Legal Updates ( May 18 – May 23, 2026 )
CASE UPDATES
Amount received by a claimant under a Mediclaim/medical insurance policy is not deductible from compensation awarded under the Motor Vehicles Act, 1988, even where compensation under the head of medical expenses is also claimed before the Motor Accidents Claims Tribunal
The Supreme Court in the case of New India Assurance Company vs Dolly Satish Gandhi [Special Leave Petition (Civil) Nos.18267 of 2025] dated May 15, 2026, has held that amount received by a claimant under a Mediclaim/medical insurance policy is not deductible from compensation awarded under the Motor Vehicles Act, 1988, even where compensation under the head of medical expenses is also claimed before the Motor Accidents Claims Tribunal.
The Court held that the two receipts stand on different footings: compensation under the Motor Vehicles Act is a statutory and beneficial entitlement arising out of the accident, whereas Mediclaim reimbursement is a contractual benefit flowing from premiums paid earlier by the claimant. Since the Mediclaim amount is an independent contractual entitlement and not a substitute payment by the wrongdoer or under the same legal regime, its receipt cannot be used to reduce MACT compensation.
The Court observed that the governing principle against “double benefit” in motor accident claims is that there should be no duplication for the same head of loss, since compensation under the Motor Vehicles Act is meant to be “just compensation” that fairly makes good the loss suffered and not to create a windfall. However, the Court clarified that the real inquiry is into the source and nature of the benefit: if the additional payment is a substitute for the same loss, it may be deductible; if it is independent or an accrued entitlement, it is not. Employment-related benefits such as provident fund, gratuity and pension were cited as illustrations of non-deductible benefits because they arise from independent rights and not as compensation for the accident.
The Court drew a clear distinction between statutory benefits and contractual benefits. It explained that a statutory benefit flows from legislation and becomes available upon fulfilment of statutory conditions, whereas a contractual benefit flows from a private agreement and is enforceable because the parties have consented to its terms. On this basis, the Court treated Mediclaim as a contractual entitlement purchased by a person through payment of premiums to prepare for medical contingencies and not as a benefit arising solely because of the motor accident.
The Court reiterated that amounts lacking correlation with the accidental death or injury, or amounts receivable independently of the accident, cannot be deducted from compensation under the Motor Vehicles Act. It further observed that if Mediclaim reimbursement were to be deducted from MACT compensation, it would denude the claimant of the benefit of premiums paid from his or her own resources, confer an undue advantage upon the Mediclaim insurer who collected premiums, and equally grant an unjust benefit to the insurer of the offending vehicle by reducing its liability because of the claimant’s prudence in obtaining insurance.
The Court also emphasized that the two regimes operate on different yardsticks: Mediclaim is limited by the policy amount, whereas compensation under the Motor Vehicles Act is guided by the beneficial principle of just and fair compensation without such strict monetary limits.
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Once complainant enters witness box and give substantive evidence regarding transaction and the mode of execution of cheque, and that version was not shaken in cross-examination, then complainant has discharged his initial burden and presumptions under Sections 118 and 139 of the NI Act become available to the complainant
The Kerala High Court in the case of Wilfred Jose vs Jayapal [CRL.A No. 1964 of 2008] dated May 18, 2026, has held that in a prosecution under Section 138 of the Negotiable Instruments Act, the complainant discharges the initial burden when he enters the witness box and gives substantive evidence regarding the transaction and the execution of the cheque, including that the accused brought, wrote, signed and executed the cheque, and such evidence remains unshaken in cross-examination. Once that initial burden is discharged, the presumptions under Sections 118 and 139 of the NI Act become available to the complainant, and the court cannot reject the complainant’s version on conjecture.
If the court has accepted that the accused himself wrote and signed the cheque, it cannot, in the absence of supporting material, hold that the transaction was otherwise than as spoken to by the complainant. The burden then shifts to the accused to rebut the presumptions either from the materials on record or by adducing independent evidence, added the Court.
The Court noted that once the complainant had entered the witness box and given substantive evidence regarding the transaction and the mode of execution of the cheque, and that version had not been shaken in cross-examination, the complainant had discharged his initial burden. The Court further noted that the accused had contended that cheque had reached the complainant through one Radhakrishnan, but the accused did not adduce any evidence in support of that case and did not examine Radhakrishnan.
The Court held that, after finding that the accused himself wrote and signed the cheque, the Magistrate could not, without supporting material, conclude that the underlying transaction was otherwise than as stated by the complainant.
Accordingly, the Court set aside the acquittal, convicted the accused under Section 138 of the NI Act, and sentenced him to simple imprisonment for one day till rising of the Court and payment of fine of Rs. 4.50 lakhs, of which Rs. 4.25 lakhs were directed to be paid to the complainant as compensation under Section 357(1)(b) CrPC, with default imprisonment of six months. The accused was directed to surrender before the Magistrate on May 29, 2026.
