Legal Updates ( May 11 – May 16, 2026 )
CASE UPDATES
Invocation of arbitration under Section 21 of Arbitration & Conciliation Act is not consent to appointment, and that subsequent participation in proceedings does not by itself constitute the express written waiver required under the proviso to Section 12(5)
The Bombay High Court in the case of D S Textiles vs IIFL Finance Limited [Arbitration Petition (L) No. 12097 of 2026] dated April 30, 2026, has held that a unilateral appointment of an arbitrator remains invalid even if the appointing party seeks to route that appointment through an “institution” or similar mechanism of its own choice, unless the parties had agreed to such institutional appointment. The Court said that the defect goes to the foundational requirement of independence, impartiality, equal treatment, and neutrality in constitution of the arbitral tribunal.
The Court explained that invocation of arbitration under Section 21 of Arbitration & Conciliation Act is not consent to appointment, and that subsequent participation in proceedings does not by itself constitute the express written waiver required under the proviso to Section 12(5).
Although the Court took note of the statement by IIFL Finance Limited (Respondent) that the arbitration proceedings were being dropped, it directed that the impugned order be quashed and set aside, and further directed that the judgment be placed before the Audit Committee of the Respondent’s Board of Directors by the Chief Compliance Officer so that the governance bodies were made aware of the practice being contrary to law and could frame appropriate policies.
The Court observed that the apparent modus operandi was to conduct arbitration in this manner and hope that most affected parties would not challenge the arbitration but would instead settle, thereby leading to recoveries; and that when a counterparty did challenge the unilateral appointment, the appointing party would simply volunteer to withdraw the arbitration proceedings.
The Court made it clear that appointment through an “institution” chosen unilaterally by one party is only a “veneer” or “fig-leaf” to claim independence, and that the arbitrator would still remain a unilaterally appointed arbitrator. It observed that orders under Section 17 attaching bank accounts were often passed rapidly in such arbitrations, and that such orders commonly contained no mention of the process of appointment of the arbitrator and were often also devoid of material particulars of compliant invocation of arbitration.
The Court stated that there are only two known methods in law to appoint an arbitrator: (i) by consent of the parties, and (ii) by appointment through a Section 11 court having jurisdiction; and that no third mode can be whitewashed as compliant. The Court therefore treated the attempt by finance companies and banks to present institution-based unilateral appointments as independent appointments as wholly untenable, completely illegal, and a colourable and manipulative device to circumvent Supreme Court law.
The Court also observed that a notice under Section 21 is only an expression to set the arbitration agreement in motion and does not by itself operate as consent to any future appointment. It clarified that participation in proceedings, filing a claim, or participating in Section 29A extension proceedings would still not amount to an express agreement in writing waiving objection to an ineligible arbitrator, and that such objection could still be raised at the Section 34 stage. The Court deprecated the practice and stated that it gives arbitration a bad name and inflicts long-term damage on alternative dispute resolution as a mechanism.
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Where the suit’s substantive reliefs concern specific performance and enforcement of agreements, the plaint cannot be rejected at the threshold under Order VII Rule 11 merely because SARFAESI measures are also in the background, unless the matter sought to be adjudicated is one that the DRT is empowered to determine
The Bombay High Court in the case of IIFL Finance vs Paramvir Developers [Interim Application No. 4596 of 2025] dated May 04, 2026, has ruled that for the purposes of Section 12-A of the Commercial Courts Act, the determinative test is whether, on a wholesome reading of the plaint and supporting documents, urgent interim relief is genuinely contemplated from the plaintiff’s standpoint in light of the nature of the suit, subject matter, and cause of action. The Court clarified that it is not whether such interim relief is ultimately granted. If that test is satisfied, non-compliance with pre-institution mediation does not justify rejection of the plaint under Order VII Rule 11 CPC.
