Legal Updates (Aug 17 – Aug 22, 2026)

CASE UPDATES

If an ordinary citizen approaches the police alleging financial loss arising from front running, it is incumbent upon the police to forward the complaint to SEBI, which alone can decide whether to initiate criminal proceedings under Sections 24 and 26 of the SEBI Act 

The Bombay High Court in the case of Viresh Gangaram Joshi vs State of Maharashtra [Criminal Application No. 1036 of 2025] dated August 13, 2026, held that Section 26 of the SEBI Act creates an express statutory bar against any court taking cognizance of offences punishable under the SEBI Act or the rules and regulations made thereunder, save on a complaint made by the Board. Since the SEBI Act is a Special Act, its provisions prevail over the general law contained in the IPC and the BNSS, and once a Special Act holds the field, the provisions of the general law cannot be invoked to prosecute the same conduct. 

The Court reiterated that where the substantive offence alleged is one under a Special Act requiring a complaint by the specified statutory authority, registration of an FIR by the police for the same conduct under the general criminal law amounts to a circumvention of the Special Act and is therefore not maintainable. The Court further held that even if an ordinary citizen approaches the police alleging financial loss arising from front running, it is incumbent upon the police to forward the complaint to SEBI, which alone can decide whether to initiate criminal proceedings under Sections 24 and 26 of the SEBI Act. 

The Court observed that the allegations, on a bare perusal, prima facie disclosed an offence of front running, which is statutorily recognised as an offence under the SEBI Act and the SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003. The Court took note of the Affidavit dated 8th December 2025 filed by the Assistant Police Inspector of the Economic Offences Wing, which expressly stated that the case pertained to front-running trades executed based on unauthorisedly provided Unpublished Price Sensitive Information, and that the core issue revolved around front running as defined in SEBI’s Circular dated 25th May 2012. 

The Court further observed that the SEBI Act is a Special Act enacted to protect investor interests and regulate the securities market, and that SEBI is the expert body entrusted with the responsibility of investigating and prosecuting violations of securities laws. The Court noted that the doctrine of circumvention would apply squarely, as the same conduct could not be reframed under the IPC to bypass the statutory bar contained in Section 26 of the SEBI Act. Accordingly, the Court quashed the FIR against former Axis AMC Chief Dealer Viresh Joshi, holding that front running is exclusively prosecutable by SEBI under Section 26 of the SEBI Act, and that registration of an FIR by police for the same conduct amounts to circumvention of the Special Act.  

Where possession of a secured asset has been lawfully taken by a secured creditor under Section 14 of the SARFAESI Act, and the borrower subsequently re-enters the property through illegal means, the District Magistrate is not rendered functus officio and possesses the authority to re-execute the possession order 

The Madhya Pradesh High Court in the case of Union Bank of India Branch Shabd Pratap Ashram Gwalior vs State of Madhya Pradesh [Writ Petition No. 29046 of 2026] dated August 05, 2026, has upheld the rights of banks and financial institutions by directing state authorities to re-execute a possession order and dispossess defaulting borrowers who had unlawfully re-entered the secured asset. The Court held that where possession of a secured asset has been lawfully taken by a secured creditor under Section 14 of the SARFAESI Act, and the borrower subsequently re-enters the property through illegal means, the District Magistrate is not rendered functus officio and possesses the authority to re-execute the possession order. 

The Court clarified that the state authorities are legally bound to assist the secured creditor in restoring possession, as such illegal re-entry cannot be permitted to defeat the statutory remedies provided to financial institutions for the recovery of defaulted loans. Accordingly, the Court directed the respondent authorities to immediately provide necessary aid and assistance to the bank for dispossessing the borrower from the mortgaged property and restoring physical possession to the secured creditor.  

The Court observed that the statutory authorities are under a bounden duty to provide continuous assistance to secured creditors for recovering defaulted loans. Referring to the established legal precedents, the Court noted that there is absolutely no legal impediment or bar that prevents the re-execution of an order of possession or providing re-assistance to a secured creditor under the SARFAESI Act. 

The Court strongly emphasized that allowing borrowers to retain possession after employing illegal tricks to re-enter a secured asset would amount to perpetuating an illegality and making a mockery of the rule of law. Furthermore, the Court highlighted that the powers exercised by the District Magistrate under Section 14 are merely ministerial and not adjudicatory, meaning the authorities must act on behalf of the secured creditor to ensure the asset remains secured.    

After resorting to all remedies available in law, including proceedings under the RDDB Act, SARFAESI Act, and the IBC, a bank cannot open a Look Out Circular as an arm-twisting tactic to recover debt from a person who is otherwise unable to pay, particularly when there are no allegations that such person was engaged in any fraud, siphoning off, or defalcation of the loan amounts 

The Delhi High Court in the case of Tushar Dey vs Union of India [W.P.(C) 8120/2026] dated August 10, 2026, has that the right to travel abroad is a fundamental right guaranteed under Article 21 of the Constitution of India and cannot be taken away in an arbitrary or illegal manner. The Court noted with concern that banks are increasingly insisting on opening of Look Out Circulars merely as a measure to recover money without initiating any criminal proceedings, which the Court found impermissible. 