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Appeal filed without certified copy of the impugned order, and without even application for exemption from filing such certified copy, is not a merely defective appeal, but wholly incompetent appeal that does not satisfy the essential requirements under the Code and the NCLAT Rules
The Supreme Court in the case of Angelwoods Apartment Allottees Association vs M Lalitha [Civil Appeal Nos. 14439-14440 of 2025] dated May 12, 2026, has held that an appeal filed without a certified copy of the impugned order, and without even an application for exemption from filing such certified copy, is not a merely defective appeal capable of being cured, rather it is a wholly incompetent appeal that does not satisfy the essential requirements under the Code and the NCLAT Rules.
The Court reaffirmed, that Rule 22(2) of the NCLAT Rules mandatorily requires every appeal to be accompanied by a certified copy of the impugned order, and that parties cannot automatically dispense with this obligation. The Court emphasised that the act of applying for a certified copy before the expiry of the limitation period is not merely a technical requirement but is an indicator of the diligence of the party in pursuing litigation in a timely manner.
The Court further held that the NCLAT, while considering applications for condonation of delay, was obligated to first ascertain whether the appeal had been instituted in accordance with the prescribed norms before extending any indulgence to the appellant. Having failed to undertake this exercise, the NCLAT’s order condoning the delay was set aside. The filing and refiling of the appeal were held to be incurably tainted, and the appeal ought to have been rejected at the threshold.
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If proprietor proves extensive and continuous use of mark over a long period, substantial sales and promotional expenditure, wide geographical presence, and broad public recognition in the relevant trade and consumer segment, such may be declared a well-known trademark within the meaning of Section 2(1)(zg) of the Act
The Delhi High Court in the case of Glaxosmithkline Pharmaceuticals vs Walter Healthcare [CS(COMM) 403/2025] dated May 15, 2026, has held that where the proprietor of a trademark proves, by cogent documentary material, extensive and continuous use of the mark over a long period, substantial sales and promotional expenditure, wide geographical presence, valid and subsisting registrations, broad public recognition in the relevant trade and consumer segment, and a consistent record of successful enforcement, the mark satisfies the criteria under Sections 11(6) and 11(7) of the Trade Marks Act, 1999 and may be declared a well-known trademark within the meaning of Section 2(1)(zg) of the Act. Accordingly, the Court declared “CALPOL” to be a well-known trademark for medicinal and pharmaceutical products under Section 2(1)(zg) of the Trade Marks Act, 1999.
The Court noted that the plaintiff had placed material showing continuous, uninterrupted and extensive use of the CALPOL mark since 1991 in relation to tablets, syrups and oral drops containing paracetamol and related ingredients, supported by invoices and documentary evidence of use. The Court also took note of the plaintiff’s evidence that CALPOL products had been continuously and extensively marketed through advertisements, promotional campaigns, print and online coverage, and that search engine results generated numerous hits only for the plaintiff’s mark.
The Court observed that the plaintiff had demonstrated the duration, extent and geographical area of use of the mark in India, including sales through distributors, stockists and online pharmacies across the country, with invoices spanning the period from 1991 to April 2024. The Court also considered the plaintiff’s evidence of extensive promotion of the mark throughout India and found that the materials on record reflected increasing popularity and growth of the CALPOL brand.
The Court further observed that the plaintiff had valid and subsisting trademark registrations in Class 05, with the oldest registration dating back to July 13, 1965, and that these registrations reflected the use and recognition of the mark. It also took into account the plaintiff’s record of successful enforcement, including multiple ex parte injunctions and consent decrees against infringing parties in prior proceedings.
Upon examining the material on record, the Court formed the view that the trademark CALPOL had acquired extensive recognition and association within the relevant section of the public in the pharmaceutical and medicinal products industry over a long journey of more than 35 years commencing from 1991. It specifically noted the exponential increase in sales, with sales exceeding Rs. 300 crores in 2024 alone and pack units sold exceeding 20 crores, along with substantial investment in marketing and advertising, extensive coverage in popular publications, and visibility of the mark across pharmacies throughout India and on e-commerce platforms.
The Court finally observed that the plaintiff’s long-standing reputation and extensive, continuous and uninterrupted use of the mark CALPOL across India reflected its significant commercial presence and recognition and was testament to its distinctiveness in the field of medicinal and pharmaceutical products for adults and children. On that basis, the Court held that CALPOL satisfied the criteria and parameters under Sections 11(6) and 11(7) of the Trade Marks Act, 1999 for declaration as a well-known trademark.
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Where term loans are repayable through continuing instalment schedules, limitation for Section 7 proceedings is not exhausted merely because some earliest instalments may have become time-barred, and each subsequent unpaid instalment constitutes a default under Section 3(12) of the IBC
The Mumbai Bench of the National Company Law Tribunal (NCLT) in the case of Authum Investment & Infrastructure Limited vs RNA Lifestyle Pvt Ltd [RCP (IB)/31/MB/2024] dated May 15, 2026, has held that for admission of a petition under Section 7 of the IBC, the Adjudicating Authority is required only to ascertain the existence of a financial debt and the occurrence of default, and once these are established, technical objections as to Form 1 particulars, insufficiency of stamping, absence of Information Utility record, or pendency of parallel proceedings against related obligors do not defeat maintainability.
