Legal Updates (October 05 – October 10, 2026)
CASE UPDATES
A bank’s general clause reserving the right to notify ‘further charges’ on its website cannot be used to impose foreclosure charges not contained in the executed Arrangement Letter, especially when the circular takes effect after the last renewal
The Dehi High Court in the case of Campari Exports vs State Bank of India [W.P.(C) 15111/2024] dated September 15, 2026, has ruled that a bank’s general ‘further charges notified on website’ clause cannot unilaterally alter a concluded loan agreement, and a circular effective after the last renewal cannot bind the borrower to foreclosure charges. Essentially, the Court held that a bank’s general clause reserving the right to notify ‘further charges’ on its website cannot be used to impose foreclosure charges not contained in the executed Arrangement Letter, especially when the circular takes effect after the last renewal. Accordingly, SBI was directed to refund Rs. 83.41 lakhs within four weeks of the order, failing which the amount would carry interest at 9% per annum.
The Court pointed out that a bank’s circular prescribing pre-payment charges, which expressly came into effect from April 01, 2023, cannot be applied to a loan facility that was last renewed on March 24, 2023, even if the circular was uploaded on the bank’s website before the renewal date. The Court reiterated that for a contract to be valid, its terms must be clear, unambiguous, and understood by both parties; absent a true meeting of minds, unilateral imposition of new charges is impermissible.
The Court observed that the Arrangement Letters did not contain any specific provision for foreclosure charges. The Circular on which SBI sought to rely, itself stated that it was effective only from April 01, 2023, which was after the last renewal of the loan facility on March 24, 2023. On the date of the last renewal, the Circular, even though uploaded on SBI’s official website, was yet to take effect.
The Court further noted that the judgment in Union of India vs. Krupanidhi Education Trust (2021) 18 SCC 318] was distinguishable because, in that case, the pre-closure charges of 2% were contained both in the agreement and in the circular, and the circular had been notified before the date of the agreement between the parties. The Ombudsman order did not assist SBI either, as it dealt with deficiency of service and not with the alteration of contractual terms. The Court also noted that the extant policy on the basis of which SBI sought to justify the deduction for transferring the loan facility was neither annexed nor brought to the notice of the Court during arguments.
A sale certificate issued under the SARFAESI Act disclosing known encumbrances does not entitle the bank or the auction purchaser to seek removal of those encumbrances from the encumbrance certificate without first settling the underlying statutory dues
The Madras High Court in the case of Indian Overseas Bank vs Assistant Commissioner of Central Excise and Service Tax [WA No. 3585 of 2023] dated September 30, 2026, has ruled that a secured creditor cannot seek removal of statutory attachments from the encumbrance certificate without the auction purchaser first depositing dues towards known encumbrances under Rule 9(7) of the Security Interest (Enforcement) Rules, 2002. The Court clarified that a sale certificate issued under the SARFAESI Act disclosing known encumbrances does not entitle the bank or the auction purchaser to seek removal of those encumbrances from the encumbrance certificate without first settling the underlying statutory dues.
The Court further held that Section 26E of the SARFAESI Act and Section 31B of the Recovery of Debts and Bankruptcy Act, 1993 grant priority to secured creditors over government dues but do not override the mandatory procedural framework of Rules 9(6) to 9(10). Also, an attachment effected by the revenue department under Section 11E of the Central Excise Act qualifies as an ‘encumbrance’ within the meaning of Section 100 of the Transfer of Property Act, 1882, restricting the owner’s right of alienation.
A secured creditor is not functus officio merely upon issuance and registration of the sale certificate, so long as its recovery proceedings before the Debts Recovery Tribunal remain pending and dues remain unrealised, added the Court.
The Court noted that the auction was conducted strictly on an ‘as is where is’, ‘as is what is’ and ‘whatever there is’ basis, and the terms of sale expressly stipulated that the purchaser had to clear any statutory liability and that the bank assumed no responsibility in that regard. The Bench observed that the sale notice and the sale certificate read with Rule 9(7) of the Security Interest (Enforcement) Rules, 2002 are founded on the principle of caveat venditor, i.e., let the seller beware, obligating the bank to disclose all known encumbrances, while caveat emptor (buyer beware) simultaneously obligates the purchaser to be vigilant.
