Legal Updates ( May 04 – May 09, 2026 )
CASE UPDATES
An unsolicited post-submission “addendum” that alters payout tranches or equity infusion is a modification of the resolution plan and the CoC’s reasoned decision not to consider such addendum is within its commercial wisdom and is not liable to judicial interference absent any violation of Section 30(2) or Section 61(3) of the IBC
The National Company Law Appellate Tribunal (NCLAT) in the case of Vedanta Ltd vs Bhuvan Madan, Resolution Professional of Jaiprakash Associates [Company Appeal (AT) (Insolvency) Nos. 552 & 553 of 2026] dated May 04, 2026, has held that where the Request for Resolution Plan (RFRP) and Process Note treat the financial proposal at the close of the Challenge Process as final and prohibit subsequent modification, an unsolicited post-submission “addendum” that alters payout tranches or equity infusion is a modification of the resolution plan and not a mere clarification.
Accordingly, the NCLAT held that the CoC’s reasoned decision not to consider such addendum is within its commercial wisdom and is not liable to judicial interference absent any violation of Section 30(2) or Section 61(3) of the Insolvency & Bankruptcy Code, or any material irregularity in the process. Further, neither the highest Net Present Value (NPV) nor a higher gross plan value gives a resolution applicant any right to approval, since the CoC is entitled to evaluate plans as a whole in accordance with the Evaluation Matrix, feasibility, viability, and other process documents.
The Tribunal noted that Vedanta’s Addendum was not merely clarificatory, but it had the effect of modifying the financial proposal in two material respects: substantially increasing upfront payment and doubling equity infusion. The Tribunal noted that Vedanta itself had pleaded before the NCLT that, with the Addendum, its score under the Evaluation Matrix would have improved considerably and it would have emerged as the highest scorer.
On value maximisation, the Tribunal accepted that maximisation of asset value is an important objective of the IBC, but emphasized that it operates within a time-bound resolution framework and does not override the structure of the process or the CoC’s commercial wisdom. It also reiterated that the fundamental object of the IBC is resolution and revival, not mere recovery.
The Tribunal rejected Vedanta’s argument that highest NPV or higher gross plan value compelled approval of its plan. It noted that the Process Note expressly stated that the CoC was under no obligation to approve the plan with the highest NPV or the highest score under the Evaluation Matrix. The Tribunal also held that the CoC had in fact considered Vedanta’s plan in the 23rd CoC meeting. The submission that the CoC abdicated its jurisdiction in favour of BDO was rejected because BDO was an adviser engaged under the RFRP, the CoC discussed its report, raised queries, required a reconsideration of qualitative scoring, and thereafter proceeded to vote.
The Tribunal found no material irregularity by the RP, as the RP’s email stating that the Addendum “appears” to violate the Process Note was treated as only a tentative opinion while seeking CoC views, and not as conduct amounting to material irregularity under Section 61(3). Thus, the Tribunal reaffirmed the narrow scope of judicial review over CoC decisions.
Marks must be compared as a whole, with emphasis on their essential features and overall similarity, and Section 17 of the Trade Marks Act does not prevent protection of a prominent part of a composite mark where that part is distinctive
The Bombay High Court in the case of UltraTech Cement vs Shiv Cement [Commercial IP Suit No. 126 of 2016] dated April 28, 2026, has held that where the plaintiff proves valid and subsisting registration, long and extensive commercial use, distinctiveness, and reputation of its trade mark, and the defendant uses marks in respect of the same goods that contain the essential and leading feature of the plaintiff’s mark and are visually, structurally, and phonetically deceptively similar, such use constitutes infringement and passing off.
The Court reaffirmed that marks must be compared as a whole, with emphasis on their essential features and overall similarity, and that Section 17 of the Trade Marks Act does not prevent protection of a prominent part of a composite mark where that part is distinctive. In an undefended action, where the defendant does not contest the evidence, the Court is entitled to grant permanent injunction, delivery up, and substantial costs, and may award monetary relief on a reasonable basis having regard to the defendant’s dishonest conduct and the statutory mandate under Section 35 CPC in commercial suits.
