Legal Updates (Aug 24 – Aug 29, 2026)
CASE UPDATES
Suit for disparagement simpliciter does not constitute a “commercial dispute” within the meaning of Section 2(1)(c)(xvii) of the Commercial Courts Act, 2015, even if stray references are made in the plaint to trademarks, copyrights, or design registrations
The Calcutta High Court in the case of Sun Pharmaceutical Industries vs Emami [F.M.A.T. No. 56 of 2026] dated August 17, 2026, has held that a suit for disparagement simpliciter does not constitute a “commercial dispute” within the meaning of Section 2(1)(c)(xvii) of the Commercial Courts Act, 2015, even if stray references are made in the plaint to trademarks, copyrights, or design registrations. The items enumerated under Section 2(1)(c) of the CC Act are exhaustive, and a narrow interpretation is to be lent to the provisions of the Act in light of its object of providing speedy remedy. Disparagement and infringement or passing off stand on diametrically opposite poles, since the former denigrates a product while the latter acknowledges its worth through emulation.
For Section 29(8) of the Trade Marks Act to apply, the registered trademark itself must feature in the offending advertisement, which was absent in the present case. A generic term like “Balm” cannot be presumed to be exclusively linked to a particular manufacturer merely on the basis of market leadership, and in the absence of any direct correlation between the container depicted in the advertisement and the plaintiff’s product, no recall value can be deduced. The plaintiff must plead and prove generic disparagement as a distinct cause of action to succeed on that ground, and mere market share does not substitute for such pleading.
The Court observed that the items enumerated under Section 2(1)(c) of the CC Act are exhaustive in defining a commercial dispute, drawing support from Bharat Coop. Bank, Everstrong Sales, and Ambalal Sarabhai Enterprises. The Court noted that while the phrases “arising out of” and “relating to” in Clause (xvii) lend a wider perspective, the cause of action and reliefs in the plaint must still be relatable to intellectual property rights.
The Court drew a fundamental distinction between disparagement, which is the denigration of a product or brand, and infringement or passing off, which acknowledges the worth of the trademark by seeking to emulate it, holding that the two stand on diametrically opposite poles. The Court observed that the plaint did not allege infringement of trademark or copyright as the immediate trigger of the suit, and that Paragraph 56 of the plaint itself sought leave under Order II Rule 2 of the CPC to sue separately for infringement, passing off, and design violations, drawing a clear line of distinction.
The Court further observed that Section 29(8) of the Trade Marks Act was not attracted because the offending commercial did not refer to, show, or allude to any trademark or copyright of Emami, but merely referred to balms in general. On the second issue, the Court observed that the plaint did not plead generic disparagement but only direct disparagement of Emami’s products, and that the offending advertisement did not carry Emami’s brand name or any unique shape, design, or colour relatable to Emami’s design registrations.
The Court held that the expression “Balm” is a generic term referring to the consistency and texture of a product rather than a particular species of products, and that mere market share of 57% did not make the term “Balm” inextricably and exclusively linked with Emami’s products. Accordingly, the Court allowed Sun Pharma’s appeal and set aside the ad interim injunction that had restrained it from airing the impugned video and making any statements regarding Emami’s “Zandu Balm”, “Mentho Plus Balm” and “Zandu Ultra Power Balm” products. The Court held that a suit for disparagement simpliciter is not a “commercial dispute” under the Commercial Courts Act and that mere market leadership cannot convert a generic term like “Balm” into a brand-specific reference.
A demand notice issued in Form B under Rule 7(1) of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Bankruptcy Process for Personal Guarantors to Corporate Debtors) Rules, 2019 is a statutory requirement and cannot be treated as an invocation of the personal guarantee
The New Delhi Bench of the National Company Law Tribunal (NCLT) in the case of Canara Bank vs Karan A Chanana [I.A No. 4796 of 2022] dated August 12, 2026, has held that a Form B notice under Rule 7(1) of the PG Rules is a statutory prerequisite and not an invocation of the guarantee itself. The NCLT held that the invocation of a guarantee is governed by the terms of the Deed of Guarantee, and in the present case, the Guarantee Deed dated Aug 28, 2015 expressly provided that the guarantee shall be invoked upon a demand being made by the Applicant Bank.
The NCLT also reiterated the settled legal position that a demand notice issued in Form B under Rule 7(1) of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Bankruptcy Process for Personal Guarantors to Corporate Debtors) Rules, 2019 is a statutory requirement and cannot be treated as an invocation of the personal guarantee.