The Tribunal further held that where term loans are repayable through continuing instalment schedules, limitation for Section 7 proceedings is not exhausted merely because some earliest instalments may have become time-barred; and each subsequent unpaid instalment constitutes a default under Section 3(12), and defaults occurring within three years prior to filing are sufficient to sustain the petition.
It was also held that multiple loan facilities granted by the same creditor to the same corporate debtor as part of a common financing relationship may be pursued in one consolidated Section 7 application, and simultaneous proceedings against co-borrowers, guarantors, or sister concerns do not bar such petition until the underlying debt is fully satisfied.
The Tribunal observed that the scope of inquiry under Section 7 is limited to examining whether there exists a financial debt and whether default has occurred. It further observed that at the admission stage the Adjudicating Authority is not required to examine broader disputes, the commercial viability of the Corporate Debtor, or its alleged solvency; nor can technical objections be permitted to defeat the statutory remedy once debt and default are established.
On limitation, the Tribunal rejected the Corporate Debtor’s argument that limitation began almost immediately after disbursement. It observed that the facilities were structured term loans with defined repayment tenures and periodic instalment obligations extending well beyond the dates of disbursement. Since the petition was filed on May 29, 2019 and the repayment schedules continued till November 2019, July 2022, and March 2023 respectively, the debt was intended to be serviced during the contractual tenure.
The Tribunal also rejected the objection that the petition was incomplete for failure to state the date of default. It found that the petition and annexures clearly disclosed the dates of default for each loan facility and held that the requirement under Form 1 is to disclose sufficient particulars to establish default. It therefore treated the alleged defect, at best, as a minor procedural irregularity that could not frustrate insolvency proceedings once debt and default were otherwise shown.
On the issue of clubbing multiple loans in one petition, the Tribunal held that all three facilities arose out of a common financial relationship between the same parties and formed components of the same overall financing arrangement. Merely because there were separate sanction letters, separate loan agreements, or different dates of default did not require separate Section 7 proceedings. The Tribunal held that once a composite financial relationship and default are established, a consolidated petition is maintainable.
As regards parallel proceedings against sister concerns, the Tribunal held that such proceedings do not bar a Section 7 petition against the present Corporate Debtor so long as the debt remains unpaid. It observed that simultaneous recourse against different obligors in respect of the same debt is legally permissible, subject to the principle that the creditor cannot recover more than what is due.
The Tribunal further held that the objection relating to insufficient stamping of the loan agreements under the Maharashtra Stamp Act did not affect maintainability of a Section 7 petition. It observed that insolvency proceedings are summary in nature and that existence of debt and default could in any case be established from other material on record, including sanction letters, statements of account, loan documentation, and assignment agreements. Similarly, absence of an Information Utility record or Banker’s Book certificate was not fatal because proof of default is not confined to those forms alone.
A SARFAESI notice or a recovery certificate cannot, in the absence of a clear contractual stipulation or specific demand made upon the guarantor under the guarantee deed, be treated as invocation of the personal guarantee
The Jaipur Bench of the National Company Law Tribunal (NCLT) in the case of Bank of Baroda vs Amit Prakash Gupta [IA (IBC) No. 20/JPR/2026] dated May 18, 2026, has held that for initiation and admission of proceedings against a personal guarantor under Section 95 of the Insolvency and Bankruptcy Code, 2016, invocation of the guarantee in accordance with the contract of guarantee is a mandatory precondition under Rule 3(1)(e) of the relevant Rules, and such invocation must precede the Rule 7 demand notice as well as the filing of the Section 95 application.
The NCLT clarified that a Rule 7 of the Personal Guarantor Rules notice cannot itself amount to invocation, because it proceeds on the basis that default has already occurred. Similarly, a SARFAESI notice or a recovery certificate cannot, in the absence of a clear contractual stipulation or specific demand made upon the guarantor under the guarantee deed, be treated as invocation of the personal guarantee. Where no such prior invocation is pleaded and proved, no default arises qua the personal guarantor and the Section 95 application is not maintainable.
The Tribunal observed that the statutory framework under Part III of the Code makes invocation of guarantee a fundamental requirement because Rule 3(1)(e) requires that the guarantee must have been invoked and remain unpaid. Finding that the financial creditor had not disclosed in its pleadings any specific act of invocation, the Tribunal rejected the argument that the recovery certificate could amount to invocation, observing that a recovery certificate is the result of adjudication or consent before a recovery forum, whereas invocation is a contractual act by which the creditor calls upon the guarantor to perform his obligation under the contract of guarantee.
The Tribunal further noted that the Bank had shown no clause in the guarantee deed under which issuance of a recovery certificate would automatically operate as invocation, and had produced no specific communication addressed to the respondent after the recovery certificate demanding payment under the guarantee.