The Court further held that where the suit’s substantive reliefs concern specific performance and enforcement of agreements, the plaint cannot be rejected at the threshold under Order VII Rule 11 merely because SARFAESI measures are also in the background, unless the matter sought to be adjudicated is one that the DRT or Appellate Tribunal is empowered to determine under the SARFAESI Act. The Court held that no ground under Order VII Rule 11 CPC was made out and accordingly dismissed the interim applications seeking rejection of the plaint.
The Court observed, on the plaint as pleaded, that there was sufficient cause of action against all three defendants because the suit was founded on enforcement of the Framework Agreement against defendant nos. 1 and 2 and the profit-sharing agreement against defendant no. 3. As regards Section 34 of the SARFAESI Act, the Court observed that the substantive prayers in the suit were for performance of the Framework Agreement and the profit-sharing agreement, reliefs which could not be decided under the SARFAESI machinery. Hence, it opined that the plaint could not be rejected at the threshold on that ground.
The Court also rejected the submission that the plaint was barred under Section 41 of the Specific Relief Act at the threshold, holding that the pleadings warranted a trial and that merits of the cause of action and reliefs could not be dealt with under Order VII Rule 11 CPC at this preliminary stage.
On Section 12-A of the Commercial Courts Act, the Court treated the law as settled by the Supreme Court, especially in cases of Yamini Manohar vs. T.K.D. Keerthi [(2024) 5 SCC 815] and Dhanbad Fuels Private Limited vs. Union of India [2025 SCC Online SC 1129]. The correct test is not whether interim relief is ultimately granted, but whether, upon examination of the nature and subject matter of the suit and the cause of action, urgent interim relief could be said to be contemplated from the plaintiff’s standpoint.
The Court expressly noted that urgent interim relief must not be a disguise or camouflage to bypass mandatory pre-institution mediation, but equally, mere non-grant of ad interim relief or later rejection of interim relief on merits does not justify rejection of the plaint under Order VII Rule 11 CPC.
The Court further observed that post-filing stages of the suit are not relevant for deciding whether the plaint should be rejected under Order VII Rule 11(d) for non-compliance with Section 12-A. The Court found that the plaintiffs had pleaded precipitative action by the defendants, threatened enforcement of security, possession action, alleged breach of the Framework Agreement and profit-sharing arrangement, and apprehended loss of their protected interests. Seen from the plaintiffs’ standpoint, urgent interim relief was therefore contemplated.
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Receipt by a person in India of Indian currency through a cheque drawn on an NRE account, even if that account had been funded by foreign currency deposits, does not by itself constitute a contravention of Section 8(1) of FERA
The Delhi High Court in the case of Prakash Chandra Yadav vs Directorate of Enforcement [Misc. Appeal (PMLA) 19/2024] dated April 30, 2026, has held that receipt by a person in India of Indian currency through a cheque drawn on an NRE account, even if that account had been funded by foreign currency deposits, does not by itself constitute a contravention of Section 8(1) of FERA, because the allegation is not of dealing in or acquiring “foreign exchange” within the meaning of the Act. Further, Section 8(2) of FERA is not attracted unless there is a transaction providing for conversion of Indian currency into foreign currency or foreign currency into Indian currency at rates other than those authorised by the RBI.
Thus, the Court held that, on the facts alleged, no violation of Section 8(1) or Section 8(2) of FERA was made out, set aside the Tribunal’s order dated 29.05.2024, directed refund of the penalty amount within four weeks, and allowed the appeal without costs.
The Court recorded that there was no dispute that the appellant received a cheque of Rs. 30 lakhs drawn on Akbar Veerji’s NRE account, that the account had been funded by deposits in US dollars, and that the cheque issued to the appellant was in Indian currency. On Section 2(h) of FERA, the Court observed that “foreign exchange” includes instruments, deposits, etc. payable in foreign currency, or payable in Indian currency or foreign currency at the option of the drawee or holder, the essential element being that it is payable in foreign currency at such option.