The Bench further observed that although Section 26E of the SARFAESI Act and Section 31B of the Recovery of Debts and Bankruptcy Act, 1993 grant priority to secured creditors over government dues, taxes and cesses, none of these provisions stipulate that the registration department must remove known encumbrances from the encumbrance certificate once a sale certificate has been issued disclosing them. The Bench also observed that the attachment under Section 11E of the Central Excise Act constitutes an encumbrance within the meaning of Section 100 of the Transfer of Property Act, 1882, as it restricts the owner’s right of alienation.
Bank Guarantee in question, being a contract of guarantee furnished by the Bank (surety) on behalf of the Corporate Debtor, falls squarely within the exception carved out under Section 14(3)(b) of the IBC
The Mumbai Bench of the National Company Law Tribunal (NCLT) in the case of Jayanti Lal Jain, IRP of DK Infrastructure vs Arvind Mathur [IA/4684/2024] dated September 09, 2026, has held that the Bank Guarantee in question, being a contract of guarantee furnished by the Bank (surety) on behalf of the Corporate Debtor, falls squarely within the exception carved out under Section 14(3)(b) of the IBC. The Tribunal observed that the Bank Guarantee is a ‘contract of Guarantee’ provided/furnished by the Bank, the ‘surety’, to perform the ‘promise’, or ‘discharge’ the liability, of the third person, being the Corporate Debtor, in case of his ‘default’.
The Tribunal examined the scope and applicability of the moratorium under Section 14 of the IBC, particularly in the context of invocation of a Bank Guarantee. Section 14(1)(c) prohibits ‘any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property’. However, Section 14(3)(b) of the Code expressly provides that the provisions of sub-section (1) shall not apply to ‘a surety in a contract of guarantee to a corporate debtor’. Furthermore, the proviso to Section 3(31) of the IBC clarifies that ‘security interest’ shall not include a performance bank guarantee.
The Tribunal also took note of the judgment of the NCLAT, New Delhi, in National Small Industries Corporation Ltd. v. Sh. Prabhakar Kumar Liquidator [Company Appeal (AT) (Insolvency) No. 841 of 2021], wherein it was held that an irrevocable and unconditional bank guarantee is not affected by the moratorium, and that the bank, being the surety, undertakes to discharge the liability of the Corporate Debtor and the assets of the surety are distinct from those of the Corporate Debtor.
From the plain reading of Section 14(3)(b) of the IBC, 2016, along with Section 126 of the Indian Contract Act, 1872, it is apparent that the Bank Guarantee given by the Bank is covered by the exclusion given in Section 14(3)(b) and that the provisions of Section 14(1) shall not apply, added the Tribunal.
The NCLT therefore concluded also held that the Bank Guarantee provided by the Bank is held to be covered by the exception provided in provisions of Section 14(3)(b) of IBC, 2016, and the Moratorium prescribed under Section 14(1) of IBC, 2016, shall not apply to its ‘Encashment’. In view of the same, the invocation of the Bank Guarantee by the Respondents does not constitute enforcement against the assets of the Corporate Debtor and is not barred by the moratorium under Section 14(1) of the IBC.
Mere transfer of the stamp duty amount to a bank account without generation of the requisite challan does not constitute payment of stamp duty or registration charges by the allottee
The Bombay High Court in the case of JP Builders and Developers vs Santosh Amarsingh Sandhu [Second Appeal No. 116 of 2025] dated September 23, 2026, has ruled that mere transfer of the stamp duty amount to a bank account without generation of the requisite challan does not constitute payment of stamp duty or registration charges by the allottee. The Court held that allottee’s six-month silence after termination notice, and subsequent withdrawal of the amount meant for stamp duty showed absence of genuine intent, and accordingly, the promoter is justified in terminating the allotment where the allottee fails to actually pay stamp duty despite Section 13 RERA framework, repeated notices and clear expressions of financial inability to arrange funds.
The High Court emphasised that Maha RERA and the Appellate Tribunal erred in mechanically invoking Section 13 of RERA to direct execution of the Agreement for Sale without examining whether the allottee had fulfilled his part of the obligation. The Court also said that a fresh allotment letter issued to a subsequent allottee creates an independent contractual relationship, and payments made by an earlier allottee who has taken a refund cannot be claimed by the new allottee against the promoter.