The Bench noted that it is settled law that the cause of action under a Section 95 petition arises on invocation of the guarantee, pursuant to which the Personal Guarantor becomes a debtor, and the invocation of a guarantee is governed by the terms of the Deed of Guarantee itself. In the present case, the Guarantee Deed dated Aug 28, 2015 expressly provides that the guarantee shall be invoked upon a demand being made by the Applicant Bank.
The Tribunal further noted that the first communication for recalling the amount of debt from the Personal Guarantor was by way of a statutory demand notice in Form B, and nothing was placed on record to show that there was any invocation of the guarantee or recall of the amount prior to Feb 19, 2022. The Tribunal also noted that the core question that arose for determination was whether the demand notice issued under Rule 7(1) of the PG Rules, 2019 constitutes a valid invocation of the Guarantee, and whether default on the part of the Personal Guarantor should exist prior to the issuance of the demand notice under Rule 7(1).
Applying this settled position of law, the NCLT observed that the demand notice issued under Rule 7(1) in Form B is a statutory requirement and cannot be construed as an invocation of the guarantee.
Provisional attachment by the Enforcement Directorate under the PMLA did not extinguish the Financial Debt or the occurrence of default, although it might have implications during the CIRP
The Ahmedabad Bench of the National Company Law Tribunal (NCLT) in the case of CFM Asset Reconstruction Private Limited vs Capbridge Venture LLP [C.P.(IB)/225(AHM)2026] dated July 30, 2026, has held that the remedies under the SARFAESI Act and the IBC operate in different fields, and that the provisional attachment of the secured asset by the Directorate of Enforcement under the PMLA does not extinguish the Financial Debt or the occurrence of default, although it may have implications during the CIRP.
The Tribunal applied the well-settled principle that once the Adjudicating Authority is satisfied regarding the existence of a Financial Debt and the occurrence of default, the petition under Section 7 deserves admission. The Bench referred to judgments of Supreme Court in Innoventive Industries Ltd. v. ICICI Bank [(2018) 1 SCC 407], to hold that the statutory requirements of Section 7 stood fully established in the present case. The decision in Vidarbha Industries Power Ltd. v. Axis Bank [(2022) 8 SCC 352], which was relied upon by the Respondent, was distinguished on facts, with the Bench holding that it did not assist the Respondent because the Financial Debt and the default stood duly established by the loan documents, Statements of Account, and the Information Utility record.
The Tribunal reaffirmed that a corporate person who owes a debt falls within the definition of a Corporate Debtor under Section 3(8) of the Code, and that the liability of a co-borrower is sufficient to invoke Section 7. The Bench also reiterated that the IBC is not a recovery mechanism, and the existence of alternative remedies does not bar the maintainability of a Section 7 petition once the statutory ingredients are satisfied. The Tribunal observed that the loan documents clearly disclosed the Respondent as a borrower owing liability under the loan transactions.
The Tribunal further observed that the Applicant derived its rights under the Deed of Assignment dated 31 March 2026, which had been duly communicated to the Respondent, and that the remedies under the SARFAESI Act and the Insolvency and Bankruptcy Code operate in different fields, with the initiation of statutory recovery measures not precluding proceedings under Section 7. The Bench also held that the provisional attachment by the Enforcement Directorate under the PMLA did not extinguish the Financial Debt or the occurrence of default, although it might have implications during the CIRP.
Insolvency and Bankruptcy Code (Amendment) Act, 2026, which inserted sub-section (4) to Section 96 with effect from May 26, 2026, is “retroactive” in nature and not merely prospective, and therefore applies to applications that were filed prior to the cut-off date but remain pending adjudication
The Delhi High Court in the case of IDBI Trusteeship Services vs Manish Jain [CS(COMM) 800/2025] dated August 19, 2026, has held that the newly inserted sub-section (4) to Section 96 of the IBC is “retroactive” in nature and applies to applications filed prior to May 26, 2026 which remain pending adjudication, thereby vacating the interim moratorium that had accrued in favour of personal guarantors to corporate debtors. The High Court clarified that where an amendment to a statute is intended to rectify a mischief or curb abuse that has crept into the working of the enactment, and the amendment does not expressly state its temporal operation, the doctrine of quasi-retroactivity applies. Such an amendment operates in futuro but is anchored to a character, status, or event that arose earlier, and consequently applies to all pending proceedings where the relevant facts continue to subsist.