The Court emphasised that an LOC is a major impediment for a person who wishes to travel abroad, and no person can be deprived of his right to go abroad except for very compelling reasons. The procedure for such deprivation cannot be arbitrary, unfair, or unreasonable, as recognised by the Supreme Court in Maneka Gandhi v. Union of India [(1978) 1 SCC 248]. The Court further observed that there were no allegations in the counter affidavit that the petitioner was engaged in any fraud, siphoning, or defalcation of the funds given as loan. 

The Court cancelled the Look Out Circular (LOC) issued against the petitioner, a former Independent and Non-Executive Director of Birla Aircon Infrastructure Private Limited (BAIPL), who had resigned from the Board in 2013. The Court laid down that after resorting to all remedies available in law, including proceedings under the RDDB Act, SARFAESI Act, and the Insolvency and Bankruptcy Code, a bank cannot open a Look Out Circular as an arm-twisting tactic to recover debt from a person who is otherwise unable to pay, particularly when there are no allegations that such person was engaged in any fraud, siphoning off, or defalcation of the loan amounts. 

The mere fact that a person was associated with a defaulting company, even as a director, does not justify the issuance of an LOC to curtail his fundamental right to travel abroad under Article 21 of the Constitution, clarified the Court, while directing the Bureau of Immigration to immediately communicate the cancellation order, signalling strict judicial scrutiny of LOC-based travel restrictions imposed on directors and guarantors of defaulting companies. 

MSMED framework cannot be invoked to defeat an independent arbitration agreement covering defective supply disputes 

The Madras High Court in the case of TI Clean Mobility vs Senatla Innovative EV Components [Arb O.P. (Com.Div.) No.83 of 2026] Dated July 31, 2026, has held that the MSMED framework cannot be invoked to defeat an independent arbitration agreement covering defective supply disputes. The Court observed that MSMED Act, 2006 is a special enactment whose non-obstante clause under Section 18 operates only within the confined sphere of Section 17, namely, recovery of unpaid amounts owed by a buyer to a supplier for goods supplied or services rendered. The Act does not contemplate disputes relating to defective supply, replacement costs, or damages for breach of contractual obligations by the supplier, and such disputes must be adjudicated under the independent arbitration agreement between the parties. 

The Court undertook a detailed reading of Sections 15, 16, 17, and 18 of the MSMED Act and observed that Section 18 opens with a non-obstante clause, but its scope is restricted to references relating to amounts due under Section 17, which deals with recovery of unpaid dues for goods supplied or services rendered. The Court further observed that Section 15 casts the liability to pay on the buyer, while Section 16 provides for levy of interest, and that the entire framework of the MSMED Act is geared towards ensuring timely payment to micro and small enterprises. 

Critically, the Court noted that the MSMED Act restricts itself to recovery of unpaid amounts under Section 15 read with interest under Section 16, and does not extend to disputes concerning defective supply or failure to supply goods. The Court further observed that any dispute falling outside the realm of Section 17 read with Section 18 cannot be the subject matter of conciliation and arbitration under sub-sections (2) and (3) of Section 18, and that an independent arbitration agreement dealing with other rights and liabilities of the parties cannot be overridden by the MSMED Act.  

Where a resolution plan has been approved by the CoC with the requisite voting share, the Adjudicating Authority’s role is limited to verifying compliance with the mandatory requirements of Section 30(2) of the IBC and the corresponding CIRP Regulations, and the NCLT cannot sit in appeal over the commercial wisdom of the CoC 

The Kolkata Bench of the National Company Law Tribunal (NCLT) in the case of Tatanagar Financial Services vs Sis Mohan Real Estate [I.A. (IB) NO. 488/KB/2025] dated August 06, 2026, has held that where a resolution plan has been approved by the CoC with the requisite voting share, the Adjudicating Authority’s role is limited to verifying compliance with the mandatory requirements of Section 30(2) of the IBC and the corresponding CIRP Regulations, and the NCLT cannot sit in appeal over the commercial wisdom of the CoC. 

The NCLT clarified that the resolution plan must provide for payment of CIRP costs, repayment of operational creditors’ debts, management of the corporate debtor’s affairs, and a mechanism for implementation and supervision, and must not contravene any provision of law. Essentially, the Tribunal cautioned that upon approval under Section 31 of IBC, all claims not forming part of the resolution plan stand extinguished, but the liability of personal guarantors is not ipso facto discharged. 