The Court observed that the allottee’s claim of having paid stamp duty and registration charges was not borne out by the record. Although the allottee forwarded payment receipts by email dated 9 July 2019, the bank account extracts placed on record showed that the amount of Rs. 4.65 lakhs were merely transferred to a Punjab National Bank account but was never credited to the Stamp Authority or Registration Authority. The allottee’s own letter dated 18 January 2020 to the bank contained a clear admission that the challan was never generated and that the e-payment receipt was not issued, upon which the bank reversed the amount back to the allottee’s account.
The Court noted that the promoter had issued as many as five notices dated 3 May 2019, 28 May 2019, 24 June 2019, 2 July 2019 and 9 July 2019 calling upon the allottee to pay stamp duty and execute the Agreement for Sale, while the allottee’s only substantive response was the email dated 30 June 2019 expressing inability to arrange funds for stamp duty. After receipt of the termination notice dated 30 July 2019, the allottee maintained stoic silence for about six months and only thereafter approached the bank for refund of the amount meant for stamp duty, which he appropriated for his own use without making any further attempt to pay stamp duty. The Court remarked that this conduct indicated absence of genuine interest in getting the agreement registered, and that the allottee may have been hoarding the flat with the intention of trading the allotment letter.
Pendency of a parallel arbitration proceeding concerning the validity, genuineness, and enforceability of the underlying loan transactions does not debar the lender from issuing a show cause notice under the RBI Master Direction
The Calcutta High Court in the case of Kitply Industries Limited vs Reserve Bank of India [W.P.A. No. 24869 of 2026] dated September 23, 2026, has clarified that pendency of a parallel arbitration proceeding concerning the validity, genuineness, and enforceability of the underlying loan transactions does not debar the lender from issuing a show cause notice under the RBI Master Direction.
The High Court asserted that the wilful defaulter proceeding has its source in statute and RBI guidelines and is substantially independent of the dispute which is the subject matter of the arbitration between the parties. Hence, issuance of a show cause notice alleging that the borrower has disposed of immovable or movable assets provided for securing the credit facility without the lender’s approval is squarely covered under the definition of wilful default in the RBI Master Direction.
The Court observed that the definition of ‘wilful default’ and ‘wilful defaulter’ is contained in paragraphs 3(t) and 3(u) of the Reserve Bank of India (Treatment of Wilful Defaulters and Large Defaulters) Directions, 2024, and that wilful default includes a situation where the borrower has disposed of immovable or movable assets provided for the purpose of securing the credit facility without the approval of the lender. The Court noted that SEFL had issued the show cause notice on the specific allegation that the petitioners had disposed of immovable and movable assets provided for securing the credit facility without the approval of SEFL, and that the description of properties/assets and documentary evidence had been disclosed to the petitioners.
The Court further observed that the issuance of the show cause notice by SEFL was squarely covered under paragraphs 3(t) and 3(i)(D) of the Master Directions, 2024. The Court placed reliance on the order of the Sole Arbitrator dated 13th July, 2026, which had categorically held that the proceeding for declaring the borrower as a wilful defaulter has its source in statute and the RBI guidelines, and is substantially independent of the dispute which is the subject matter of the arbitration.
Accordingly, the NCLT’s dismissal of the Section 7 insolvency petition on the ground that the disputes are already before the Arbitrator does not, by itself, immunise the borrower from a wilful defaulter proceeding under the RBI framework, added the Court.
A claim by one partner against the other partners for contribution in respect of an amount paid towards discharge of the partnership firm’s liability is a dispute arising from the partnership relationship and falls within an arbitration clause covering disputes relating to the partnership deed and books of accounts
The Delhi High Court in the case of Krishan Baldev Bansal vs Balbir Singh Tyagi [FAO(COMM) 64/2026] dated October 05, 2026, has restored the arbitral award holding that a partner’s claim for contribution after discharging the firm’s bank liability is arbitrable under the partnership deed, not a personal guarantor dispute. The Court clarified that a contemporaneous order-sheet recording the parties’ submission that the award may be passed only on a particular claim is sufficient to confine the scope of adjudication, and the absence of a separate written application or statement on oath does not invalidate the award.
Where the parties agree to narrow the disputes before the arbitrator, the arbitrator cannot be faulted for not adjudicating the other reliefs originally pleaded, as those reliefs cease to remain live issues for determination. A claim by one partner against the other partners for contribution in respect of an amount paid towards discharge of the partnership firm’s liability is a dispute arising from the partnership relationship and falls within an arbitration clause covering disputes relating to the partnership deed and books of accounts, added the Court.