The Tribunal also held that the SARFAESI notice could not constitute invocation of the personal guarantee. It observed that the financial creditor had not pleaded in the Section 95 application that the guarantee was invoked through that notice; that a notice under Section 13(2) of the SARFAESI Act serves the purpose of enforcement of security interest against secured assets; and that invocation of a personal guarantee is conceptually and legally distinct from enforcement proceedings under SARFAESI.
The Tribunal further held that the Rule 7(1) demand notice could not be treated as invocation of guarantee because the scheme of the Code and the 2019 Rules treats invocation as a prior substantive contractual act and the Rule 7 notice as a later procedural step issued on the premise that default has already occurred. It explained that a valid invocation of a personal guarantee requires a clear and unambiguous demand upon the guarantor in terms of the guarantee deed, identifying the debt, calling upon him to pay the guaranteed amount or relevant portion, and indicating that upon failure the creditor would enforce the guarantee. On that reasoning, the Tribunal found that proceedings or instruments such as recovery certificates or SARFAESI notices may evidence liability or enforcement steps, but cannot substitute for invocation unless there is a clear contractual demand upon the guarantor.
On the RP’s report, the Tribunal accepted that delay in filing the report under Section 99 was not fatal, but held that the report still failed on the central issue because it confused existence of debt against the corporate debtor with default by the personal guarantor. The Tribunal recorded that the RP did not identify the precise document by which the guarantee was invoked and could not fill lacunae in the petition or construct a case of invocation on a basis different from what the financial creditor had pleaded.
Accordingly, the Tribunal concluded that the financial creditor had failed to establish invocation of the personal guarantee in accordance with law before initiation of the Section 95 proceedings. It therefore held that no default could be said to have arisen qua the personal guarantor, rejected the company petition under Section 100, took the RP’s report on record but declined to accept the recommendation for admission, and declared that the interim moratorium under Section 96 stood ceased.
REGULATORY UPDATES
SEBI discontinued the Investor Risk Reduction Access (IRRA) platform with immediate effect as it was not accessed by any stock broker
The Securities and Exchange Board of India (SEBI) vide its Circular No. HO/38/44/12(3)2025-MIRSD-TPD1/I/10705/2026, dated May 07, 2026, has decided to discontinue the Investor Risk Reduction Access (IRRA) platform with immediate effect. Concurrently, Stock Exchanges have been directed to review the Contingency Pool Trading facility with a view to strengthening its framework. Stock Exchanges have also been advised to disseminate this circular to stock brokers. This circular expressly supersedes the earlier SEBI Circular no. SEBI/HO/MIRSD/MIRSD-PoD-1/P/CIR/2022/177 dated December 30, 2022, which had originally introduced the Investor Risk Reduction Access (IRRA) platform for stock brokers in India.
The platform was conceptualized as an alternative access point for trading, specifically designed to provide stock brokers with a fallback mechanism in the event of disruption of their primary trading services. The IRRA platform was operationalized with effect from October 01, 2023.
In the period following the introduction of the IRRA platform, SEBI introduced a series of technology-driven measures aimed at strengthening business continuity requirements for stock broker operations. These measures included the operationalization of Business Continuity Planning and Disaster Recovery (BCP-DR) requirements, an enhanced Cyber Security and Cyber Resilience framework, the implementation of a Security Operations Centre for the market (M-SoC), and a strengthened technical glitch framework. Concurrently, the trading operations of stock brokers witnessed significant technological advancements, which strengthened operational resilience by facilitating seamless transitions between primary and alternate sites during periods of disruption, as well as the emergence of independent cold sites for business continuity purposes.
In addition to the above measures, Stock Exchanges independently provide a Contingency Pool Trading facility for stock brokers. This facility is a mechanism that allows stock brokers to square off outstanding open positions for their clients during business disruptions. It operates via the exchange’s internal network within its physical premises, where broker-allocated dedicated terminals are seamlessly connected to the Stock Exchange trading platform. Notably, this facility has been utilized by brokers on several occasions over the past few years in instances of business disruptions, demonstrating its practical effectiveness as a contingency mechanism.
Given the above developments, Stock Exchanges informed SEBI that the IRRA platform had become structurally redundant. Critically, since its inception, the IRRA platform had not been accessed by any stock broker, a consequence of the robust regulatory measures, significant technological innovations in trading operations, and the ready availability of the Contingency Pool Trading facility. On this basis, Stock Exchanges unanimously recommended that the IRRA platform be discontinued.
Based on stakeholder feedback and the aforementioned factors, SEBI discontinued the Investor Risk Reduction Access (IRRA) platform. The circular has been issued in exercise of powers conferred under Section 11(1) of the Securities and Exchange Board of India Act, 1992, and Regulation 50 of the SEBI (Stock Brokers) Regulations, 2026, with the twin objectives of protecting the interests of investors in securities and promoting the development of and regulating the securities market.