The Tribunal reiterated that once the CoC has approved a resolution plan by the requisite percentage of voting share, it is imperative for the Resolution Professional to submit the same to the NCLT, and the NCLT’s discretion is circumscribed by Section 31 to a scrutiny limited to the requirements specified in Section 30(2). The NCLT categorically held that it is not endowed with the powers to analyse or evaluate the commercial decision of the CoC, and since the resolution plan was approved by 100% voting share, the Adjudicating Authority could not interfere in the same. 

Regarding reliefs, waivers, and concessions, the NCLT held that it has the power to grant only those reliefs that fall within the ambit of the I&B Code and the Companies Act, 2013, while reliefs pertaining to other governmental authorities would have to be dealt with by the respective competent authorities, keeping in view the spirit of the Code. On extinguishment of claims, the Bench reiterated that all claims not part of the resolution plan shall stand extinguished on the date of approval, including statutory dues owed to government authorities. On guarantors, the NCLT reiterated that approval of a resolution plan does not per se discharge the liability of personal guarantors, and appropriate action against them may be taken in accordance with law. 

An independent professional certifying statutory e-Forms does not fall within the definition of an “officer” or “officer-in-default” under the Companies Act, 1956 or 2013, and the ROC cannot directly prosecute such a professional under Section 439(2) of the 2013 Act unless active criminal complicity is prima facie established 

The Calcutta High Court in the case of Registrar of Companies, West Bengal vs Ranjan Meghani [CRR 4267 OF 2022] dated August 01, 2026, has laid down that an independent professional certifying statutory e-Forms does not fall within the definition of an “officer” or “officer-in-default” under the Companies Act, 1956 or 2013, and the ROC cannot directly prosecute such a professional under Section 439(2) of the 2013 Act unless active criminal complicity is prima facie established. However, the Court qualified this by holding that the proposition that an independent professional can never be prosecuted under Section 628 merely because they are not an executive officer is legally incorrect, and active complicity with mens rea can attract the rigour. 

On the question of whether an independent Chartered Accountant certifying statutory e-Forms falls within the definition of an “officer” or “officer-in-default” under the Companies Act, the Court observed that the status of an “officer” under Section 2(30) of the 1956 Act and Section 2(59) of the 2013 Act is intrinsically linked to executive governance, managerial control, and internal administration of the company. Section 2(60)(v) of the 2013 Act expressly carves out a statutory protection, declaring that a person who gives advice to the Board in a professional capacity shall not be deemed an officer in default. This exclusion, read alongside Section 226 of the 1956 Act (which disqualifies company officers from acting as independent auditors), reinforces the fundamental dichotomy between internal executive management and external professional advisors. Expanding the definition of “officer” to encompass an independent professional certifier would distort the statutory architecture of company law. 

Consequently, under Section 439(2) of the 2013 Act (Section 621 of the 1956 Act), the ROC lacks the direct statutory locus standi to prosecute an independent professional under provisions designed for internal corporate default, unless active criminal complicity is prima facie established, added the Court. 

On the substantive scope of Section 628 of the 1956 Act, the Court observed that the section penalises “any person” who makes a false statement in any return, report, certificate, or other document required under the Act, knowing it to be false, or who intentionally conceals any material fact. The essence of the offence is not merely the submission of an inaccurate document but the conscious, deliberate introduction of falsehood coupled with the requisite mens rea. Criminal penal liability of this severity can never be fastened vicariously, on the basis of loose suspicion, or through abstract association. A rigorous scrutiny of the complaint revealed a fatal lacuna: the complaint explicitly attributed all mala fide intention, physical execution, and deliberate concealment to the company director, Shri Biswajit Biswas, while concerning the Chartered Accountant, it contained only a generic assertion that he certified the forms.   

IBC moratorium cannot be invoked by a mortgagor to obstruct SARFAESI proceedings. Where a petitioner is admittedly a mortgagor and not a creditor under the IBC, the moratorium provisions of the Code cannot be used as a shield to obstruct a secured creditor’s enforcement action under the SARFAESI Act

The Bombay High Court in the case of Ravijyot Finance and Leasing vs Unity Small Finance Bank [Writ Petition No. 703 of 2023] dated August 17, 2026, has held that IBC moratorium cannot be invoked by a mortgagor to obstruct SARFAESI proceedings. The Court further held that where a petitioner is admittedly a mortgagor and not a creditor under the IBC, the moratorium provisions of the Code cannot be used as a shield to obstruct a secured creditor’s enforcement action under the SARFAESI Act.  

Briefly, the Petitioner’s case was that since the moratorium period of 180 days under the IBC was over and no extension had been granted, the Bank could not proceed with the sale until the NCLT applied its mind and passed an order under Sections 121 and 122 of the IBC. The Petitioner had admittedly earlier filed a Securitisation Application before the Debt Recovery Tribunal (DRT) challenging the first sale notice, and that proceeding was still pending. The Petitioner had also filed Commercial Suit challenging the very mortgage as forged and fabricated, and an Interim Application seeking urgent interim relief to stall the auction was rejected by a Single Judge of the Bombay High Court on 24th March 2026. 