The Court observed that, in the present case, the cheque was paid and payable to the appellant only in Indian currency. On Section 8(1), the Court held that what is prohibited is dealing in foreign exchange by purchase, acquisition, borrowing, sale, transfer, lending or exchange, except through an authorised dealer. The Court expressly observed that the allegation against the appellant was not of dealing in foreign exchange or exchanging the same, but only of receiving an amount in Indian rupees from an NRE account, and that this could not amount to a violation of Section 8(1) of FERA.
The Court disagreed with the Tribunal’s reliance on the Explanation to Section 8(1), holding that the Explanation must be read strictly and according to its grammatical meaning, and that it did not support the Tribunal’s finding. It noted that there was no allegation that Akbar Veerji had opened any account with the appellant in foreign exchange or had lent money to the appellant in foreign exchange.
On Section 8(2), the Court held that the Tribunal’s view was also unsustainable because Section 8(2) applies to transactions providing for conversion of Indian currency into foreign currency or foreign currency into Indian currency at rates other than those authorised by the RBI. The Court observed that there was no allegation against the appellant either of exchange of foreign currency into Indian currency or vice versa, or of any exchange at a rate other than the rate authorised by the RBI; therefore Section 8(2) had no application on the facts.
On the suppression argument, the Court held that the earlier order dated 06.04.2009 only rejected a challenge to the order framing charge on a prima facie view and was therefore no longer relevant after the criminal proceedings ended in acquittal on 30.11.2017. The Court referred to the criminal court’s findings that the funds had come through banking channels into an NRE account, that transactions out of the NRE account were in Indian rupees and made in India by cheque, and that nothing showed that the accused had acquired any foreign exchange or that the remittances into the NRE account were impermissible.
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A Look Out Circular, being a coercive executive measure that directly impairs the fundamental right to travel abroad under Article 21, cannot be sustained merely on the basis of executive fiat, routine commercial default, bank debt recovery, guarantor/director status, or vague assertions of economic interest or public interest
The Delhi High Court in the case of Ritu Singhal vs Bureau of Immigration [W.P.(C) 17646/2022] dated April 17, 2026, has held that a Look Out Circular (LOC), being a coercive executive measure that directly impairs the fundamental right to travel abroad under Article 21, can be issued and continued only strictly in accordance with law, and ordinarily only in cases involving a live cognizable offence, deliberate evasion of arrest or judicial process, and a real and proximate likelihood of absconding. It cannot be sustained merely on the basis of executive fiat, routine commercial default, bank debt recovery, guarantor/director status, or vague assertions of economic interest or public interest.
The Court stated that public sector banks, through their Chairman, Managing Director or Chief Executive Officer, lack lawful authority to seek issuance of LOCs, and LOCs issued solely at their behest are liable to be quashed. Further, the exceptional power under Clause 6(L) of the 2021 Office Memorandum must be narrowly construed and can be invoked only in rare and compelling cases involving a clear and grave threat to sovereignty, security, integrity, strategic interests, national/systemic economic interests, or larger public interest in the strict sense recognised by law.
The High Court emphasised that where a charge-sheet or complaint has already been filed and the criminal court is seized of the matter, the proper course is ordinarily for the affected person to approach that court or the originating authority for cancellation or modification of the LOC, since that court is best placed to assess necessity and proportionality on the basis of the investigative record. Accordingly, the Court quashed the impugned LOCs falling in the first two categories, subject to stated conditions regarding prior intimation, itinerary disclosure, and certain case-specific safeguards.
The Court observed that the right to travel abroad is an integral facet of the right to life and personal liberty under Article 21, and that any restriction on this right must be founded on law and on a just, fair and reasonable procedure. Executive instructions cannot substitute legislative mandate when a fundamental right is curtailed.
The Court observed that an LOC is not statutory in origin but arises from executive instructions of the Ministry of Home Affairs, and that the current regime is governed principally by the Office Memorandum dated Feb 22, 2021. That regime permits resort to LOCs in cognizable offences, and in non-cognizable matters generally only for intimation of travel movements, subject to a narrow exceptional category.