The Court applied the doctrine of “quasi-retroactivity” as expounded by the Supreme Court in Vineeta Sharma [(2020) 9 SCC 1], State Bank’s Staff Union vs. Union of India [(2005) 7 SCC 584], and SEBI vs. Rajkumar Nagpal [(2023) 8 SCC 274], holding that the expression “an application is filed” in sub-section (4) of Section 96 must be read to include applications filed and pending as on May 26, 2026.
The Court placed heavy reliance on the Report of the Select Committee on the Insolvency and Bankruptcy Code (Amendment) Bill, 2025, which expressly recorded that the amendment was aimed at curbing the rampant misuse of the interim moratorium by personal guarantors to obstruct legitimate recovery proceedings, a loophole flagged by NCLT members as being responsible for significant value erosion.
Applying this principle, the Court held that the interim moratorium under Section 96 of the IBC, which had accrued in favour of a personal guarantor to a corporate debtor upon filing of a Section 95 application prior to May 26, 2026, stood vacated by the retroactive operation of sub-section (4) inserted by the Amending Act, 2026, and the suit against such personal guarantor was therefore maintainable. The Court thus rejected the application under Order VII Rule 11 of the CPC filed by the Personal Guarantor seeking rejection of the plaint on the ground of interim moratorium under Section 96 of the IBC.
Arbitrator has wide discretion under Section 31(7) of the Arbitration Act to award pre-reference, pendente lite, and post-award interest at such rate as it deems reasonable, and the rate of interest can be interfered with only if it is so perverse or unreasonable as to shock the conscience of the Court
The Delhi High Court in the case of India Tourism Development Corporation vs Bajaj Electricals [O.M.P. (COMM) 404/2019] dated August 17, 2026, has reaffirmed the well-settled legal position that under Section 34 of the Arbitration Act, the Court does not sit in appeal over an arbitral award and interference is permissible only on the limited grounds specified therein. A possible view taken by the Arbitrator on facts must be respected, and mere erroneous application of law or reappreciation of evidence is not a ground to set aside an award. Patent illegality must go to the root of the matter and shock the judicial conscience, and cannot be of a trivial nature.
The Court also held that the Arbitrator is the ultimate master of the quantity and quality of evidence to be relied upon, and where the findings of the Arbitrator are based on some evidence, even if it is a single witness’s testimony, the Court cannot regard the conclusion as patently illegal. The Court further held that the Arbitrator has wide discretion under Section 31(7) of the Arbitration Act to award pre-reference, pendente lite, and post-award interest at such rate as it deems reasonable, and the rate of interest can be interfered with only if it is so perverse or unreasonable as to shock the conscience of the Court.
Interim moratorium under Section 96 of the Insolvency and Bankruptcy Code, 2016 operates only qua the corporate debtor and cannot be invoked by directors or persons in-charge to stay criminal prosecutions launched against them under Section 138 read with Section 141 of the Negotiable Instruments Act, 1881
The Bombay High Court in the case of Jagmohan Garg vs National Spot Exchange [Application No. 1749 of 2024] dated August 18, 2026, has categorically held that the interim moratorium under Section 96 of the Insolvency and Bankruptcy Code, 2016 operates only qua the corporate debtor and cannot be invoked by directors or persons in-charge to stay criminal prosecutions launched against them under Section 138 read with Section 141 of the Negotiable Instruments Act, 1881.
The Court also clarified that where a cheque is drawn by a company on its own account towards discharge of a corporate liability, the underlying debt is that of the company. The vicarious liability fastened on directors under Section 141 of the NI Act does not transform the corporate debt into the personal debt of the director, and therefore the expression “in respect of any debt” in Section 96 of the IBC does not get attracted.
The Court reiterated that shareholders or directors of a company are not the owners of its property; the company has an independent juristic existence. When a corporate entity incurs a debt, the debt remains that of the corporate entity, and does not become the personal debt of its directors. Where a cheque is drawn by a company on its own account towards discharge of such debt, the debt or liability is primarily that of the company. Directors are prosecuted by invoking the deeming provisions of Section 141 of the NI Act, but this does not alter the character of the underlying debt.
The Court applied the binding precedent in P. Mohanraj vs M/s Shah Brothers Ispat Pvt Ltd [(2021) 6 SCC 258], where the three-Judge Bench had held that the moratorium provision contained in Section 14 of the IBC applies only to the corporate debtor, and that natural persons mentioned in Section 141 of the NI Act continue to be statutorily liable. The Court noted that Section 141 enables prosecution of persons in charge of the affairs of the company along with the company, and that the statutory liability against directors under Section 138 is personal and continues to bind natural persons, irrespective of any moratorium applicable to the corporate debtor.