The Court observed that the Petitioner was admittedly the mortgagor of the subject property and was attempting to create a false impression that it was a creditor under the IBC whose cause the Bank, another creditor, was breaking ranks from. The Court characterised the Petition as yet another attempt by a mortgagor to wriggle out of the situation without availing the statutory remedy under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act). 

The Court also noted that the question of law sought to be raised on the basis of IBC provisions was nothing but a desperate attempt to avoid steps being taken by the Bank, which was admittedly a secured creditor under the SARFAESI Act. The Court reiterated that moratorium under the IBC would not apply to the subject property, which exclusively belonged to the Petitioner as mortgagor. The Court further observed that the Writ Petition was not maintainable against a private bank in view of settled law, particularly since the Respondent private Bank was the only Respondent in the Petition. 

The High Court emphasised that the availability of an efficacious statutory remedy before the DRT, coupled with the petitioner’s own admission of having already approached the DRT against an earlier sale notice, rendered the writ petition non-maintainable. The Court further held that suppression of the NCLT order declining extension of moratorium violated the clean hands doctrine, and that writ jurisdiction could not be invoked against a private bank in any event.  

Date of submission of complete Form FA, and not the date of settlement, determines the applicable law, and 90% CoC approval is mandatory under the amended regime. The right to withdraw a CIRP application under Section 12A is governed by the provisions in force on the date when the complete Form FA is submitted to the IRP 

The Chennai Bench of the National Company Law Tribunal (NCLT) in the case of Neeraj Agarwal vs S. Arun [CP(IB)/211(CHE)/2022] dated July 29, 2026, has ruled that the date of submission of complete Form FA, and not the date of settlement, determines the applicable law, and 90% CoC approval is mandatory under the amended regime. The NCLT ruled that the right to withdraw a CIRP application under Section 12A is governed by the provisions in force on the date when the complete Form FA is submitted to the IRP. 

The Tribunal held that under the amended Section 12A read with amended Regulation 30A, withdrawal requires 90% voting share approval of the CoC, and no such approval having been obtained, the withdrawal application is non-compliant and liable to be dismissed.  

The Tribunal noted that both the IBC Amendment Act, 2026 (notified on May 26, 2026) and the IBBI Third Amendment Regulations, 2026 (notified on June 01, 2026) were in force on June 01, 2026, the date when the complete Form FA was submitted. The Tribunal rejected the contention of the operational creditor and suspended director that the amendment was prospective and would apply only to new cases admitted after notification, observing that the meaning of prospective is that it applies from the date it was notified. 

The Tribunal held that Section 6 of the General Clauses Act, 1897 would not be applicable because no right had accrued to the operational creditor under the pre-amended Section 12A, as the complete Form FA was submitted only on June 01, 2026 when the amended provisions were already in force. The right to file a Section 12A application accrues only upon submission of the complete Form FA and payment of CIRP costs and fees, both of which were completed only on June 01, 2026. 

0.25% levy introduced by the IBBI with effect from Oct 01, 2022 satisfies the test of a regulatory fee does not amount to a colourable exercise of power, neither arbitrary nor violative of Article 14 of the Constitution, as it applies uniformly to all resolution plans approved on or after Oct 01, 2022 

The Bombay High Court in the case of Hazel Mercantile vs IBBI [Writ Petition No. 3842 of 2026] dated August 19, 2026, has held that the Insolvency and Bankruptcy Board of India (IBBI) performs wide-ranging regulatory functions throughout the CIRP and that the levy introduced by the IBBI with effect from Oct 01, 2022 satisfies the test of a regulatory fee as evolved in Indian constitutional jurisprudence. The levy was introduced vide Regulation 31A of the IBBI Regulations which specified that the regulatory fee would be calculated at 0.25% of the realisable value to creditors under the resolution plan approved under Section 31 of the IBC and shall be payable to the Board, where such realisable value was more than the liquidation value. The Court further held that the Board is well within its powers to levy the regulatory fee as part of the insolvency resolution process costs.

The Court also held that the principle of ejusdem generis does not apply to clause (e) of Section 5(13) of the IBC, as it is a residuary clause and clauses (a) to (d) do not form a single class or genus. Also, the Court clarified that the regulatory fee is not a tax masquerading as a fee, as the Board provides broad-based and general quid pro quo services to all stakeholders in the CIRP, including the successful resolution applicants, and the law has evolved to the extent that specific service is not required to be demonstrated for a regulatory fee. 

