Legal Updates (October 19 – October 24, 2026)
CASE UPDATES
Section 34 of the SARFAESI Act, 2002 only bars civil court jurisdiction over matters the DRT or DRAT is empowered to determine, and does not preclude a substantive suit concerning the validity or genuineness of a title deed foundational to the ownership claim
The Calcutta High Court in the case of Amit Kumar Saha vs Canara Bank [WPA 22668 of 2026] dated October 08, 2026, has ruled that disputed questions of title and the genuineness of a conveyance deed fall outside the writ court’s jurisdiction and outside the DRT’s statutory remit under Section 34 of the SARFAESI Act. Where the very foundation of a person’s claim to ownership rests on a document whose genuineness is seriously disputed, the High Court declined to entertain the dispute under Article 226 and relegated the parties to the competent Civil Court.
The High Court held that Section 34 of the SARFAESI Act, 2002 only bars civil court jurisdiction over matters the DRT or DRAT is empowered to determine, and does not preclude a substantive suit concerning the validity or genuineness of a title deed foundational to the ownership claim. The Court also said that the Debt Recovery Tribunal exercising jurisdiction under the SARFAESI Act must act within the four corners of the statute, and its jurisdiction cannot be stretched to adjudicate the validity or genuineness of a deed of title, particularly where such determination is foundational to the ownership claim itself.
The Court observed that the materials on record indicated that the deed was executed on 14 December 2021 in favour of the petitioners and that the deed, on the face of it, purported to confer title upon them. Property tax receipts and electricity bills prima facie indicated the petitioners’ possession over the property. However, the respondent Bank had seriously disputed the authenticity and genuineness of the deed and questioned the petitioners’ claim of title founded thereon.
The Court asserted that once the very foundation of the petitioners’ claim to title was put in issue, the question of whether they had acquired a valid and enforceable title under the deed would necessarily require adjudication upon the genuineness, validity and legal effect of the instrument, upon appreciation of evidence that may be adduced by the parties. Such adjudication, involving disputed questions of fact and title, fell within the province of the competent Civil Court and could not appropriately be undertaken in exercise of the extraordinary jurisdiction under Article 226 of the Constitution.
Admission under Section 7 IBC requires a summary finding of debt and default above the statutory threshold, and not an exact reconciliation or forensic reconciliation of accounts, and that positive Earnings Before Interest, Taxes, Depreciation and Amortisation (EBITDA) does not answer a failure to service debt
The Supreme Court in the case of Deepak Raheja vs Omkara Assets Reconstruction [Civil Appeal No.12195 of 2025] dated October 15, 2026, has held that admission under Section 7 IBC requires a summary finding of debt and default above the statutory threshold, and not an exact reconciliation or forensic reconciliation of accounts, and that positive Earnings Before Interest, Taxes, Depreciation and Amortisation (EBITDA) does not answer a failure to service debt. The Code is intended to intervene when default occurs, rather than wait until the company reaches irreversible financial collapse. The jurisdictional trigger is therefore ‘default’ under Section 3(12), not commercial or balance-sheet insolvency.
The Court clarified that under Section 7 IBC, default is established through a summary, prima facie assessment on a preponderance of probabilities. The NCLT need not determine the outstanding liability down to the last rupee, and quantification disputes cannot arrest admission where the Section 4 threshold is satisfied. The Court also said that Record of Default issued by an Information Utility is independently sufficient to prima facie establish default. Although not irrebuttable, its presumption can be displaced only by clear, cogent, credible and compelling material, not bare denials or bookkeeping disagreements.
The Apex Court went on to observe that financial contracts, account statements, acknowledgements and other documentary material form an alternative evidentiary tier. They must collectively demonstrate that a financial debt became due and remained unpaid, and they do not individually enjoy the same evidentiary footing as an IU Record of Default. Further, positive EBITDA does not establish the capacity to meet debt-servicing obligations. The Code adopts default under Section 3(12), rather than commercial or balance-sheet insolvency, as the trigger for timely intervention.
The Court explained that an appeal under Section 62 is confined to questions of law, not a fresh examination of accounts or evidence. Concurrent factual findings of the NCLT and NCLAT can be disturbed only where they are perverse, unsupported by evidence, reached by ignoring material evidence, or based on an incorrect legal standard. It also held that Omkara’s status as a financial creditor under Section 5(7) stood established, as the assignment’s validity had already been conclusively decided between the parties, and reopening it was barred by issue estoppel.