The High Court also clarified that the mere fact that the claimant partner also stood as guarantor to the bank does not convert the inter se contribution claim into a personal dispute outside the scope of the arbitration. The substance of the claim, and not the capacity in which the bank proceeded, determines arbitrability.
The Court observed that the order-sheet dated Dec 11, 2023, was a contemporaneous record of the proceedings and recorded the parties’ submission that the award may be passed only on the claim made by Respondent No.3 (the Appellant). The Court noted that the arbitral award explained this understanding by recording that the parties had submitted that the award may be passed only on the claim concerning the loan amount paid by Respondent No.3 to the Bank as guarantor, and that the other claims need not be discussed and decided.
The Court also observed that the Sole Arbitrator had noticed the objection regarding arbitrability, and recorded that no such objection had been raised in the written statement. The Court further observed that the Respondents had not led any evidence to establish that the amount paid by the Appellant was not a liability of the partnership firm.
Unauthorised use of mark/ franchise amounts to actionable trademark infringement, copyright infringement and passing off
The Delhi High Court in the case of Manash Lifestyle Private Limited vs John Doe/ Ashok Kumar [CS(COMM) 985/2026] dated September 15, 2026, has held the unauthorised ‘PURPLLE 2026 Franchise Opportunity’ as actionable trademark infringement, copyright infringement and passing off, emphasising that the goodwill of a Unicorn brand cannot be left to monetary compensation. The Court recorded prima facie infringement under Sections 29(1) and 29(2) of the Trade Marks Act, 1999, copyright infringement under Section 51 read with Section 14 of the Copyright Act, 1957, and passing off, on the basis that the identical mark was used as the central identifier of a commercial franchise programme.
The Court observed that the Plaintiff is the registered proprietor of the trademark PURPLLE with 62 registrations across multiple classes, the earliest dating back to Dec 19, 2014, and is the owner of copyright in the registered artistic works comprised in its logos. The Plaintiff’s turnover under the mark rose from Rs. 10,034.99 Lakhs in FY 2019-2020 to Rs. 40,190.69 Lakhs in FY 2024-2025, with promotional expenditure aggregating Rs. 55,990.22 Lakhs over the same six years, reflecting formidable goodwill and reputation.
The Court further observed that Defendant No. 1 had adopted the identical mark PURPLLE together with the logo, the genuine store photographs and the official email address of the Plaintiff, not in any incidental or isolated manner but as the central identifier of a purported franchise programme offered for substantial monetary consideration. The Court recorded that it was prima facie evident that Defendant No. 1 was infringing the registered marks of the Plaintiff and also attempting to pass off its goods as those of the Plaintiff, causing irreparable injury and harm to the goodwill and reputation of the Plaintiff.
The Court therefore granted an ex parte ad-interim injunction against the unknown operator of a Facebook page and WhatsApp Business Account offering a fake ‘PURPLLE 2026 Franchise Opportunity’ for Rs. 15 lakhs, using the Plaintiff’s registered mark, logo, genuine store photographs and official email. Accordingly, Meta was ordered to take down the impugned URL within 36 hours and disclose BSI and IP logs, WhatsApp LLC was directed to suspend the linked account within 36 hours and disclose registration, IP, login and payment details, Reliance Jio was directed to block the mobile number within 36 hours and furnish KYC particulars, and Truecaller was directed to remove the false ‘Purplle Store’ listing within 36 hours.
An express, independent bar on delayed payments, standing apart from any dispute, ousts the arbitrator’s power to award pre-reference interest under Section 31(7)(a) of the Arbitration and Conciliation Act, 1996
The Supreme Court in the case of North-Eastern Electric Power Corporation Limited (NEEPCO) vs Astra Construction Pvt Ltd [Special Leave Petition (Civil) No. 24803 of 2025)] dated September 22, 2026, has held that an express, independent bar on delayed payments, standing apart from any dispute, ousts the arbitrator’s power to award pre-reference interest under Section 31(7)(a) of the Arbitration and Conciliation Act, 1996. The Court explained that the opening words ‘unless otherwise agreed by the parties’ expressly subordinate the arbitrator’s statutory power to the bargain between the parties. An express contractual bar suffices to exclude that power, even if not specifically addressed to the arbitrator’s jurisdiction.