The Court held that the regulatory fee is not excessive or disproportionate, as the audited accounts of the Board show that prior to the introduction of the fee, the Board was suffering a deficit funded by Government contributions, and after the fee, the Board is able to meet its expenditure with some surplus, which is necessary for financial independence of the regulator. The Court emphasised that the proviso to Regulation 31A is prospective and not retrospective, as the NCLT has the power under Section 31 of the IBC to send the resolution plan back to the CoC for reconsideration or to give notice to rectify defects, and the resolution plan is “cast in stone” only insofar as the CoC and the resolution applicant are concerned, and not insofar as the adjudicatory authority is concerned. 

Lastly, the Court held that the regulatory fee does not amount to a colourable exercise of power, as the petitioners have not challenged the validity of Sections 5(13), 53, 196(1)(c), and 240(2)(d) of the IBC, and the delegation of power to the Board is not unbridled or excessive. The Court held that the regulatory fee is not arbitrary or violative of Article 14 of the Constitution, as it applies uniformly to all resolution plans approved on or after Oct 01, 2022. 

Use of different inks for the signature and other entries on a cheque does not by itself render the negotiable instrument invalid or cast doubt on its probable execution, and keeping a substantial sum of money at home is not an improbability in law unless the accused establishes the same through evidence 

The Kerala High Court in the case of D. Chandran vs S. Anilkumar [CRL.A NO. 932 OF 2021] dated August 07, 2026, has held that use of different inks for the signature and other entries on a cheque does not by itself render the negotiable instrument invalid or cast doubt on its probable execution, and keeping a substantial sum of money at home is not an improbability in law unless the accused establishes the same through evidence. The Court also clarified that once the complainant discharges his initial burden by proving issuance of the cheque, its dishonour, and issuance of statutory notice, the presumptions under Sections 118 and 139 of the NI Act operate in his favour. These presumptions are rebuttable, but the accused must raise a probable defence meeting the standard of preponderance of probabilities, not mere possibility. 

The Court explained that a bare denial or an uncorroborated assertion of repayment is insufficient to rebut the presumptions. The burden of specifically pleading and proving the complainant’s lack of financial capacity rests on the accused, and in the absence of such a plea in the reply notice, the complainant cannot be faulted for not adducing evidence on financial capacity. 

The Court observed that the accused admitted borrowing Rs. 2.35 lakhs from the complainant and also admitted issuance of cheque bearing his signature. While there is evidence of repayment of Rs. 35,000/-, no documentary evidence was tendered to prove discharge of the remaining Rs. 2 lakhs, apart from the oral testimony of defence witness and the contention in the reply notice. The Court reiterated the settled legal position that when a party asserts discharge of a liability, he must prove the same with cogent and convincing evidence, and a bare denial of passing of consideration would not aid the case of the accused. 

The Court found that the trial court erred in denying the presumptions under Sections 118 and 139 of the NI Act to the complainant. The complainant had successfully discharged his initial burden by proving issuance of the cheque, its dishonour, and the statutory notice. The trial court’s reliance on the improbability of keeping Rs. 7 lakhs at the residence was misplaced, as keeping money at home by itself is not an improbability unless established by evidence. 

REGULATORY UPDATES

SEBI cautions investors against “live trading strategies/real-time strategies” being offered on social media platforms 

The Securities and Exchange Board of India (SEBI) vide its Press Release PR No.48/2026 dated 17 August, 2026, has cautioned investors against “live trading strategies/real-time strategies” being offered on social media platforms. It urged investors to remain vigilant while carrying out transactions in the securities market. Referring to its May 8, 2026 circular, SEBI said market price data can be shared for investor education purposes only without monetary incentives and with a thirty-day delay. Those engaged only in educational activities cannot use market data from the previous 30 days, indicate future prices, or give advice or recommendations on securities. 

SEBI said that live market data cannot generally be shared, except for market functioning or regulatory purposes. It noted that some people on social media are offering “live trading strategies/real-time strategies” and giving real-time tips on stock-market positions. The regulator observed that these live trading sessions attract a large number of viewers, with live chats also enabled, and unregistered advisory services are also exchanged. 

SEBI said some of these individuals present themselves as securities-market experts, offering guidance on when to invest or exit, trading strategies and positions in market indices. Some also claim to trade in real time while displaying their trading performance, live data based market patterns and expected targets. Accordingly, the Regulator advised the investors to not trust claims of such persons and not to take their investment decisions on such live trading sessions and to deal with only SEBI registered intermediaries. 

Click here to read/ download the original press release   

SEBI Amends NDCF Framework for InvITs to Allow Add-Back of Debt-Funded Major Maintenance Expenses for Road Projects 

The Securities and Exchange Board of India (“SEBI”) has issued a Circular No.: HO/17/11/17(5)2026-DDHS-POD2/I/18791/2026 dated August 14, 2026, amending the framework for computation of Net Distributable Cash Flows (“NDCF”) for Infrastructure Investment Trusts (“InvITs”). The amendments stem from a request received by SEBI from an industry association to review the existing framework, with the objective of permitting the addition of debt-funded major maintenance expenses for road projects while calculating NDCF. The changes have been finalised based on the recommendations of the Hybrid Securities Advisory Committee (“HySAC”) and a public consultation process undertaken pursuant thereto. The amendments are being made to Section F (Para 3.19) titled “Framework for calculation of Net Distributable Cash Flows (NDCFs)” of Chapter 3 of the Master Circular for InvITs dated July 11, 2025. 