On the accounting objections, the Court found no legal error in the tribunals’ approach. The NeSL records established that default had been registered and had gone unchallenged, while the account statements, review reports, recall notice and the companies’ own correspondence collectively supported a default exceeding the statutory threshold. The CMA and DSRA arguments had been examined by both tribunals, and further precision in the outstanding amount belonged to the claims-verification process during CIRP, rather than being a precondition to admission.
Section 11(2) of the Trade Marks Act, 1999, cumulatively requires mark similarity, well-known status in India, and use without due cause that takes unfair advantage of or harms the earlier mark’s reputation. However, dissimilar goods, specialised purchasers and separate trade channels did not themselves exclude unfair advantage or detriment under Section 11(2)
The Madras High Court in the case of INEXO Cast Metal Solutions vs Federal Express Corporation [CMA(TM) No. 4 of 2025] dated October 15, 2026, has clarified that Section 11(2) of the Trade Marks Act, 1999, cumulatively requires mark similarity, well-known status in India, and use without due cause that takes unfair advantage of or harms the earlier mark’s reputation. Hence, FEDEX’s established pre-application reputation, FEDEXO’s substantial similarity, and the appellant’s failure to establish due cause justified refusal of registration.
The Court held that FEDEXO reproduced FEDEX in its entirety and that the marks, assessed as a whole through the eyes of a purchaser of average intelligence and imperfect recollection, were substantially similar. It found that evidence established FEDEX’s well-known status in India before the application dated 26 November 2009. Its inclusion in the Registry’s list in February 2024 recorded that status.
Thus, the High Court rejected the claimed use of FEDEXO since 2007 because the correspondence showed its introduction only in November 2009. Unexplained misstatements concerning adoption and use indicated bad faith under Section 11(10)(ii), while due cause and honest concurrent use under Section 12 remained unestablished. The Court also cautioned that dissimilar goods, specialised purchasers and separate trade channels did not themselves exclude unfair advantage or detriment under Section 11(2). Actual confusion or likelihood of confusion is not an essential requirement of that provision.
The Court found that FEDEXO incorporated FEDEX in its entirety, with only the letter “O” added. It held that the marks, viewed as a whole from the perspective of a purchaser of average intelligence and imperfect recollection, were substantially similar. The Court clarified that formal recognition of FEDEX as a well-known mark in February 2024 did not necessarily establish when it acquired that reputation. Evidence of its use, registrations, promotion, awards and enforcement sufficiently established that FEDEX was already well known in India before the appellant’s application on 26 November 2009.
The Court found that the appellant had not satisfactorily explained its adoption of FEDEXO or established its claimed use since 2007. Its repeated claims of earlier use contradicted its correspondence and invoices, and the unexplained material misstatements indicated bad faith under Section 11(10)(ii). The pleas of due cause and honest concurrent use under Section 12 therefore failed. Although the Registrar had misstated the date and recipient of the appellant’s letter and had inadequately examined Section 11(2), the Court independently reviewed the documentary record and found that those defects did not entitle the appellant to registration.
Undisclosed cash loan violating Sections 269SS and 271AAD of the Income-tax Act is still enforceable. Under Sections 118 and 139 of the NI Act, the presumption applies once the cheque’s signature is admitted, and the accused must rebut it through a probable defence on a preponderance of probabilities
The Bombay High Court in the case of Manoj Punamchand Oswal vs Vijay Omkarmal Gandhi [Criminal Revision Application No. 11 of 2010] dated September 30, 2026, has upheld an 18-month conviction under Section 138 of the Negotiable Instruments Act, rejecting the argument that an undisclosed cash loan violates Sections 269SS and 271AAD of the Income-tax Act and is therefore unenforceable. The Court explained that under Sections 118 and 139 of the NI Act, the presumption applies once the cheque’s signature is admitted, and the accused must rebut it through a probable defence on a preponderance of probabilities.
The High Court clarified that accused’s shifting stand that the cheque was lost or stolen and misused did not establish a probable defence sufficient to rebut the presumption. The Court reiterated that an objection to financial capacity requires supporting material from the complainant. Here, it accepted the explanation of how the loan was funded and noted that no such objection appeared in the notice reply.
The Court observed that revisional jurisdiction under Sections 397 and 401 CrPC does not permit reappreciation of evidence merely to reach a different conclusion from concurrent factual findings. Since Oswal had not denied his signature, the presumptions under Sections 118 and 139 of the NI Act applied. His inconsistent claims that the cheque was lost or stolen and misused did not establish a probable defence sufficient to rebut those presumptions.