Referring to a two-Judge Bench decision in Ajay Kumar Radheyshyam Goenka vs Tourism Finance Corporation of India Ltd. [(2023) 10 SCC 545], the Court observed that the scope and nature of proceedings under the IBC and the NI Act are quite different and do not intercede each other. The criminal liability and fines under Section 138 of the NI Act are built on the principle of not honouring a negotiable instrument, which affects trade. The extinguishment of debt consequent to the insolvency resolution process does not ipso facto result in extinguishment of criminal proceedings, and the termination of proceedings against the corporate entity does not result in automatic exoneration of the directors or responsible persons.
In essence, the Court held that the debt in question is that of the corporate entity, and the factors constituting an offence under Section 138 relate to the failure of the corporate entity to pay the amount covered by the cheque drawn by it. The applicants were arraigned by invoking Section 141 of the NI Act. In such circumstances, the initiation of the insolvency resolution process, either under Part II or Part III of the IBC, does not preclude the continuation of the prosecution for an offence under Section 138 of the NI Act.
The bar under the proviso to Section 43(5) of RERA 2016, mandating pre-deposit by the promoter, applies even at the stage of hearing the application for condonation of delay
The Bombay High Court in the case of Neumec Developers and Builders vs Chirag Jain [Second Appeal No. 315 of 2026] dated August 05, 2026, has held that an application for condonation of delay in filing an appeal does not have a distinct and separate existence apart from the appeal itself; rather, it constitutes a composite proceeding of appeal. Consequently, the bar under the proviso to Section 43(5) of RERA 2016, mandating pre-deposit by the promoter, applies even at the stage of hearing the application for condonation of delay.
The expression “before the said appeal is heard” in Section 43(5) encompasses the hearing of the condonation application, as the term “appeal” subsumes the condonation application within its fold. A promoter who belatedly invokes the jurisdiction of the Appellate Tribunal is bound by the same pre-deposit requirement as a promoter who files within the limitation period, applying the principle of a fortiori.
The Court examined the proviso to Section 43(5) of RERA 2016, which mandates that an appeal by a promoter shall not be entertained without the promoter first depositing at least thirty per cent of the penalty, or the total amount to be paid to the allottee including interest and compensation, before the appeal is heard.
The Court observed that the expression “before the said appeal is heard” appearing in Section 43(5) is significant and distinguishes it from Section 21 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (“RDB Act”) as the expression “before the said appeal is heard” is absent in Section 21. The Court placed heavy reliance on the Division Bench judgment in Deluxe Cotton Corporation vs. Bank of Baroda [2016 SCC OnLine Bom 2629], which held that an appeal accompanied by an application for condonation of delay is nevertheless an appeal in the eyes of law, and the bar under Section 21 applies even at the stage of considering the condonation application.
The Court further observed that the object of the pre-deposit requirement, as explained by the Supreme Court in M/s. Newtech Promoters and Developers Private Limited vs. State of Uttar Pradesh [(2021) 18 SCC 1], is to safeguard the allottee’s money and prevent unscrupulous litigation by promoters. The Court noted that allowing a promoter to delay the appeal and have the condonation application heard without pre-deposit would defeat the object of RERA 2016 and lead to absurd consequences, as it would enable promoters to keep matters sub judice to the grave prejudice of successful allottees.
Where a well-known pharmaceutical mark with established goodwill and continuous use since 1996 is sought to be diluted by a subsequent user adopting a coined expression sharing the dominant prefix and overall visual and phonetic similarity, and where both parties operate in the pharmaceutical sector with overlapping trade channels, the case satisfies the ‘triple identity’ test warranting grant of interim injunction
The Delhi High Court in the case of Noviets Pharma vs Novartis AG [FAO(OS) (COMM) 143/2026] dated August 18, 2026, has held that where a well-known pharmaceutical mark with established goodwill and continuous use since 1996 is sought to be diluted by a subsequent user adopting a coined expression sharing the dominant prefix and overall visual and phonetic similarity, and where both parties operate in the pharmaceutical sector with overlapping trade channels, the case satisfies the ‘triple identity’ test warranting grant of interim injunction.