The Court accepted and applied the position that LOCs are coercive measures of last resort and cannot be used routinely for law enforcement or debt recovery. It reiterated that recourse to an LOC may be taken only where there is a cognizable offence and the accused is deliberately evading arrest or process, coupled with a real and proximate likelihood of absconding. It observed that the inclusion of Chairmen, Managing Directors and Chief Executive Officers of public sector banks as authorities empowered to seek LOCs had been held bad in law, and that public sector banks do not possess legal authority to seek opening of LOCs.
The Court further observed that mere inability to repay debt, absence of collateral, declaration of an account as NPA, or pendency of DRT or recovery proceedings cannot justify curtailment of the right to travel abroad in the absence of a criminal case and the legally required threshold. It also observed that expressions such as “economic interests of India” and “larger public interest” cannot be expanded to cover routine commercial defaults. The Court emphasised that the authority opening an LOC must independently apply its mind and pass a speaking order based on specific and credible material. A mechanical or pro forma exercise, or action taken merely because a bank or originating agency requests it, is insufficient.
The Court also observed that an LOC cannot be sustained merely because a person is a director, guarantor, shareholder or family member of a borrower or accused, unless there is specific material demonstrating direct and personal involvement. It expressly stated that guilt is personal and not vicarious in civil or criminal liability. The Court stressed that continuance of an LOC is not indefinite and must be periodically reviewed. Where the subject has cooperated, has not evaded process, and no further interrogation or presence is demonstrably required, continuation becomes an unreasonable restriction on personal liberty.
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Disputes raised by the Corporate Debtor, including MSME-related objections, alleged irregularity in NPA classification, pending arbitration, or other inter se disputes, do not defeat admission once debt and default are established
The National Company Law Appellate Tribunal (NCLT) Mumbai Bench in the case of Buldana Urban Cooperative Credit Society vs Amar Seeds [C.P.(IB)/767(MB)2025] dated April 29, 2026, has held that for admission of a Section 7 IBC application, the Adjudicating Authority is required to determine whether there exists a financial debt and whether a default has occurred. The Court held that disputes raised by the Corporate Debtor, including MSME-related objections, alleged irregularity in NPA classification, pending arbitration, or other inter se disputes, do not defeat admission once debt and default are established.
The Tribunal also held that a dispute as to the precise date of default is not material where, even on the Corporate Debtor’s own case, the application remains within limitation. Further, a defect in the supporting affidavit of the application was treated as a curable defect, not fatal to maintainability once cured pursuant to the Tribunal’s direction.
The Tribunal explained that the debt owed by the Corporate Debtor fell within the definition of “financial debt” under Section 5(8), that the default exceeded the threshold under Section 4, and that the conditions necessary to trigger CIRP were fulfilled. Accordingly, the Section 7 application was admitted, moratorium under Section 14 was declared, and RSDS Advisory & Restructuring LLP was appointed as IRP.
The Tribunal observed that it was an admitted and undisputed position that the Applicant sanctioned Rs. 18 crores to the Corporate Debtor under the sanction letter dated 10.04.2023, that the loan agreement dated 29.04.2023 was executed, and that the account statement reflected disbursement of Rs. 18 crores on 29.04.2023. It also noted that the facility was secured by a mortgage deed dated 18.04.2023.
The Tribunal reproduced the repayment clauses of the loan agreement and noted that the loan, though approved as a demand loan, was permitted to be repaid in monthly instalments as a concession, and that if an amount equal to three instalments was not paid, the creditor could demand recovery of the entire outstanding amount with interest and expenses.
On default, the Tribunal observed that the moratorium expired on 29.04.2024 and that the Corporate Debtor failed to pay the first three instalments. In terms of the loan agreement, this entitled the Applicant to recall the entire loan. The Tribunal also recorded that demand notices dated 27.06.2024 and 19.09.2024 were issued and remained unpaid.
On the objection regarding the date of default, the Tribunal rejected the contention as inconsequential. It held that even if the Corporate Debtor’s interpretation were accepted and the instalments were treated as due on the 10th of the following month, the application would still be within the three-year limitation period. The Tribunal stated that the objection did not have the effect of rendering the application time-barred and was therefore rejected.