The Court rejected the alleged mismatch between the payee and the account in which the cheque was deposited, relying on the bank witness’s evidence that it was credited to Vijay Gandhi’s account, not Vijay Industries’ account. It also accepted the complainant’s explanation of how he arranged the loan amount and found no merit in the financial-capacity objection. The alleged inconsistency about whether the loan was for business or a bungalow, and the delay in depositing the cheque within its validity period, were not material to the case.
Participation in valuation cannot replace the findings of oppression and mismanagement required under Sections 241–242 of the Companies Act. A share-purchase direction under Section 242(2)(b) must rest on findings concerning the complained-of conduct under Section 241 and the statutory opinion required by Section 242(1)
The New Delhi Principal Bench of the National Company Law Appellate Tribunal (NCLAT) in the case of Sanjit Instruments Private Limited vs Arvind Jagannath Bagul [Company Appeal (AT) No.54 of 2026] dated October 14, 2026, has held that participation in valuation cannot replace the findings of oppression and mismanagement required under Sections 241–242 of the Companies Act, rejected reliance on a stale valuation, and remanded the petition for fresh adjudication. The NCLAT clarified that a share-purchase direction under Section 242(2)(b) must rest on findings concerning the complained-of conduct under Section 241 and the statutory opinion required by Section 242(1).
The NCLAT rejected the view that the preventive and remedial nature of Sections 241–242 permits a buy-out without findings establishing oppression or mismanagement and satisfaction of Section 242(1). Further, failure to object does not make a valuation report automatically acceptable, and the Tribunal must independently examine its contents, genuineness and suitability for determining the share-purchase consideration.
The Tribunal found that NCLT had ordered the share purchase without recording findings establishing oppression or mismanagement or satisfaction of the conditions under Section 242(1). It rejected NCLT’s view that equitable relief could be granted without such findings merely because the parties had participated in the valuation process. NCLAT also held that the absence of objections did not relieve NCLT of its duty to judicially scrutinise the valuation report.
Borrowers whose statutory appeal failed for non-compliance with Section 18 cannot reopen the recovery process through a belated challenge to the original NPA classification under Article 226
The High Court of Karnataka in the case of Shri Lakshmi Venkataramana Yajamana Industries vs Union of India [WA No. 935 of 2026] dated September 30, 2026, has held that borrowers whose statutory appeal failed for non-compliance with Section 18 cannot reopen the recovery process through a belated challenge to the original NPA classification under Article 226. The Court said that the alternative-remedy rule, though discretionary, must be applied with greater rigour in bank-recovery matters.
The Court observed that the borrowers had not been remediless, as they actively pursued DRT proceedings, approached the High Court once, and then went to the DRAT. The DRAT proceedings failed only because the statutory pre-deposit under Section 18 was not met. The Court thus clarified that permitting them to then reopen the entire recovery process by tracing the grievance back to the original NPA classification would, in substance, accomplish indirectly what the statutory scheme did not permit directly.
The Court also noted the considerable delay in challenging the NPA classification, which was known to the borrowers when they first approached the DRT. Article 226, being discretionary, cannot ordinarily be invoked to challenge an antecedent cause of action after a litigant has pursued successive remedies against its consequential measures. The Court, however, did not adjudicate whether Canara Bank had complied with the MSME or COVID-19 restructuring frameworks.
The Court observed that the borrowers were aware of the NPA classification when they first challenged the Bank’s enforcement measures before the DRT. Relying on Supreme Court decisions, the Court reiterated that although the alternative-remedy rule is discretionary, High Courts must exercise particular restraint in bank-recovery matters where an effective statutory mechanism exists. It also noted the considerable delay in challenging the original NPA classification.
The Bench held that borrowers who have pursued statutory remedies and whose appellate proceedings have failed for non-compliance with the Section 18 pre-deposit requirement cannot circumvent that requirement by subsequently invoking Article 226 to reopen the recovery process through a challenge to the original NPA classification.
Promoter-family consent terms cannot determine title against the company, and corroborated asset records establish ownership on a preponderance of probabilities. Sections 446(2)(b) and 446(2)(d), read with Section 456 of the Companies Act, 1956, empower the Company Court to adjudicate ownership of property claimed for the liquidation estate
The Bombay High Court in the case of Yasmin Mohamed Yunus Valibhoy vs Mafatlal Dyes and Chemicals [Company Petition No. 900 of 2005] dated October 21, 2026, has held that promoter-family consent terms cannot determine title against the company, and corroborated asset records establish ownership on a preponderance of probabilities. The Court clarified that Sections 446(2)(b) and 446(2)(d), read with Section 456 of the Companies Act, 1956, empower the Company Court to adjudicate ownership of property claimed for the liquidation estate.