The High Court observed that there was no dispute that the plaintiffs were the registered proprietors of the UltraTech trade-marks and that the plaintiffs had clearly proved open, continuous, and extensive use of those marks since 2003. It found that UltraTech had acquired distinctiveness, immense goodwill and reputation, and had become exclusively associated in the public mind and in the trade with the plaintiffs alone. The Court also noted that the mark UltraTech had been recognized as a well-known trade mark and had been included in the list of well-known trade-marks.
On comparison of the rival marks, the Court held that the impugned marks “ULTRA PLUS/ULTRAPLUS CEMENT”, “ULTRA HITOUCH/ULTRA HITOUCH CEMENT BEMISAL MAJBUTI”, and “ULTRA POWER” were visually, structurally, and phonetically virtually identical to, and in any event deceptively similar to, the plaintiffs’ registered and well-known UltraTech trade-marks. The Court emphasized that “ULTRA” was the leading and essential feature of the plaintiffs’ marks and that the defendant’s use of similar get-up, placement, colour scheme, and general idea on cement bags showed mala fide adoption. Since the rival goods were the same, namely cement, the Court held that confusion, deception, and misrepresentation were more than likely.
Thus, the Court treated the defendant’s conduct as dishonest and lacking in bona fides, noting not only the adoption and use of the impugned marks but also the defendant’s failure to appear, file a written statement, cross-examine the plaintiffs’ witness, or challenge the plaintiffs’ evidence. The Court therefore held that the plaintiffs’ case had gone uncontroverted and that the evidence remained unchallenged. Accordingly, High Court granted a permanent injunction restraining a rival cement maker from using marks deceptively similar to UltraTech, holding that the adoption was “entirely dishonest” and “actuated in bad faith.”
For purposes of Sections 11 and 57 of the Trade Marks Act, 1999, a foreign proprietor may succeed in rectification by proving that, on the date of the impugned application, its mark had acquired actionable recognition and spill-over reputation in India within the relevant consumer segment, even without formal commercial launch or direct sales in India
The Delhi High Court in the case of Toyota Jidosha Kabushiki Kaisha vs Tech Square Engineering [LPA 176/2023] dated May 04, 2026, has held that, for purposes of Sections 11 and 57 of the Trade Marks Act, 1999, a foreign proprietor may succeed in rectification by proving that, on the date of the impugned application, its mark had acquired actionable recognition and spill-over reputation in India within the relevant consumer segment, even without formal commercial launch or direct sales in India. In assessing such reputation, the Court may legitimately rely on third-party imports, niche market presence, public-domain references and other material demonstrating recognition of the mark in India, especially for luxury goods.
The Court observed that in a rectification action under Section 57(2), a mark can be removed if it is “wrongly remaining on the Register”, and that this enquiry may require examination of whether the mark ought not to have been registered under Sections 9 or 11.
The Court noted that Toyota was not relying on a prior Indian registration or prior Indian application. Therefore, to succeed under Sections 11(1) and 11(2), Toyota had to show that ALPHARD qualified as an “earlier trade mark” by being a well-known trade mark in India on the date of the respondent’s application. The Court emphasized that for determining whether a mark is well-known, the relevant test under Section 11(6) to (10) is recognition in the relevant section of the public, and not necessarily widespread recognition among the public at large.
The Court observed that, in the case of high-value luxury automobiles, reputation cannot be judged by standards applicable to mass-market goods. In such a niche market, imports, niche consumer visibility, and targeted recognition are of heightened evidentiary significance. The Court therefore accepted Toyota’s submission that unsolicited importation by private parties was not neutral evidence, but reflected conscious market demand and recognition of the ALPHARD mark in India. The Court treated this as strong evidence of goodwill and reputation in India.
The Court held that the Single Judge erred in discounting third-party imports and public-domain references merely because they did not emanate from Toyota. It observed that “use” is not confined to acts of the proprietor alone and may be inferred from third-party actions and public-domain material associating the mark with the goods or services.
On the respondent’s claim of use, the Court found the documentary record weak. It noted that invoices were in the name of Tekstar Global Private Limited and not the respondent, and no proof of any legal nexus such as common shareholding, management control or formal commercial arrangement was shown. The Court also found that several invoices reflected cash transactions without adequate purchaser details, limiting their evidentiary value. It therefore held that the respondent had failed to discharge the burden of proving prior user and bona fide proprietorship.