On the MSME defence, the Tribunal held that while MSME status was not disputed, the reliefs under the MSMED Act and related RBI frameworks cannot override the operation of the Code. The Tribunal expressly observed that for admission under Section 7, the relevant date is the date of default and not the date of NPA, and that even procedural non-compliance in NPA classification would not negate the right to approach the Adjudicating Authority once default is established.
On the argument that the petition was a counterblast and on disputes relating to pledged goods/arbitration, the Tribunal held that proceedings under Section 7 are summary in nature, and the Adjudicating Authority is only required to ascertain the existence of financial debt and default. Inter se disputes and pendency of arbitration were held to be irrelevant for admission of the application.
The Tribunal noted that the Applicant had placed on record the NeSL record of default in Form D, showing the status as “Deemed to be Authenticated”, total outstanding of Rs. 22.77 Crores, and date of default as 31.07.2024. It also found that the application filed on 30.07.2025 was within limitation. Accordingly, the Tribunal found that the proposed IRP did not have a valid AFA as on the date of the order.
For admission under Section 95 of IBC, pendency of proceedings under SARFAESI or before the DRT does not bar initiation of insolvency resolution against a personal guarantor, having regard to the independent nature of IBC proceedings and the overriding effect of Section 238
The National Company Law Tribunal (NCLT) Mumbai Bench in the case of Canara Bank vs Shweta Deepak Patel [IA(I.B.C)2976(MB)2025] dated April 06, 2026, has observed that a document styled and worded as a guarantee, which records that the signatory unconditionally and irrevocably guarantees repayment of the borrower’s dues, will be treated as a contract of guarantee and not as an indemnity merely because it also contains language that, as between the bank and guarantor, the guarantor is treated as principal debtor.
The Tribunal held that where the terms of the guarantee are on demand, a Section 13(2) SARFAESI notice addressed to the guarantor and containing a specific demand to pay within the stated period can amount to valid invocation of the personal guarantee. In such a case, the guarantor’s default arises upon failure to comply within that demand period, and the date of default for the guarantor may therefore be different from the borrower’s default/NPA date.
The Tribunal further held that for admission under Section 95/100 IBC, pendency of proceedings under SARFAESI or before the DRT does not bar initiation of insolvency resolution against a personal guarantor, having regard to the independent nature of IBC proceedings and the overriding effect of Section 238. Even if the guarantee deed is challenged on stamping, the application can still be admitted where debt and default are otherwise established from other transaction documents on record.
The Tribunal observed on perusal of the agreement, that it was a guarantee agreement. It noted that the respondent was expressly described as “Guarantor”, and the document specifically stated that the guarantor would “unconditionally and irrevocably guarantee the repayment of all amounts”. It therefore rejected the argument that the document was merely an indemnity.
The Tribunal held that, in the facts of the case, the Section 13(2) notice dated 06.07.2024 constituted a valid invocation of the personal guarantee because it was addressed to the borrower/guarantor/mortgagor/owner and specifically required the respondent to pay within 60 days. On that basis, the Tribunal accepted 04.09.2024 as the correct date of default for the personal guarantor.
The Tribunal expressly observed that it did not find any guarantee agreement for the GECL and GECL 1.0 facilities. However, it held that the default in respect of the OCC facility alone was above the statutory threshold of Rs. 1 crore, and therefore the Section 95 proceedings were maintainable on that basis.
Further, the Tribunal rejected the objection based on differing dates of default for the borrower and guarantor. It held that the guarantor’s obligation to pay arises after invocation of the guarantee following default by the principal borrower, and that, here, the guarantor’s default occurred on expiry of the 60-day period under the invocation notice, i.e. 04.09.2024.
At the same time, the Tribunal held that the insufficiency of stamping objection did not defeat the petition because the bank had otherwise established the debt and default through other transaction documents, including the acknowledgment of debt and renewed sanction letters accepted by the personal guarantor.