Unlike pendente lite interest, pre-reference interest cannot be sourced in Section 31(7)(a) alone, and it must trace its basis to an agreement (express or implied), a statutory provision such as Section 3 of the Interest Act, 1978, or proof of mercantile usage. The Court therefore said that the plea founded on a contractual bar to interest, when specifically raised in the pleadings before the Arbitral Tribunal, is not waived merely because the Tribunal proceeded to award interest. Such bar can be pressed in subsequent proceedings under Sections 34 and 37 of the Arbitration Act.
The Court said that under the Arbitration Act, 1940, there was no express provision conferring such power, and the Constitution Bench in Secretary, Irrigation Department v. G.C. Roy [(1992) 1 SCC 508] filled the gap by holding that interest could be implied as a term of the bargain. Under the 1996 Act, Section 31(7)(a) expressly confers the power to award interest, but the opening words ‘unless otherwise agreed by the parties’ subordinate that power to the parties’ bargain. The Court reaffirmed that pendente lite interest is governed by procedural law under Section 31(7)(a), whereas pre-reference interest is referable to substantive law and cannot be sourced in Section 31(7)(a) alone.
REGULATORY UPDATES
RBI Grants One-Time Approval Mechanism for Mutual Funds, Insurers & Pension Funds Acquiring Stakes in Banking Companies – Amendment to the 2025 Master Direction eases repeat shareholding acquisitions by regulated institutional investors up to 10% of paid-up capital, while extending RBI’s continuous monitoring and ‘fit and proper’ net to cover them
The Reserve Bank of India (RBI) issued the Reserve Bank of India (Payments Banks – Acquisition and Holding of Shares or Voting Rights) Amendment Directions, 2026, bearing Reference Number RBI/2026-27/277 (DOR.HOL.REC.No.237/16.13.100/2026-27), dated October 1, 2026. These Amendment Directions modify the earlier Reserve Bank of India (Payments Banks – Acquisition and Holding of Shares or Voting Rights) Directions, 2025, referred to as the ‘Master Direction’, which was issued on November 28, 2025, and which mandates that any person seeking to make an initial acquisition of major shareholding in a banking company must obtain the prior approval of the Reserve Bank.
Key Takeaways
One-time approval window for institutional investors: Mutual funds (SEBI-registered), insurance companies (IRDAI-registered) and pension funds (PFRDA-registered), collectively termed “qualifying persons,” can now seek a one-time approval from the RBI for subsequent acquisitions of major shareholding up to 10% of the paid-up share capital or voting rights of a banking company, without needing fresh prior approval each time.
Prior approval continues for initial acquisition: The requirement to obtain prior RBI approval for the initial acquisition of major shareholding remains unchanged. The relief operates only at the subsequent-acquisition stage, and only where the person’s aggregate holding had not fallen below 5% between acquisitions.
Promoter-group-linked qualifying persons covered by proxy applications: A bank may apply for one-time approval on behalf of a qualifying person that belongs to the bank’s promoter group, recognising that such persons may not independently file the application through the PRAVAAH portal.
Revocation on non-compliance or “fit and proper” failure: The one-time approval is subject to conditions specified in the approval and all other applicable provisions of the Directions, and may be revoked by the RBI for non-compliance or if the qualifying person or any person associated with them is subsequently found not to be “fit and proper.”
Extended monitoring and reporting net: Qualifying persons with one-time approval are brought within the RBI’s continuous monitoring framework, and major shareholders with one-time approval must report any decrease or increase of their aggregate holding across the 5% threshold to the RBI and the concerned banking company within three working days.
In substance, the RBI’s amendment creates a one-time approval pathway that lets mutual funds, insurers and pension funds acquire subsequent major shareholding up to 10% in a banking company without repeated prior-approval applications, while folding them into the existing continuous-monitoring and ‘fit and proper’ regime. It is a calibrated easing of process for regulated, non-promoter institutional investors, not a dilution of substantive safeguards.
Click here to read/ download the original Amendment Direction
SEBI Mandates Display of Investor Awareness Messages on Stock Brokers Websites and Trading Apps from October 5, 2026, under Project Jagrook – Stock brokers must prominently display SEBI-prescribed investor awareness messages alongside existing Risk disclosures, with mandatory compliance on websites from November 1, 2026 and on trading apps on alternate days thereafter
The Securities and Exchange Board of India (SEBI) issued a Circular dated October 01, 2026, bearing reference HO/38/24/(15)2026-MIRSD-PODMMC/I/22872/2026, addressed to all Recognized Stock Exchanges, Depositories, and Stock Brokers (through Recognized Stock Exchanges), mandating the display of ‘investor awareness messages’ by stock brokers on their trading apps and websites under Project Jagrook, SEBI’s nationwide investor awareness initiative, in connection with the upcoming World Investor Week 2026.