Lastly, the Court pointed out that adoption of the identical mark ALPHARD in the same field or allied/cognate goods, coupled with inconsistent explanations by the respondent regarding the origin of the mark, raised serious doubt about the respondent’s bona fides.
If borrower obtains a loan from a bank for purchase of machinery from a supplier chosen by the borrower, the borrower’s obligation to repay the loan to the bank arises from the borrower-lender contract and is not defeated by the supplier’s alleged failure to supply the machinery, unless the bank had undertaken responsibility for such supply
The Calcutta High Court in the case of Jayanti Karmakar vs General Manager [WPA 17153 of 2009] dated April 30, 2026, has held that where a borrower obtains a loan from a bank for purchase of machinery from a supplier chosen by the borrower, the borrower’s obligation to repay the loan to the bank arises from the borrower-lender contract and is not defeated by the supplier’s alleged failure to supply the machinery, unless the bank had undertaken responsibility for such supply or acted in breach of a statutory or contractual obligation.
The Court found that the loan of Rs. 4.39 lakhs had been sanctioned for setting up the rolling mill and that the machines were hypothecated to the Bank. It observed that the Bank was only a lender of the loan amount and had issued the cheque in favour of the supplier on the basis of the petitioner’s own request and quotation. The Court noted that the petitioner had written to several authorities regarding non-supply but had not informed the private respondent, while the delivery challan on record reflected her signature acknowledging receipt of the remaining machinery.
The Court held that the agreement was between borrower and lender, and that the Bank could not be made responsible for alleged non-supply of machinery by the supplier as per the quotation furnished by the petitioner. If the supplier had failed to deliver, the petitioner could take steps against the supplier in accordance with law, but could not avoid repayment of the loan and accrued interest on that basis.
The Court further observed that the real dispute was a commercial dispute between the petitioner and the private respondent supplier, and that the foundational issue whether the diesel oil engine had actually been supplied was a seriously disputed question of fact, especially because the respondents relied on a delivery challan allegedly signed by the petitioner while the petitioner alleged forgery.
The Court expressly found no arbitrariness or illegality in the Bank’s actions, since the Bank had merely sanctioned and disbursed the loan in terms of the quotation and request furnished by the petitioner. It therefore, rejected the petitioner’s contention that repayment liability should not arise because of the supplier’s alleged default, holding that liability to repay a loan arises from the contract between borrower and lender and is not contingent on performance by a third party unless specifically provided otherwise.
During the subsistence of moratorium under Section 14 of the IBC, a lessor cannot terminate a subsisting lease and recover possession of leased property occupied by the corporate debtor by invoking contractual breach clauses or by initiating or continuing eviction proceedings under the Gujarat Public Premises Act, 1972
The Gujarat High Court in the case of Gujarat Industrial Development Corporation vs Gujarat Hydrocarbons and Power SEZ Ltd [R/Letters Patent Appeal No. 55 of 2026] dated April 29, 2026, has held that during the subsistence of moratorium under Section 14 of the IBC, a lessor cannot terminate a subsisting lease and recover possession of leased property occupied by the corporate debtor by invoking contractual breach clauses or by initiating or continuing eviction proceedings under the Gujarat Public Premises Act, 1972.
The Court emphasised that Explanation to Section 14(1) is clarificatory and not an enabling exception permitting such termination or recovery on grounds other than insolvency. The expression “proceedings” in Section 14(1)(a) is broad, and the protection under Section 14(1)(d) extends to actual occupation or possession of property by the corporate debtor, so as to maintain status quo and preserve the corporate debtor as a going concern during CIRP.
The Court observed that Section 14(1)(d) of the IBC prohibits recovery of any property by an owner or lessor where such property is occupied by or in possession of the corporate debtor, and that this protection had to be read in light of the object of the moratorium, namely preservation of the assets and value of the corporate debtor as a going concern. It accepted that the leasehold interest of the corporate debtor in the demised premises was “property” within Section 3(27) of the IBC, and noted that the leased land was the only property held by the corporate debtor.