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SEBI has decided to prescribe a uniform time lag of 30 days for both the sharing and usage of price data for educational purposes
The Securities and Exchange Board of India (SEBI) vide its Circular No. HO/47/17/12(11)2025-MRD-POD3/I/11107/2026 dated May 08, 2026, has addressed to all Recognized Stock Exchanges, Clearing Corporations, Depositories, all Registered Intermediaries, and BSE Limited (in its capacity as Administration and Supervisory Body for Investment Advisers and Research Analysts), that it has consolidated and modified the regulatory framework governing the sharing and usage of market price data for educational purposes, building upon two prior circulars issued in 2024 and 2025.
The regulatory framework on this subject has evolved through three distinct stages. First, SEBI Circular dated May 24, 2024 (No. SEBI/HO/MRD/MRD-PoD-3/P/CIR/2024/56) prescribed norms for sharing of real-time price data by Market Infrastructure Institutions (MIIs) — comprising Stock Exchanges, Clearing Corporations, and Depositories — and registered market intermediaries. Under this circular, real-time price data could only be shared for orderly market functioning or regulatory compliance, and a time lag of one day was prescribed for sharing data for educational and awareness activities.
Subsequently, SEBI Circular dated January 29, 2025 (No. SEBI/HO/MIRSD/MIRSD-PoD-1/P/CIR/2025/11) further tightened the framework by stipulating that entities solely engaged in education could use price data only with a lag of three months. SEBI clarified that the two circulars operated at different levels — the May 2024 circular governed the sharing of data (with a one-day lag), while the January 2025 circular governed the usage of that data by purely educational entities (with a three-month lag).
Thus, the present circular was necessitated by stakeholder feedback and public consultation. Stakeholders flagged that the one-day lag for sharing was too short and created a risk of misuse, while the three-month lag for usage was considered excessively long for meaningful educational purposes. Balancing these competing concerns, SEBI has now decided to prescribe a uniform time lag of 30 days for both the sharing and usage of price data for educational purposes.
Recognising the unique role of the National Institute of Securities Markets (NISM) as SEBI’s own capacity-building initiative — responsible for SEBI-mandated training, certification programmes, and training of SEBI officers and market intermediaries, SEBI has carved out a special exception for NISM, whereby NISM is permitted to access market price data with a lag of only one day, but strictly for the purpose of usage in its simulation lab. This exception is limited in scope and does not extend to general educational or advisory activities.
The circular formally modifies Paragraphs 2(iii) and 2(iv) of the May 24, 2024 Circular to reflect the 30-day lag for sharing of market price data for investor education and awareness activities, along with the one-day exception for NISM’s simulation lab. Importantly, MIIs and market intermediaries are required to enter into appropriate legal agreements with entities or persons with whom data is shared. These agreements must contain provisions to prevent misuse and ensure maintenance of an audit trail for usage of such data.
The circular also modifies Question No. 8 of the FAQ at Annexure-A of the January 29, 2025 Circular, which distinguishes between “education” and “advice/recommendation.” Under the revised FAQ, a person engaged solely in education must not use market price data of the preceding thirty days to speak, display, or reference the name of any security (including by code name) in any talk, speech, video, ticker, or screen share that indicates future price, advice, or recommendation relating to any security. The one-day exception for NISM’s simulation lab is preserved in this FAQ as well.
The provisions of this circular are applicable with effect from July 01, 2026. All MIIs are directed to: (i) take necessary steps and put in place systems for implementation; (ii) make necessary amendments to their bye-laws, rules, and regulations; and (iii) bring the provisions to the notice of market participants, including investors, and disseminate the same on their websites.
The circular has been issued in exercise of powers conferred under Section 11(1) of the SEBI Act, 1992, read with Regulation 51 of the Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2018, Section 26(3) of the Depositories Act, 1996, and Regulation 97 of the SEBI (Depositories and Participants) Regulations, 2018, with the overarching objective of protecting investor interests and promoting the development and regulation of the securities market.
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Holding of an infrastructure project or termination of a concession agreement shall not affect SPV’s status
The Securities and Exchange Board of India (SEBI) vide its Circular No. SEBI/HO/DDHS/DDHS-PoD-2/I/11698/2026, dated May 15, 2026, gives effect to an amendment made on April 17, 2026 to Regulation 2(1)(zy)(ii) of the Infrastructure Investment Trusts (InvIT) Regulations, which introduced a proviso clarifying that in respect of an SPV holding an infrastructure project, the conclusion or termination of a concession agreement, or any other agreement of a similar nature, shall not affect the SPV’s status as an SPV.
SEBI said that such an SPV shall continue to be classified as an SPV, subject to the fulfilment of conditions as may be specified by SEBI. This amendment provides regulatory certainty to InvITs holding SPVs whose underlying concession agreements have expired or been terminated, ensuring that such SPVs are not automatically disqualified from the InvIT structure.