The High Court went on to hold that the settlement resolved disputes within the family but neither bound the company nor determined title against it. Despite repeated opportunities, Sheetal withdrew her defective evidence affidavit and declined to enter the witness box. The Court thus held that her claim rested on no evidence and drew an adverse inference from her refusal to subject it to trial.
The asset register, purchase vouchers and seizure list, supported by police affidavits and Synergy Art Foundation’s confirmation, established ownership on a preponderance of probabilities. The Court did not apply the criminal standard of proof beyond reasonable doubt. Lastly, the Court appointed art expert Sonal Singh Naharwar to assist the sale process through an art auction house. Ownership of the remaining 39 paintings was left undecided, and Sheetal and Gayatri were each directed to deposit Rs. 15 lakhs within four weeks of upload for their preservation, without acquiring any equities.
The Court noted that Sheetal had repeatedly been given opportunities to prove her claim but ultimately withdrew her evidence affidavit and declined to enter the witness box. Her refusal to subject her claim to cross-examination justified an adverse inference that she could not prove title. The Court also found that Clause 7(b) of the family consent terms concerned possession and enjoyment of the 35 paintings involved in the earlier criminal complaint, but it neither established ownership against the company nor bound the Official Liquidator.
The Court separately examined the company’s evidence rather than treating Sheetal’s failure as sufficient proof of ownership. The asset register, purchase vouchers and seizure list, supported by police affidavits and gallery confirmation, provided a reliable basis for identifying the five paintings as company assets. Where the records did not permit a clear match, ownership was not attributed to the company.
Where an arbitration clause specifies two places and the governing law clause vests exclusive jurisdiction in courts at one of them, that place is the juridical seat and the other is merely the venue
The Supreme Court in the case of Arcis Clean Energy vs Parshva Innovation [2026 INSC 1109] dated October 12, 2026, has held that where an arbitration clause specifies two places and the governing law clause vests exclusive jurisdiction in courts at one of them, that place is the juridical seat and the other is merely the venue. Accordingly, the Apex Court set aside the Delhi High Court’s order appointing a sole arbitrator under Section 11(6) of the Arbitration and Conciliation Act, holding that the Delhi High Court lacked jurisdiction because the juridical seat of arbitration was Goa and not Delhi.
The Apex Court reaffirmed the settled distinction between the ‘seat’ of arbitration and the ‘venue’ for arbitral proceedings, holding that the seat is akin to an exclusive jurisdiction clause and that courts at the seat have exclusive jurisdiction to regulate arbitral proceedings. Applying the three-condition test in BGS SGS SOMA JV v. NHPC Ltd. [(2020) 4 SCC 234], the Court held that where an arbitration clause specifies more than one place, the BGS SGS SOMA test is not satisfied and the venue so specified cannot automatically be treated as the juridical seat.
The Court held that in such a situation, the juridical seat must be determined by reading the agreement as a whole, including the Governing Law and Jurisdiction clause, and that the arbitration clause cannot be read in isolation from the rest of the contract for the purpose of ascertaining the seat.
The Court examined the settled distinction between the ‘seat’ of arbitration and the ‘venue’ for arbitral proceedings, drawing on Indus Mobile Distribution Pvt Ltd. v. Datawind Innovations Pvt Ltd. [(2017) 7 SCC 678], Swastik Gases (P) Ltd. v. Indian Oil Corporation Ltd. [(2013) 9 SCC 32], and Brahmani River Pellets Ltd. v. Kamachi Industries Ltd. [(2020) 5 SCC 462]. It reiterated that parties may, by agreement, confer exclusive jurisdiction upon courts at a particular place for regulating arbitral proceedings, regardless of whether any part of the cause of action arose within that court’s territorial jurisdiction.
The Court then distinguished the three-condition test laid down by the three-Judge Bench in BGS SGS SOMA JV v. NHPC Ltd. [(2020) 4 SCC 234] as affirmed in Arif Azim Company Ltd. v. Micromax Informatics FZE [(2025) 9 SCC 750], which requires that (i) the arbitration agreement should designate only one place, (ii) that place must have anchored the arbitral proceedings without scope of change, and (iii) there must be no other significant contrary indicia, before a designated ‘venue’ can be construed as the ‘seat’ of arbitration.
The Court noted that in the present case, the arbitration clause itself specifies two places, namely Delhi and Goa, and therefore the BGS SGS SOMA test is not satisfied to treat Delhi as the seat. It further reiterated that the mere expression ‘place of arbitration’ cannot be the basis for determining the parties’ intention as to the seat, and that the intention must be gathered from other clauses in the agreement, including the conduct of the parties.