Key details:
Continuation of Earlier Framework: The circular builds upon SEBI’s earlier circular no. SEBI/HO/MIRSD/MIRSD-PoD-1/P/CIR/2023/73 dated May 19, 2023, which had already mandated all stock brokers to display ‘Risk disclosures’ to their clients in the specified manner. The present circular is in continuation of that framework and is intended to further investor benefit, safety, and education.
Core Obligation on Stock Brokers: All stock brokers are required to prominently display the “investor awareness message(s)”, as shared by SEBI, on their websites and trading apps in the manner prescribed by the circular. SEBI retains the authority to modify these messages from time to time.
Display Requirements on Websites: During the period from October 5, 2026, to October 31, 2026, all stock brokers must display both the ‘investor awareness messages’ shared by SEBI and the ‘Risk disclosures’ on their websites. From November 1, 2026, onwards, stock brokers are required to display the specified ‘investor awareness messages’ on the landing page of their websites.
Display Requirements on Trading Apps: During the period from October 5, 2026, to October 31, 2026, stock brokers may display the ‘investor awareness messages’ on their trading apps on a voluntary basis. However, if a stock broker chooses to display such messages on any given day, the display of ‘Risk disclosures’ becomes optional for that day. From November 1, 2026, onwards, stock brokers must mandatorily display the specified ‘investor awareness messages’ and ‘Risk disclosures’ on alternate days, on the landing page of their trading apps.
Directions to Stock Exchanges and Depositories: Stock Exchanges and Depositories have been directed to (i) bring the provisions of this circular to the notice of their members/participants, as applicable, and disseminate the same on their websites; (ii) display the ‘investor awareness messages’ shared by SEBI, as it is, on their websites; and (iii) make necessary amendments to the relevant bye-laws, rules and regulations for the implementation of the circular.
Click here to read/ download the original Circular
IBBI Liquidation Process Regulations, 2016 govern every stage of a corporate liquidation, from liquidator appointment and fee determination through claim submission, asset realisation, distribution of proceeds under section 53, and final closure, with the June 2026 and September 2026 amendments substituting the earlier stakeholders’ consultation committee with the committee of creditors, compressing the completion timeline to 180 days, and introducing a revised fee structure based on realisation and distribution
The IBBI (Liquidation Process) Regulations, 2016, as amended up to 22 September 2026 (most significantly by Notification No. IBBI/2026-27/GN/REG151 dated 1 June 2026 and Notification No. IBBI/2026-27/GN/REG154 dated 22 September 2026), provide the complete operational framework for liquidation of a corporate debtor under Chapter III of Part II of the Insolvency and Bankruptcy Code, 2016. The Regulations vest the committee of creditors, constituted under section 21 and continuing into liquidation, with substantive decision-making authority over the liquidator’s key actions, including professional appointments, fee fixation, asset sale strategy, valuation, and early dissolution.
Key Takeaways
Committee of creditors replaces the consultation committee as the central decision-making body during liquidation.
The June 2026 amendment substituted the earlier stakeholders’ consultation committee (Regulation 31A) with the committee of creditors constituted under section 21 of the Code, which continues to function during the liquidation process. The committee now exercises approval authority over professional appointments and their remuneration, liquidator fees, liquidation costs, valuations, sale of assets (including manner of sale, reserve price, and auction process), continuation or institution of legal proceedings, assignment of not readily realisable assets, and early dissolution. Prior committee approval by a two-thirds voting share is required for sale of assets, assignment of not readily realisable assets, and the manner of pursuing avoidance or fraudulent trading proceedings after dissolution. The first meeting of the committee must be convened within seven days of the liquidation commencement date.
Liquidator’s fee restructured around realisation and distribution, with the committee fixing the fee in its first meeting.