Key updates: 

• Amendment at HoldCo/SPV Level: Under the revised framework, a new line item has been introduced in Table S.No. (I.) titled ‘Computation of Net Distributable Cash Flow at HoldCo/SPV Level’. This addition permits an add-back of payments made towards major maintenance expense for road projects to the extent such expenditure is funded by external borrowing, subject to Note 12. The new line item appears after the existing add-back for proceeds from sale of infrastructure investments, infrastructure assets, or shares of SPVs/Investment Entity not distributed pursuant to an earlier plan to re-invest under Regulation 18(7) of the InvIT Regulations.

• Amendment at Trust Level: A corresponding amendment has been made to Table S.No. (II.) titled ‘Computation of Net Distributable Cash Flow at Trust Level’. A new line item has been inserted to allow the add-back of payments made towards major maintenance expense for road projects to the extent funded by external borrowing, again subject to Note 12. This mirrors the change at the HoldCo/SPV level and ensures consistency in the treatment of such expenses across both levels of the InvIT structure.

• Substitution of Notes 4 and 6: Note No. 4 and Note No. 6 under S. No. (III.) titled ‘Notes/Other Rules’ have been substituted. The revised Note 4 addresses surplus cash available in InvITs/HoldCos/SPVs arising from three specified scenarios, namely, the 10% of NDCF withheld in line with the Regulations in any earlier year or half year, surplus cash available in a new HoldCo/SPV on acquisition by the InvIT, or any other reason excluding surplus cash available due to any debt raise. Importantly, the revised Note 4 carves out an exception permitting surplus cash available on account of payments made for Major Maintenance expenditure for road projects to the extent funded by external debt to be distributed, subject to conditions specified in Note 12 and adequate disclosures. The revised Note 6 expressly provides that no Trust or SPV can distribute any cash flows by obtaining external debt, except to the extent clarified in Notes 2, 7 and 12, while excluding any working capital or overdraft facilities obtained by the Trust or SPVs as part of treasury management or working capital purposes, provided such facilities are squared off within the quarter. 

• Insertion of New Note 12: A new Note No. 12 has been added under S. No. (III.) titled ‘Notes/Other Rules’, which sets out the conditions subject to which payments made towards major maintenance expense for road projects funded by external debt shall be added back. The term “Road Project” has been defined to mean a project in the ‘Roads and bridges’ infrastructure sub-sector as mentioned in the notification of the Ministry of Finance dated September 19, 2025, including any amendments or additions thereto. “Major maintenance expense” has been defined as expenditure incurred on maintenance of a road project which is not routine maintenance and is in accordance with the obligations and requirements specified in the concession agreement.

• Unitholder Approval Requirement: The framework mandates that unitholder approval pursuant to Regulation 22(5) of the InvIT Regulations shall be undertaken before adding back payments made for Major Maintenance expense for road projects to the extent funded by external borrowing. Such approval requires votes cast in favour of the resolution to be at least sixty per cent of total votes cast. The approval is required to be undertaken for each project, whether held at InvIT level or at SPV/HoldCo level, with respect to which the investment manager proposes to raise borrowing for major maintenance payments. The approval may be taken on a one-time basis covering the debt already availed or proposed to be availed for the entire project life cycle, or for specific major maintenance expense. Any deviations requiring additional debt from the previously approved proposal would require fresh unitholder approval prior to availing the debt.

• Disclosure Requirements in Explanatory Statement: The explanatory statement to the notice convening the unitholder meeting is required to inter-alia disclose the names and details of the projects, SPVs, or HoldCos for which the debt for Major Maintenance expense is proposed to be raised or is already raised, the category of all expenses which will be considered as Major Maintenance expenses, indicative year-wise and project-wise estimates of the Major Maintenance expenses for which borrowing is proposed to be raised as per the latest available valuation report, the possible impact on future growth potential of the InvIT due to the use of borrowing for Major Maintenance expenses, the present and future impact on distribution to unitholders, and the other funding alternatives in case debt is not available in future for funding Major Maintenance expenses. The circular also provides suggested disclaimer language indicating that Major Maintenance Debt is similar to a loan taken for capital expenditure, although Major Maintenance expense cannot be capitalised as per accounting principles, and that such debt would form part of the aggregate borrowing of the InvIT and result in reduction in the leverage headroom available in future years.

