products, including insurance, mutual funds, and pensions, without assuming risk. It outlines responsibilities such as marketing, sales, customer support, and after-sales services.
Additionally, Referral Services are defined to permit Payments Banks to refer customers to TPPSPs without involvement in product processes or branding, ensuring operational separation and compliance. The directions aim to standardise practices, maintain regulatory clarity, and protect customer interests while enabling Payments Banks to participate in agency and referral business models.