The Court noted that the impugned marks were deceptively similar to the extent that they were visually and phonetically similar, targeted the same consumer base, and the class of consumers was also similar. The Single Judge noted that a mere replacement of the letters ‘AR’ with ‘IE’ and removal of the letter ‘I’ from the respondents’ mark would not amount to a distinguishing feature sufficient to differentiate the goods of the parties. However, the Division Bench emphasised that in cases involving pharmaceutical products, a stricter approach ought to be adopted by Courts due to public interest considerations, and even an initial interest confusion at a preliminary stage would be sufficient to meet the requirement of deceptive similarity under Section 29 of the Trade Marks Act, 1999.
The Single Judge further noted that the prefix ‘NOV’ formed the dominant feature of the impugned marks and that the mark ‘Novartis’, being in use since 1996, could not be allowed to be diluted by a similar mark using the prefix ‘NOV’. The Division Bench, while dealing with the appeal, observed that the Single Judge had applied the demurrer principle for territorial jurisdiction and that the issue would be decided after framing of issues at trial.
The Court noted that both parties were involved in pharmaceutical products, with the appellants dealing in veterinary products, making the competing goods and consumer base sufficiently similar to create a substantial risk of confusion. The Court found that the appellants had failed to provide a plausible explanation for how they arrived at the mark ‘Noviets’, and that the mark appeared to have been coined to benefit from the goodwill of the respondents.
Accordingly, the Court reaffirmed that ‘NOVARTIS’, being a well-known mark registered and used in India since 1996 with substantial sales figures, is entitled to strong protection against any deceptively similar adoption, even where the competing mark differs in suffix or device elements. The Court rejected the appellants’ argument that the prefix ‘NOV’ was generic or common to the trade, holding that it constituted the dominant and essential feature of the respondents’ mark and could not be allowed to be diluted by a subsequent user without adequate explanation for adoption.
REGULATORY UPDATES
RBI (Priority Sector Lending – Targets and Classification) Second Amendment Directions, 2026, carve out incremental advances linked to the US Dollar-Rupee swap window from Adjusted Net Bank Credit, with immediate effect
The Reserve Bank of India (RBI), vide Circular RBI/2026-27/232 dated August 07, 2026, issued the Second Amendment Directions to the Priority Sector Lending – Targets and Classification Directions, 2025, with immediate effect. The amendment is anchored in the Governor’s Statement dated June 5, 2026, and the RBI circular dated June 08, 2026 on the ‘Swap Facility for FCNR (B) Deposits’, under which a US Dollar-Rupee swap facility has been introduced for fresh Foreign Currency Non-Resident (Bank) [FCNR (B)] dollar funds mobilised for a minimum tenor of three years and a maximum tenor of five years.
The Directions draw further context from the RBI (Cash Reserve Ratio and Statutory Liquidity Ratio) Second and Third Amendment Directions dated June 08, 2026 and June 19, 2026, which granted exemption from maintenance of CRR and SLR on fresh FCNR (B) deposits of three to five year tenor mobilised (including renewals upon maturity) between June 08, 2026 and September 30, 2026, and on fresh Non-Resident (External) Rupee (NRE) term deposits of three years or more tenor mobilised (including renewals upon maturity) between June 19, 2026 and September 30, 2026.
The core amendment provides that the following advances extended in India shall be excluded from the calculation of Adjusted Net Bank Credit (ANBC): (a) advances against fresh FCNR (B) deposits of three to five year tenor mobilised (including renewals upon maturity) by banks between June 08, 2026 and September 30, 2026; and (b) advances against NRE term deposits of three years or more mobilised (including renewals upon maturity) by banks between June 19, 2026 and September 30, 2026.
The amendment partially modifies Item VI in the table at paragraph 6.1 of the PSL Directions, 2025, to capture advances extended in India against the incremental fresh FCNR (B) / NRE deposits (including renewals upon maturity) qualifying for CRR and SLR exemption under the earlier RBI circulars dated August 14, 2013 and January 31, 2014 (read with the February 6, 2014 clarification and the UCB circulars dated August 27, 2013 and June 11, 2014), as well as the CRR and SLR Second and Third Amendment Directions dated June 08, 2026 and June 19, 2026.
A capping mechanism has been prescribed through a Note, which clarifies that the amount to be excluded from ANBC for computation of priority sector targets shall not exceed the fresh FCNR (B) / NRE deposits eligible for exemption from maintenance of CRR / SLR under the above Amendment Directions. Additionally, Footnote 3 of the PSL Directions, 2025, which prescribed the methodology for calculating incremental advances as the difference between outstanding advances in India as on March 7, 2014 (or June 13, 2014 for UCBs) and the Base Date of July 26, 2013, has been deleted in its entirety.
Click here to read/ download the original amendment direction