The Circular imposes a time-bound obligation on the Investment Manager to either exit its investment in such an SPV (by way of sale, liquidation, winding-up, or merger) or acquire a new infrastructure project within that SPV, within one year from the latest of the following events: (i) completion or termination of the concession agreement or similar agreement; (ii) conclusion of all pending claims, litigations, tax assessments, and related appeals; or (iii) completion of the defect liability period. Importantly, any time taken to obtain relevant statutory or regulatory approvals for exiting the investment shall be excluded from the computation of the one-year timeline, providing a practical carve-out for regulatory delays.
Until the InvIT exits its investment in such an SPV, the circular mandates comprehensive disclosures in the InvIT’s annual report, operating at two levels. At the InvIT level, the Investment Manager must disclose a detailed breakup of the value of investments, on both a gross and net basis, in SPVs where the concession agreement or similar agreement has ended or been terminated. At the SPV level, additional disclosures are required for each such SPV, covering: (i) brief project details and the date of termination/conclusion of the agreement, along with the status of any vesting certificate or similar document issued by the concessioning authority upon handover; (ii) assets and liabilities of the SPV, including specific reserves, on a broad/grouped basis as per the annual audited financial statements; (iii) details of contingent liabilities as set out in the audited financial statements; and (iv) details of outstanding debt, if any, along with the repayment schedule.
Beyond financial disclosures, the circular also requires the Investment Manager to disclose whether the SPV has sufficient assets to meet its liabilities, including contingent liabilities, and if not, how such liabilities are planned to be met. Additionally, a clear exit strategy and timeline must be disclosed, detailing how and when the InvIT intends to exit its investment in the SPV or acquire a new infrastructure project, along with steps taken so far and the expected timeline for completion. Finally, any other material details relating to the SPV, including pending claims, litigations, assessments, statutory or contractual obligations, and the balance period of the defect liability period, must also be disclosed.
The circular has been addressed to all Infrastructure Investment Trusts (InvITs), all parties to InvITs, all Depositories, and all Recognized Stock Exchanges. The circular was issued in exercise of powers conferred under Section 11(1) of the Securities and Exchange Board of India Act, 1992, read with Regulation 33 and Regulation 2(1)(zy)(ii) of the SEBI (Infrastructure Investment Trusts) Regulations, 2014 (InvIT Regulations). The circular came into force with immediate effect upon issuance.
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RBI tightens NBFC recovery governance and proposes Amendment Directions, 2026 to shift primary accountability from Recovery-Agent Oversight to End-to-End NBFC
The Draft Reserve Bank of India (Non-Banking Financial Companies – Responsible Business Conduct) Amendment Directions, 2026 proposes a standalone and more comprehensive framework governing recovery of loan dues and engagement of recovery agencies by NBFCs. The amendment directions is stated to have been issued in exercise of the RBI’s powers under Sections 45JA, 45L and 45M of the Reserve Bank of India Act, 1934.
The central effect of the draft amendment is that recovery conduct is no longer treated merely as a third-party agent issue, but as an NBFC governance, outsourcing, customer protection, disclosure, monitoring and grievance redressal issue. The proposed framework places primary responsibility on the NBFC to design policy architecture, control outsourced conduct, regulate customer contact practices, preserve evidence of recovery interactions, structure lawful possession processes, and prevent abusive or coercive recovery behaviour, while also introducing a narrowly tailored but highly regulated regime for device-disablement tools in financed-device loans.
As a structural matter, the amendment inserts the definitions of “Recovery agency” and “Recovery agent” into paragraph 6 of the Reserve Bank of India (Non-Banking Financial Companies – Responsible Business Conduct) Directions, 2025. “Recovery agency” is defined broadly to mean any entity or individual, other than the NBFC’s own employees, engaged by an NBFC under an outsourcing arrangement to assist in recovery of loan dues from a borrower in default, including taking possession of security. Further, “Recovery agent” is defined as a representative of a recovery agency involved in recovery-related activities at the point of customer interface. The explanation makes clear that where an individual is directly engaged by an NBFC under an outsourcing arrangement for recovery or possession-related activities, the instructions applicable to both recovery agencies and recovery agents will apply to that individual.
In place of the earlier framework on “Responsibilities of Recovery Agents of the NBFC”, the amendment inserts a new Section J titled “Conduct of NBFCs in Recovery of Loan Dues and Engagement of Recovery Agencies”, and shifted the regulatory focus from only recovery agents to the broader conduct obligations of NBFCs themselves, their employees, and outsourced recovery agencies.
Under paragraph 100A, the new Section J applies to recovery of loan dues by an NBFC from borrowers in default, including taking possession of security. The proviso clarifies that wherever expressly specified, the provisions will also apply mutatis mutandis to collection of dues in the normal course from borrowers who are not in default. Paragraph 100B further states that these provisions operate without prejudice to any statutory rights available to an NBFC, and without prejudice to obligations relating to enforcement of security under any statute, as well as other Directions dealing with specific recovery actions such as one-time settlement. Paragraph 100C clarifies that for purposes of this section, “NBFC employees” includes employees deployed for recovery of loan dues, including taking possession of security.