• Statutory Auditor Certification: A certificate from the statutory auditor is required to be obtained certifying that the major maintenance expenses incurred are in line with the obligations and requirements for major maintenance stated under the concession agreements, and that the payments made for such Major Maintenance expenses are funded by external borrowings. The statutory auditor may rely on an independent expert for certifying that the major maintenance expenses incurred are in line with the obligations and requirements for major maintenance stated under the concession agreements. Only such payments as certified by the statutory auditor of the InvIT will be allowed to be added back for the purpose of NDCF calculation.

• Ongoing Disclosure Obligations: The InvIT is required to make certain disclosures as part of its financial results and Annual, Half-yearly, and Quarterly Reports, as applicable. The Net Borrowing Ratio provided under Chapter 4 is required to segregate the amount and percentage of borrowing taken for major maintenance expenses. The notes to the NDCF statement are required to disclose, for each project, SPV, HoldCo, and the InvIT, the aggregate amount of borrowing raised in the concerned period for meeting Major Maintenance expenses and the aggregate amount of outstanding debt for Major Maintenance expenses as on the date. Additionally, the debt maturity profiles required under InvIT Regulations are required to specifically segregate and highlight borrowing taken for Major Maintenance expenses. 

Click here to read/ download the original circular   

SEBI Eases Framework for Online Bond Platform Providers; Permits IFSCA Products and 54EC Bonds 

The Securities and Exchange Board of India (SEBI) has issued a Circular No.: HO/17/11/(2)2026-DDHS-POD1/I/18769/2026 dated August 14, 2026, modifying the regulatory framework governing Online Bond Platform Providers (OBPPs) with the stated objective of promoting ease of doing business. The framework for OBPPs was originally prescribed by SEBI through a notification dated November 09, 2022, under Regulation 51A of the SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021, and was subsequently streamlined through various circulars covering registration, permissible products and services, and operational requirements. The present circular has been issued in response to suggestions received from stakeholders and seeks to widen the product universe available on OBPPs while rationalising certain compliance obligations.

Key Modifications Introduced

The circular introduces three principal modifications to Chapter XXI of the SEBI Master Circular for issue and listing of Non-Convertible Securities, Securitised Debt Instruments, Security Receipts, Municipal Debt Securities and Commercial Paper dated October 15, 2025. First, OBPPs are now permitted to offer products, securities, or services regulated by the International Financial Services Centres Authority (IFSCA). Second, OBPPs are permitted to offer bonds issued under Section 54EC of the Income Tax Act, 1961, or Section 85 of the Income-tax Act, 2025. Third, the compliance officer requirement has been relaxed, replacing the earlier mandate of appointing a Company Secretary with a more flexible prescription aligned with SEBI (Stock Brokers) Regulations, 2026.

Revised Permissible Products and Services

Clause 5.2 of the NCS Master Circular has been modified to expand the list of permissible offerings on an Online Bond Platform. OBPPs may now offer listed debt securities, listed municipal debt securities, and listed securitised debt instruments; debt securities, municipal debt securities, and securitised debt instruments proposed to be listed through a public offering; listed Government Securities, State Development Loans, and Treasury Bills; listed Sovereign Gold Bonds; other products or securities or services regulated by a financial sector regulator, namely SEBI, RBI, IRDAI, IFSCA, or PFRDA; and bonds issued under Section 54EC of the Income Tax Act, 1961, or Section 85 of the Income-tax Act, 2025.

Conditions for IFSCA-Regulated and 54EC Offerings: 

• For products regulated by other financial sector regulators, OBPPs may offer them either under a different tab on the online bond platform or on any other website or platform, and such offerings shall be governed by the directions and stipulations of the respective regulator. The grievance redressal mechanism for such products is to be specified by the OBPPs on their platform. In the specific case of IFSCA-regulated products, OBPPs must offer them in the manner prescribed for SEBI-registered stock brokers operating within GIFT-IFSC and in compliance with applicable FEMA guidelines, including the Overseas Investment Rules and limits under the Liberalised Remittance Scheme. Such products must be clearly labelled as international or overseas instruments to prevent confusion with domestic debt securities.

• For bonds issued under Section 54EC of the Income Tax Act, 1961, or Section 85 of the Income-tax Act, 2025: OBPPs may offer them under a different tab or on any other website or platform, but are required to provide a disclaimer stating that these are tax-specific instruments and that the grievance redressal mechanism lies with the issuer and not with SEBI. OBPPs must also disclose the features of 54EC bonds, including eligible issuers, lock-in period, investment limit, non-transferable status, tax features, application size, and exemption from listing requirements under the SEBI (LODR) Regulations, 2015. Further, OBPPs must prominently disclose that investment in these instruments is intended for investors seeking to avail the associated tax benefits, subject to satisfaction of eligibility criteria and other conditions prescribed under the applicable provisions of the Income-tax Act.

Compliance Officer Requirement: 

Clause 1.1 of Annexure-XXIA of the NCS Master Circular has been modified to provide that the entity must appoint a Compliance Officer as per the SEBI (Stock Brokers) Regulations, 2026, who shall comply with the certification requirements, namely the NISM-Series-III-A: Securities Intermediaries Compliance (Non-Fund) Certification Examination, as prescribed from time to time. This replaces the earlier requirement of appointing a Company Secretary as the compliance officer.