The Court further observed that the statutory freeze under Section 14 is intended to preserve the status quo from the insolvency commencement date until completion of CIRP or approval of the resolution plan. The Court held that Explanation to Section 14(1) is clarificatory and was inserted by way of abundant caution to make explicit the legislative intent that Government licences, permits, concessions and similar grants should not be suspended or terminated during moratorium merely on the ground of insolvency. The Court specifically held that the Explanation cannot be read as an exception enabling termination or recovery in situations otherwise barred by the main provision, because such an interpretation would render Section 14(1) nugatory.
The Court also observed that the moratorium protection was not confined to civil suits stricto sensu. It held that the expression “proceedings” in Section 14(1)(a) is of wide amplitude and is not limited to civil proceedings alone. Proceedings before statutory or quasi-judicial authorities are capable of falling within that expression where they operate against the corporate debtor and threaten depletion of its assets or interference with its protected status during CIRP. On that reasoning, eviction proceedings under the Public Premises Act, 1972 could not be treated as outside the moratorium merely because they arose before a statutory authority.
If the Competition Commission differs from the findings of the Director General on any issue adverse to the opposite party, it must give notice indicating such disagreement and afford an effective opportunity of hearing/rebuttal before recording an adverse finding or issuing directions based on that departure
The New Delhi Principal Bench of the National Company Law Appellate Tribunal (NCLAT) in the case of Grasim Industries vs CCI [Competition Appeal (AT) No. 13 of 2020] dated May 05, 2026, has held that where the Competition Commission differs from the findings of the Director General on any issue adverse to the opposite party, it must give notice indicating such disagreement and afford an effective opportunity of hearing/rebuttal before recording an adverse finding or issuing directions based on that departure. Failure to do so violates the principles of natural justice, particularly the rule of audi alteram partem.
The Tribunal stated that if the Commission proposes to differ from the DG’s findings, it must spell out the reasons for disagreement and give the affected party an opportunity to respond. The Tribunal held that CCI’s direction requiring Grasim to make its discount policy transparent and publicly accessible was contrary to the DG’s finding that non-disclosure of the pricing/discounting policy was not, in itself, a contravention.
The Tribunal also held that CCI’s direction that buyers of Viscose Staple Fibre (VSF) should be free to use it for spinning or trading or any other lawful purpose was in variance with the DG’s finding that Grasim had no obligation to keep traders in business and that refusal to sell to traders did not appear to fall within Section 4. Thus, the NCLAT rejected the respondents’ submission that the word “buyer” should be read only as “spinners”; it held that in common parlance, a buyer allowed to trade can be understood as a trader.
For the purpose of maintainability of petitions under Sections 397 and 398 of the Companies Act, 1956, against oppression and mismanagement, the expression “member” is not to be construed in an unduly restrictive or purely technical sense confined only to formal entry in the register of members under Section 41(2)
The Supreme Court in the case of Dr. Bais Surgical and Medical Institute vs Dhanajay Pande [Civil Appeal No. 8973 of 2010] dated May 04, 2026, has held that for the purpose of maintainability of petitions under Sections 397 and 398 of the Companies Act, 1956, against oppression and mismanagement, the expression “member” is not to be construed in an unduly restrictive or purely technical sense confined only to formal entry in the register of members under Section 41(2).
The Court held that in the context of the equitable jurisdiction under Sections 397 and 398, read with Section 399, a person may be treated as a member where the cumulative factual circumstances demonstrate a clear, recognized proprietary interest in the company and the person has, in substance, been treated by the company as having shareholder status, notwithstanding absence of formal entry in the register at the relevant time.
The Court observed that the statutory scheme draws a distinction between the inclusive definition of “member” under Section 2(27) and the provisions in Section 41 dealing with acquisition of membership. Section 41 prescribes recognized modes by which membership may arise, but the requirement of written agreement and entry in the register was not treated as the sole or exclusive mode in the context of proceedings under Sections 397 and 398.
The Court emphasized that jurisdiction under Sections 397 and 398 is equitable in character, and therefore maintainability must be examined with reference to Section 399 and the remedial purpose of the provisions, rather than by a purely mechanical application of Section 41(2). It rejected an unduly restrictive or technical construction of the term “member” that would defeat substantive rights.