The Directions require every NBFC to put in place a policy on collection and recovery of loan dues, including taking possession of security, whether carried out by its own employees or recovery agents. Under paragraph 100D, the policy is expected to cover trigger points for initiation of recovery, graded recovery actions through an escalation matrix, code of conduct for employees and recovery agents, and recovery of dues in cases involving death of a borrower. In relation to engagement of recovery agencies, the policy must also address eligibility and due diligence criteria, performance evaluation standards, inspection or audit mechanisms, controls for compliance with statutory and regulatory requirements, and procedures or penal actions in case of non-compliant agencies or agents. The policy must also incorporate provisions relating to compensation payable to borrowers or guarantors for loss arising from recovery-related actions of the NBFC or recovery agencies that are not consistent with the Directions.
In relation to outsourcing and onboarding of recovery agencies, paragraph 100E requires the NBFC’s due diligence process to conform to the RBI’s Reserve Bank of India (Non-Banking Financial Companies – Managing Risks in Outsourcing) Directions, 2025, as amended from time to time. The NBFC must also ensure that engaged recovery agencies verify the antecedents of their recovery agents at the pre-engagement stage and thereafter on an ongoing basis at a pre-defined periodicity specified in the NBFC’s policy. Paragraph 100F adds a mandatory training requirement by requiring NBFCs to ensure that only those recovery agents are engaged who have obtained certification from the Indian Institute of Banking and Finance after completing the prescribed training programme for Debt Recovery Agents, or from another institute having a tie-up arrangement with IIBF. Recovery agents already engaged but lacking such certificate must obtain it within one year from the issuance of the Directions.
Paragraph 100G obliges the NBFC to frame a code of conduct for both recovery agents and its own employees based on the instructions contained in the Directions. Where a recovery agency is engaged, the NBFC must obtain an undertaking from that agency confirming that its recovery agents agree to comply with the code of conduct. This makes the NBFC directly responsible not only for prescribing behavioural standards but also for obtaining contractual confirmation of compliance from outsourced agencies.
The disclosure obligations imposed on NBFCs are extensive. Under paragraph 100H, the NBFC must make available an up-to-date list of recovery agencies empanelled with or engaged by it across all prominent customer-facing channels, including branches, offices, websites and mobile applications, as applicable. The list must include key particulars such as the name of the agency, whether it is corporate or individual, correspondence address, period of engagement, purpose of engagement, and assigned geographical areas. The list must be updated within seven calendar days of any modification, but where the agency’s engagement is terminated, the update must be immediate. Paragraph 100I further requires that before a case is forwarded to a recovery agency for recovery through an in-person visit, the borrower or guarantor must be notified of the agency’s details at least one day before the first visit through message or email on the registered contact details, or, where such contact details are unavailable, by letter to the current address at least three days before the visit. Paragraphs 100J and 100K require immediate notification to the borrower or guarantor if the recovery agency is changed during an ongoing process or if the agreement with the agency is terminated.
The Directions also impose customer protection measures during the recovery process. Paragraph 100L requires the NBFC to ensure that disclosure of borrower or guarantor information to employees or recovery agencies is limited strictly to what is necessary for recovery duties, and to put in place safeguards, including penal provisions, to prevent misuse of customer information. Paragraph 100M states that if a grievance relating to loan dues or recovery has been lodged by a borrower, the NBFC must not forward the concerned recovery case to an employee or recovery agency until the grievance is finally disposed of. Paragraph 100N requires the NBFC to document the time and number of calls made by its employees or recovery agents to the borrower or guarantor and to maintain recordings of the content or text of such calls, as well as calls made by the borrower or guarantor to the number conveyed by the NBFC. These records must be preserved for six months from the date of the call, or until disposal where matters are sub judice. The NBFC must also take reasonable precautions, including informing the borrower or guarantor that the conversation is being recorded. Paragraph 100O further prohibits recovery targets or incentive structures in the recovery agency contract that may induce harsh recovery practices described in paragraph 100X.
For cases involving possession of security, paragraph 100P provides that where an NBFC incorporates a possession clause in the loan contract or agreement and relies on that clause to enforce its rights, it must ensure both that the clause is legally valid and that it is clearly brought to the borrower’s notice at the time of execution. The loan contract or agreement must accordingly include provisions on notice period before taking possession, circumstances in which the notice period can be waived, procedure for taking possession, final opportunity for repayment before sale or auction of the security, procedure for returning possession to the borrower, and procedure for sale or auction of the security. This effectively requires ex ante contractual clarity on the entire possession and enforcement process.