Lastly, the Tribunal held that prior or parallel proceedings under SARFAESI and before the DRT do not bar a Section 95 application. It relied on Section 238 of the IBC and noted that insolvency proceedings under the Code are independent and are not invalidated merely because other recovery proceedings are pending. The Tribunal accepted that the bank, through its rejoinder, had filed statements of account with the Bankers’ Books Evidence Act certificate, which reflected disbursement to the corporate debtor. It therefore rejected the respondent’s evidentiary objection.
Where a suspended director, while aware of ongoing CIRP, conceals true asset-related transactions of the corporate debtor, furnishes forged leave and license documents to the RP, and diverts rental income from properties owned by the corporate debtor into his personal account, such conduct constitutes intention to defraud creditors, warranting a contribution direction under Section 66(1) of the IBC
The Mumbai Bench of the National Company Law Tribunal (NCLT) in the case of Ganesh Venkata Siva Rama Krishna Remani vs Puneet P. Bhatia [IA 4016 of 2025] dated April 29, 2026, has observed that where a director/suspended management, while aware of impending or ongoing CIRP, conceals true asset-related transactions of the corporate debtor, furnishes forged leave and license documents to the RP, and diverts rental income from properties owned by the corporate debtor into his personal account or a connected account, such conduct constitutes carrying on the business of the corporate debtor for a fraudulent purpose with intent to defraud creditors, warranting a contribution direction under Section 66(1) of the IBC.
The Tribunal directed Respondent No. 1 to contribute the amounts already received from Respondent Nos. 3 and 4, as well as any further amounts received under the leave and license arrangements, to the assets of the corporate debtor within 30 days, together with interest at 12% per annum from the date of receipt until payment. The Tribunal further held that, given the concealment, diversion of funds, and obstruction in relation to the corporate debtor’s assets during CIRP, the matter merited referral to the IBBI for appropriate action under Sections 70, 72, 73 and 74 of the IBC.
The Tribunal observed that Respondent No. 1 was fully aware of his obligation to disclose details of all assets of the corporate debtor to the RP, but instead furnished forged documents, thereby concealing the genuine nature of the transactions and the rental income that should have accrued to the corporate debtor.
The Tribunal noted that Respondent Nos. 3 and 4 had paid Rs. 9.67 lakhs and Rs. 40.68 lakhs respectively until discovery of the fraud. It also noted that the ledger statement of M/s BNT Connections showed payments linked to Mr. Puneet Bhatia, and that the leave and license agreement dated 04.01.2024 with Respondent No. 3 was entered into by Respondent No. 1 in his personal name. On that basis, the Tribunal found that rentals in respect of properties owned by the corporate debtor were received by Respondent No. 1 personally or in the account of M/s BNT Connections.
The Tribunal expressly held that the amounts ought to have accrued to the corporate debtor but were siphoned away at the behest of Respondent No. 1 to the prejudice of creditors. It found that these facts clearly established fraudulent intent and demonstrated carrying on the business of the corporate debtor in relation to these properties for a fraudulent purpose with intent to defraud creditors. The Tribunal also considered it appropriate to refer the matter to the IBBI for action against Respondent No. 1, treating him as an officer of the corporate debtor for the purposes of Sections 70, 72, 73 and 74 of the IBC.
REGULATORY UPDATES
Insolvency and Bankruptcy Board of India (Model Bye-Laws and Governing Board of Insolvency Professional Agencies) (Amendment) Regulations, 2026
The Insolvency and Bankruptcy Board of India (IBBI) vide it Official Gazette Notification F. No. IBBI/2026-27/GN/REG/140, dated May 13, 2026, has amended its regulations to provide for appointment of its nominee director on the governing board of an insolvency professional agency (IPA), with the nominee enjoying the same status, rights, duties, powers and responsibilities as other directors. The change has been introduced through amendments to the Insolvency and Bankruptcy Board of India (Model Bye-Laws and Governing Board of Insolvency Professional Agencies) Regulations, 2016.