Under the substituted Regulation 4, the committee may fix the liquidator’s fee in its first meeting after the liquidator’s appointment, in accordance with section 34(8) of the Code. Where the committee has not fixed a fee, the liquidator is entitled to a fee as a percentage of the amount distributed to stakeholders — net of liquidation costs — across three time bands: the first six months, the next six months, and the period thereafter. The rates range from 5% on the first ₹1 crore distributed in the first six months (reducing to 0.10% on further sums distributed in the period thereafter), with correspondingly lower rates for each subsequent slab. Where the committee fixed the fee under the CIRP Regulations (regulation 39D), that fee continues. A clarification confirms that the new fee structure applies to liquidation processes commencing on or after the Fourth Amendment Regulations, 2026.
Liquidation must be completed within 180 days, a significant compression from the earlier one-year timeline.
Regulation 44 now requires the liquidator to liquidate the corporate debtor within 180 days from the liquidation commencement date, reduced from the earlier one-year period, and further from the original two-year period prescribed at the time of the 2019 amendment. If the liquidator fails to complete within 180 days, he must, on receiving an instruction from the committee, make an application to the Adjudicating Authority to continue the liquidation, with a report explaining why it was not completed and specifying the additional time required. The liquidator continues to discharge his responsibilities until the extension application is decided. The model timeline in Regulation 47 has been correspondingly revised to reflect the 180-day deadline, with the period of any compromise or arrangement under section 230 (up to 90 days) excluded from the liquidation period under Regulation 2B.
Claim submission, verification, and the list of stakeholders are now governed by tightened timelines.
Under the amended Regulations 16 and 30, a person claiming to be a stakeholder who did not submit a claim during the CIRP must submit it within 14 days of the liquidation commencement date (reduced from 30 days), and the liquidator must verify claims within 7 days of receipt (reduced from 30 days). The liquidator must communicate admission or rejection decisions, with reasons, within 7 days. The list of stakeholders must be filed with the Adjudicating Authority within 30 days from the last date for receipt of claims (reduced from 45 days). Regulation 30A permits assignment or transfer of debts by creditors during the liquidation process, with both parties required to provide the liquidator the terms of the assignment and the assignee’s identity. A stakeholder must also update its claim as and when it is satisfied, partly or fully, after the insolvency commencement date.
Secured creditors must elect between relinquishment and realisation within 14 days, with compressed payment windows and section 29A ineligibility extended to asset sales.
Regulation 21A requires a secured creditor to inform the liquidator within 14 days (reduced from 30 days) of the liquidation commencement date whether it will relinquish its security interest or realise it under section 52. Failure to intimate within 14 days results in the secured assets being deemed relinquished to the liquidation estate. A secured creditor who chooses to realise must pay the amount it would have shared had it relinquished, within 45 days of the liquidation commencement date, and the excess of the realised value over the admitted claim within 90 days — both timelines compressed from the earlier 90-day and 180-day windows. Under Regulation 37, if the liquidator identifies a buyer willing to pay more than the secured creditor’s intimated price, the creditor must sell to that buyer; the liquidator must communicate this within 7 days (reduced from 21 days) of the secured creditor’s intimation, and the buyer must act within 14 days (reduced from 30 days). Regulation 32 prohibits the liquidator from selling any movable or immovable property or actionable claims to a person ineligible under section 29A, and Regulation 37(8) extends the same ineligibility to secured creditors realising their own security interest.
Schedule I – Mode of Sale (Auction and Private Sale)
Schedule I, issued under Regulation 33, prescribes the auction process in detail. The liquidator issues a public notice for auction, and in case of failure of an auction, issues a notice for the next auction within fifteen days unless the committee decides otherwise. The entire auction process must be completed within thirty-five days from the issue of the public notice. The liquidator prepares a marketing strategy, terms and conditions of sale including reserve price and earnest money deposit (which shall not exceed ten per cent of the reserve price and no non-refundable deposit or fee may be charged for participation). The reserve price is the value determined under Regulation 35, and on failure of an auction may be reduced with the committee’s approval by not more than ten per cent at a time.
The public notice is published in the same manner as the liquidation public announcement. Prospective bidders must submit an undertaking regarding their eligibility under section 29A of the Code. The liquidator shall sell assets through an electronic auction platform empanelled by the Board, unless a physical auction is likely to maximise realisation and the Adjudicating Authority permits it. The auction shall be transparent with the highest bid visible. The liquidator may reject the highest bid with the committee’s approval by two-thirds voting share, recording the reasons and mentioning it in the next progress report.