Directions to Stock Exchanges and Effective Date: 

The circular clarifies that all other provisions of the NCS Master Circular shall remain unchanged and that the circular shall come into force with immediate effect. Stock Exchanges have been directed to take necessary steps for implementation, make amendments to relevant bye-laws, rules, and regulations wherever applicable, and bring the provisions of the circular to the notice of stock brokers while disseminating the same on their websites. The circular has been issued in exercise of powers conferred under Section 11(1) of the Securities and Exchange Board of India Act, 1992, read with Regulation 55(1) of the SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021, to protect the interest of investors in securities and to promote the development of, and to regulate, the securities market. 

Click here to read/ download the original circular  

SEBI proposes easing Know Your Client process for individual Persons Resident Outside India 

The Securities and Exchange Board of India (SEBI) vide its Press Release PR No.46/2026 dated 14 August, 2026, has proposed easing the Know Your Client (KYC) process for individual Persons Resident Outside India (PROIs). This includes Non-Resident Indians (NRIs), Overseas Citizens of India (OCIs), and foreign nationals. The proposal would allow individual PROI clients in Financial Action Task Force (FATF)-compliant countries to complete digital onboarding without being physically present in India. Intermediaries would be allowed to accept KYC records and related documents digitally from such clients. 

KYC is the process through which a financial intermediary verifies a client’s identity and other details. SEBI’s consultation paper proposes changes to several steps in this process for clients who are outside India. At present, the KYC framework requires the client’s physical presence in India for digital onboarding. SEBI has proposed removing this requirement for PROI clients located in FATF-compliant countries. 

Under the proposed framework, a PROI client could submit the KYC form either physically or digitally. A digital KYC form could be submitted using an electronic signature. A scanned copy of a physical KYC form under electronic signature would also be permitted. This would give clients outside India an alternative to sending the physical form by courier. SEBI has also proposed greater flexibility for specimen signatures. A client could submit a cropped image of the specimen signature while submitting the KYC documents digitally. 

The client would then have to provide a wet signature before the intermediary during Video In-Person Verification (VIPV). The intermediary would verify whether the wet signature matches the signature submitted earlier. The proposal also provides alternatives where the original identity or address document is not produced for verification. These include equivalent electronic documents through DigiLocker and documents issued by the issuing authority through a verifiable mechanism. 

Aadhaar-based electronic KYC authentication could also be used. Copies of documents attested by specified certifying authorities would be another option. The specified authorities include notaries, authorised officials of overseas branches of scheduled commercial banks registered in India, and branches of overseas banks that have relationships with Indian banks. They also include court magistrates, judges and Indian embassies or consulates in the country where the client resides. 

Physical In-Person Verification (IPV) would continue to be required. If physical IPV is not feasible, the intermediary could conduct VIPV. The proposed safeguards include recording the client’s consent and carrying out liveness checks. The process would also require random actions by the client during the video interaction and live GPS coordinates. The system would have to prevent connections through spoofed IP addresses, VPNs, or proxy servers. The client’s location would also have to match the country specified in the KYC form and the officially valid or deemed officially valid document. 

The proposal further requires the client’s photograph captured during VIPV to match the photograph submitted in the KYC documents. The process would also require end-to-end encryption. VIPV would have to be conducted by an authorised official of the intermediary. The process would also be subject to concurrent audit. SEBI has separately proposed making KYC records of individual PROIs portable. This would mean that a client would not have to repeat the KYC process when approaching another intermediary. 

Attributes in the KYC record that have been verified with official or source databases would be tagged as “validated.” Other intermediaries could use these validated details while carrying out additional checks where required based on the client’s risk profile. The proposal would also allow an intermediary to rely on KYC undertaken by another SEBI-registered intermediary. It could also rely on KYC undertaken by an entity regulated by another financial sector regulator. The intermediary may rely on records obtained from the KYC Registration Agency (KRA). 

For KYC undertaken by an entity regulated by another financial sector regulator, the records may be obtained from the Central KYC Records Registry (CKYCRR) through the KRA. The intermediary relying on the existing KYC would nevertheless remain ultimately responsible for its client’s KYC. It would also have to undertake enhanced KYC measures proportionate to the client’s risk profile. SEBI’s draft circular says the proposed provisions would come into effect 30 days after the circular is issued. 

The proposed provisions would apply to the onboarding of PROI clients except those residing in FATF non-compliant countries. The existing requirements would continue to apply to PROI clients in FATF non-compliant countries. KYC undertaken before the proposed circular comes into effect would continue to be governed by the existing KYC provisions. SEBI has invited public comments on the proposal until September 4, 2026. 

Click here to read/ download the original press release