The Gazette Notification states that the Board shall nominate one individual as its nominee director on the Governing Board of an insolvency professional agency, and such nominee director shall have the same status, rights, duties, powers and responsibilities as other directors of the governing board. The amendment also clarifies that nominee directors will be excluded while calculating the minimum requirement of seven directors on the governing board of an IPA.
Further, new eligibility conditions have been introduced for independent directors, including that they should not be members of statutory regulators that have sponsored or promoted the IPA, or directly or indirectly hold shareholding in or exercise control over it, and should not simultaneously serve as independent directors of another insolvency professional agency.
The regulations also provide that a managing director’s second term will be subject to a satisfactory performance review by the governing board and prior approval of the IBBI. For obtaining prior approval for the appointment or renewal of a managing director, an IPA will have to send at least two names to the IBBI at least one month before the expiry of the incumbent’s tenure.
Insolvency Professional Agencies are entities recognised by the IBBI to enrol, monitor and regulate insolvency professionals under the Insolvency and Bankruptcy Code. The three recognised IPAs in India are the Indian Institute of Insolvency Professionals of ICAI, ICSI Institute of Insolvency Professionals and the Insolvency Professional Agency of the Institute of Cost Accountants of India.
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SEBI permitted use of fresh borrowings for InvITs where Net Borrowings exceeds forty-nine percent of the value of InvIT assets
The Securities and Exchange Board of India (SEBI) vide its Circular No: SEBI/HO/DDHS/DDHS-PoD-2/ I/11700/2026, dated May 15, 2026, has expanded the permissible use of borrowings by Infrastructure Investment Trusts (InvITs) where net borrowings exceed 49% of the value of InvIT assets. SEBI said Regulation 20(3)(b)(ii) of the SEBI (Infrastructure Investment Trusts) Regulations, 2014 was amended on April 17, 2026 to expand the permissible use of such borrowings. Under the circular, borrowings above the 49% limit may now be utilised for capital expenditure undertaken to enhance asset performance or augment capacity.
SEBI has also permitted the use of such borrowings for major maintenance expenses in respect of road projects. The circular clarifies that “major maintenance expense” means expenditure incurred on maintenance of a road project that is not routine maintenance and is in accordance with obligations and requirements specified in the concession agreement. Further, the circular permits refinancing of debt by the InvIT, special purpose vehicle (SPV) or holding company (Holdco), subject to conditions.
SEBI clarified that only debt originally raised for purposes permitted under the InvIT Regulations can be refinanced, and only the principal amount may be refinanced, excluding accumulated interest, charges or fees. The circular also defines “road project” as a project in the ‘Roads and bridges’ infrastructure sub-sector as specified in the Ministry of Finance notification dated September 19, 2025, including any amendments or additions. The circular comes into force with immediate effect.
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Removal of difficulties for on-boarding for FPIs – PAN allotment related issues
The Securities and Exchange Board of India (SEBI) vide its Press Release PR No.30/2026, dated May 15, 2026, said the Central Board of Direct Taxes (CBDT) had issued clarifications to address difficulties faced by Foreign Portfolio Investors (FPIs) in obtaining Permanent Account Numbers (PAN) following changes introduced under the Income-tax Rules, 2026. SEBI noted that CBDT had notified the Income-tax Rules, 2026 and new forms for PAN applications on March 20, 2026, making certain previously optional fields mandatory.
The regulator said it engaged with CBDT after stakeholders flagged difficulties faced by FPIs in furnishing the required information for PAN allotment. CBDT clarified that for the RA/AR field, the name of the Authorised Signatory as captured in the Common Application Form would suffice and no supporting documents would be required. CBDT further clarified that where the address, mobile number/landline number or email ID of the RA/AR are unavailable, details of the FPI may be furnished instead.
SEBI also said that where PAN, Aadhaar or passport details of the Authorised Signatory are unavailable, the FPI registration number may be provided. CBDT also clarified that where TIN or its equivalent is not applicable in a jurisdiction, the TIN field may be filled with “0000000000”. Further, where the mobile number of the FPI is unavailable, a landline number may be provided instead.
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