On the close of the auction, the highest bidder is invited to provide the balance sale consideration within ninety days, with interest at twelve per cent on payments made after thirty days; the sale is cancelled if full payment is not received within the stipulated period. The liquidator conducts due diligence on the highest bidder within three days and presents the results to the committee for approval. If the highest bidder is found ineligible, the earnest money is forfeited and the next highest bidder may be declared successful after the same process. On payment of the full amount, the liquidator executes the certificate of sale or sale deed with the committee’s approval and the assets are delivered to the successful bidder. Private sale, as an alternative mode, requires a strategy to approach interested buyers, and the sale is confirmed to the buyer in compliance with Regulation 33.
Schedule III – Registers and Books of Account
Schedule III provides indicative formats for the various registers and books the liquidator must maintain under Regulation 6, including the Cash Book, General Ledger, Bank Ledger, Register of Fixed Assets and Inventories, Securities and Investment Register, Register of Book Debts and Outstandings, Tenants Ledger, Suits Register, Decree Register, Register of Claims and Distributions, Contributory’s Ledger, Distributions Register, Fee Register, Suspense Register, Documents Register, Books Register, and the Register of Unclaimed Dividends and Undistributed Proceeds. The liquidator may modify these formats as he deems fit in the facts and circumstances of the liquidation process.
Click here to read/ download the original Regulation
Interim Moratorium on Personal Guarantors Ceases from 26 May 2026: IBBI Circular Distils Bombay and Delhi High Court Rulings – Noting the amendment to Sections 96 and 124 of the IBC, read with twin High Court judgments, IBBI confirms that the interim moratorium no longer bars pending insolvency applications against personal guarantors
The Insolvency and Bankruptcy Board of India (IBBI), through Circular No. IBBI/II/106/2026 dated 21st September 2026, has brought to the attention of all registered Insolvency Professionals, recognised Insolvency Professional Entities, and registered Insolvency Professional Agencies two judicial pronouncements on the cessation of the interim moratorium applicable to personal guarantors of corporate debtors. The Circular records that the Insolvency and Bankruptcy Code (Amendment) Act, 2026 inserted sub-section (4) in sections 96 and 124 of the Insolvency and Bankruptcy Code, 2016, providing that the interim moratorium shall not apply in respect of a personal guarantor to a corporate debtor, with effect from 26th May 2026.
In this regard, the Bombay High Court, in Tata Capital Financial Services Limited v. Neel Motors LLP and others [Commercial Arbitration Petition No. 620 of 2021], by judgment dated 24th July 2026, observed that the phrase ‘where an application is filed’ would bring within its sweep anything that is filed and is pending with the Adjudicating Authority as of that date. The Court held that had the legislature intended to confine Section 96(4) only to filings made after the introduction of the provision, it would have consciously used language to that effect.
The Court further held that the provision squarely fits within the ambit of a retroactive application, meaning that reading the words ‘is filed’ as including those that have been filed and are pending will give the provision prospective effect from the date it takes effect, rather than retrospective effect. Accordingly, the Court concluded that any application filed for initiating an insolvency resolution process in respect of a personal guarantor to a corporate debtor would not fall within the ambit of Section 96(1) and the related provisions with effect from 26th May 2026, and that the moratorium, insofar as it operated until 25th May 2026, ceased to operate with effect from 26th May 2026, in respect of applications filed under Section 95 of the IBC.
The Delhi High Court, in IDBI Trusteeship Services Ltd. v. Manish Jain and Ors. [CS(COMM) 800/2025], by judgment dated 19th August 2026, concurred with this position. The Court held that the amendment to Section 96 of the IBC by way of insertion of sub-section (4), read with the principles of ‘retroactive’ legislation laid down by the Supreme Court, leaves no doubt that the provisions of sub-section (4) of Section 96 are retroactive in nature, even though the Amending Act did not expressly state so. The Court further held that the import, purport, and impact of such retroactive legislation would amount to ‘quasi retroactivity’ and would be applicable to pending applications.
Accordingly, the IBBI has noted, through this Circular, that the interim moratorium under Section 96, and correspondingly under Section 124, of the Code, in respect of a personal guarantor to a corporate debtor, has ceased to operate with effect from 26th May 2026, in respect of applications pending before the Adjudicating Authority as on that date. The Circular has been issued in exercise of the powers conferred under Section 196 of the Code.
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