The Directions introduce a specific regime for technology-based recovery tools affecting financed mobile devices. Paragraph 100Q prohibits an NBFC from using any technology-based mechanism that restricts or disables the functions of a borrower’s mobile phone, tablet or similar device as a recovery tool, except where the loan financed acquisition of that device. Even in such cases, this mechanism may be used only if the loan contract expressly and unambiguously allows it and sets out the triggering events, notice process, graduated restriction approach, cure period and grievance redressal mechanism. In addition, a first notice can only be issued after the loan becomes 60 days past due, giving the borrower at least 21 days to cure the default, followed by a second notice after expiry of the first notice period giving at least another 7 days. The explanation makes clear that restriction or disablement cannot be deployed until the loan has become 90 days past due and the borrower has failed to cure the default despite both notices.
Paragraph 100R sets out detailed safeguards for any such device-restriction mechanism. The NBFC must adopt a graduated approach rather than disabling the device ab initio, and cannot disable essential functions such as internet access, incoming calls, emergency SOS features, or receipt of emergency government or public-safety notifications. Restrictions must be reversed expeditiously and in any case within one hour of cure of default. If there is wrongful restriction or delay in reversal after cure, the lender must compensate the borrower at the rate of ₹250 per hour until the wrongful action is remedied. The mechanism must be uninstalled soon after the loan is fully repaid, the borrower must retain the right to prepay the loan at any stage, and the NBFC must maintain a robust grievance redressal mechanism for issues relating to unlocking. Paragraph 100S separately imposes an absolute prohibition on the NBFC accessing, using, obtaining or retaining any data stored in the borrower’s mobile device for loan recovery or any other purpose.
On governance and oversight, paragraph 100T requires an NBFC to establish a management structure to monitor and control the activities of recovery agencies and to ensure that they do not engage in conduct that could damage the NBFC’s integrity and reputation. The NBFC must ensure that its agreement with each recovery agency contains necessary provisions to support this control framework. Paragraph 100U further requires a periodic review of the recovery mechanism so that lessons from experience are incorporated and improvements are made over time.
The operational conduct requirements applicable to NBFC employees and recovery agents are also set out in detail. Under paragraph 100V, during any visit for collection, recovery or taking possession of security, the employee or recovery agent must identify themselves through identity cards issued by the NBFC and the recovery agency respectively. The recovery agent must also carry an authorisation letter issued by the NBFC or recovery agency and a copy of the notice issued under paragraph 100I. The authorisation letter and notice must include, among other things, the telephone number of the recovery agency and the grievance redressal officer appointed by the NBFC under paragraph 100Y.
Paragraph 100W prescribes standards of conduct during borrower interaction. Recovery-related discussions may be held only with the borrower or guarantor, as applicable. The employee or recovery agent must behave in a civil manner and maintain decency and decorum during visits. Only authorised representatives may visit borrower or guarantor premises. Contact or visits may ordinarily take place only between 08:00 hours and 19:00 hours, unless the borrower or guarantor expressly requests or authorises otherwise, and requests to avoid contact at a particular time should ordinarily be respected. Contact should generally occur at the place chosen by the borrower or guarantor; only if no specific choice is made, or if the borrower or guarantor fails to appear at the chosen place on two or more successive occasions, may contact be made at residence or place of business or occupation. The Directions also require agents to avoid calls or visits on inappropriate occasions such as bereavement, calamitous events or marriage functions. For microfinance loans, collection or recovery must generally take place at a mutually decided designated or central designated place, though field staff may collect at residence or workplace if the borrower fails to appear at the designated place on two or more successive occasions. Any written communication must have prior approval of the NBFC and include the sender’s name and contact details, and proper acknowledgement or receipt must be promptly given for dues collected or recovered.
Paragraph 100X prohibits harsh recovery methods and gives an illustrative list of practices deemed harsh. These include use of minatory or abusive language; posting video, audio or personal details of the borrower or guarantor on social media; sending inappropriate mobile or social media messages; excessive calling or messaging, including outside prescribed hours; threatening or anonymous calls; intimidation or harassment of the borrower, guarantor, or their relatives, referees, friends or co-workers; use or threat of violence or other means to harm family, assets or reputation; and making false or misleading representations, particularly regarding the extent of debt or the consequences of non-payment. The provision is framed broadly so that the listed practices are deemed harsh without limiting the wider prohibition on harsh recovery methods generally.
For grievance handling, paragraph 100Y requires every NBFC to maintain a dedicated mechanism for redressal of recovery-related grievances. The details of this mechanism must be provided to the borrower both in the loan agreement and when the NBFC communicates the details of the recovery agency under paragraph 100I. In addition, all recovery-related communications issued by the NBFC must include the name, email address, telephone number and address of the relevant grievance redressal officer whom the borrower or guarantor may contact.
Finally, paragraph 100Z clarifies that compliance with this new recovery framework is in addition to compliance with other applicable RBI guidelines and guidelines issued by other authorities from time to time. The Directions specifically refer to the Telecom Regulatory Authority of India’s Telecom Commercial Communications Customer Preference Regulations, 2018, as amended, in relation to commercial communications aspects. This indicates that NBFCs must treat the new framework as supplemental and not exhaustive of all legal and regulatory obligations relevant to recovery conduct.
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