The Court approved the approach that, for Sections 397 and 398, the word “member” cannot be construed in isolation or rigidly confined to the technical requirements of Section 41(2), and that the broader definitional framework in Section 2(27) assumes significance.
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A computer-related invention which merely uses an algorithm to colour-code message recipients based on message address characteristics, in order to assist a sender in avoiding unintended recipients, does not become patentable unless it demonstrates a technical contribution that improves the system’s functionality
The Delhi High Court in the case of Blackberry Limited vs Controller of Patents and Designs [C.A.(COMM.IPD-PAT) 14/2022] dated April 30, 2026, has held that a computer-related invention which merely uses an algorithm to colour-code message recipients based on message address characteristics, in order to assist a sender in avoiding unintended recipients, does not become patentable unless it demonstrates a technical effect or technical contribution that improves the system’s functionality or provides a technical solution to a technical problem.
Where the alleged contribution is only a software-based, user-convenience or data-management measure, and the claimed advance is rendered obvious by the prior art, the application is liable to be refused under Sections 2(1)(j) and 3(k) of the Patents Act.
The Court observed that the invention pertains to handheld wireless communication devices and seeks to enable users to differentiate intended recipients in outgoing draft messages by colour-coding recipient names based on message address characteristics such as host name, domain name or organization. The stated objective was to help users on small-screen handheld devices quickly identify intended recipients and reduce the risk of sending messages to unintended persons. The specification also described the device architecture, including a display, keyboard, micro-processor and navigation tool such as a trackball.
On inventive step, the Court recorded that the Controller had relied principally on prior arts D1 and D2, and also discussed D3 in the appellate analysis. D1 disclosed application of identifying styles to messages based on message attributes for categorisation; D2 disclosed a pre-send alert showing addressees so the sender could verify or modify recipients; and D3 disclosed visually distinguishable message formats for different users. The Court accepted that in the subject application, colour coding was done through an algorithm using message address characteristics, whereas in D1 the algorithm used message attributes for categorisation.
On Section 3(k) of the Patent Act, the Court endorsed the Controller’s view that the claimed feature of differentiating between recipients and notifying the sender before sending was not of a technical nature. The Court noted that the problem addressed by the invention was not related to the performance of existing hardware, and that the proposed solution only involved colour coding on the basis of message characteristics, with the hardware executing the algorithm in the same way as any other algorithm. It further held that the subject matter lay in software-implemented non-technical processes such as associating colour, accepting and examining message addresses, and displaying message information, and therefore amounted to a computer program per se or algorithm within Section 3(k).
The Court significantly observed that a “technical problem” must be technical in nature and not person-dependent in the manner suggested by the subject application. It accepted the reasoning that an error in sending a message to the wrong recipient depends on the person sending the message and is therefore not, by itself, a technical problem. It also observed that even after implementation of the invention, user error could still persist, for example where multiple recipients have the same name and the user must remember different assigned colours.
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While subsidiary companies are separate legal entities, the corporate veil may be lifted where associated companies are inextricably connected so as to form one concern
The Supreme Court in the case of Alpha Corp Development Pvt Ltd vs Greater Noida Industrial Development Authority [Civil Appeal No. 1526 of 2023] dated May 05, 2026, has held that while subsidiary companies are separate legal entities, the corporate veil may be lifted where associated companies are inextricably connected so as to form one concern. Since in the present case, Earth Infrastructures Limited (EIL) EIL was the main driving force behind the development of all three Greater Noida Industrial Development Authority (GNIDA)-linked projects, GNIDA was aware of that position, and the subsidiary/SPC entities were only a front, the Court held this to be an eminently fit case for lifting the corporate veil.
The Court explained that although GNIDA remained entitled to recover its principal dues, its failure to monitor the projects, delay in taking steps against defaults, and lack of diligence during the CIRP disentitled it from claiming penal interest, penal charges and time-extension penalties at this stage.
The Court found that GNIDA was informed of the CIRP and of the inclusion of development rights over the project lands in that process, but failed to act with diligence or within the timelines contemplated by the Code. It held that GNIDA had contributed greatly to the situation by persistent inaction and ineptitude, and had failed to monitor development, failed to take timely coercive steps despite defaults and complaints from buyers, and later sought to portray itself as an uninformed victim.
The Court also observed that GNIDA could not credibly claim ignorance of EIL’s role in the projects. GNIDA knew that EIL was undertaking development on all three leased lands, including through approvals, communications and the structure of the Earth Towne arrangement itself. The Court accepted the position that, ordinarily, holding and subsidiary companies are distinct legal entities, but held that this was a fit case for lifting the corporate veil because the associated entities were inextricably connected and EIL was the real driving force in development and in payment of GNIDA dues, while the subsidiary companies were only a front.
The Apex Court therefore held that the NCLAT erred in setting aside the approved plans, and hence, restored the resolution plans of Alpha and Roma, directed GNIDA to recalculate dues excluding penal components, and allowed payment of those recalculated dues over twenty-four months. The Court also emphasised that since Earth Copia was on freehold land in Gurugram and had nothing to do with GNIDA, the NCLAT was wrong in allowing the approval of Alpha’s plan for that project to be affected by GNIDA’s challenge.
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Agreements for sale executed by partners in their individual capacity, without reference to the firm, are not binding on the firm; and a suit seeking declaration that such agreements are null and void is maintainable without seeking cancellation since an agreement for sale does not create an interest in property
The Bombay High Court in the case of Abdul Karim Noor Mohammed vs Hotel Sultan Plaza [Writ Petition No. 1411 of 2025 (F)] dated April 29, 2026, has held that where immovable property has been brought into the common stock of a partnership firm by a partner, such property becomes property of the firm, and an individual partner cannot unilaterally bind the firm or alienate that property unless the act is done in the firm’s name or in a manner expressing or implying an intention to bind the firm in terms of Section 22 of the Partnership Act.
The Court clarified that agreements for sale executed by partners in their individual capacity, without reference to the firm, are therefore not binding on the firm; and a suit seeking declaration that such agreements are null and void is maintainable without seeking cancellation, since an agreement for sale does not create an interest in property.
The High Court accepted the concurrent findings that the suit property had been brought into the common stock of the partnership firm through the partnership documents and the mutation in survey records. It expressly held that there was no requirement of a registered document for the firm to acquire ownership of property contributed by a partner.
The Court observed that the impugned agreements were executed by Respondents Nos. 12 and 13 in their individual capacity, not in the name of the partnership firm, and there was no reference in those instruments showing an intention to bind the firm as required by Section 22 of the Partnership Act. The Court further noted that the transactions purported also to transfer the goodwill of the business, which it treated as an asset exclusively belonging to the firm and not capable of unilateral transfer by an individual partner.
REGULATORY UPDATES
RBI has exempted the NBFCs with assets below Rs 1000 Crore without public funds or customer interface from registration and reserve fund provisions
The Reserve Bank of India (RBI) vide its Notification No. RBI/2026-27/43 dated April 29, 2026, has notified the Reserve Bank of India (Non-Banking Financial Companies – Registration, Exemptions and Framework for Scale Based Regulation) Amendment Directions, 2026 on April 29. The changes revise the framework issued on November 28, 2025, following a review of rules governing such NBFCs.
As per the Notification, NBFCs with assets of less than Rs. 1,000 crores, based on their latest audited balance sheet, and operating without public funds or any customer interface will be exempt from the registration and reserve fund provisions under the Reserve Bank of India Act, 1934 from July 1, 2026.
The amended directions set out a three-category structure. A Type I NBFC is one that does not use public funds, has no customer interface, and holds a certificate of registration. Any NBFC that has been granted registration but does not fall within this category will be treated as a Type II NBFC. An Unregistered Type I NBFC refers to an entity meeting the same conditions but exempted from the provisions of Sections 45IA and 45IC of the Reserve Bank of India Act, 1934.
The exemption applies to NBFCs operating without public funds and customer interface as part of a conscious and long-term business model whose asset size remains below Rs 1,000 crore. Existing NBFCs that meet the criteria, including those already holding a certificate of registration as Type I NBFCs, may apply for deregistration by December 31, 2026. Applications for deregistration are required to be submitted through the PRAVAAH portal along with audited financial statements for the last three financial years, a statutory auditor’s certificate confirming the absence of public funds and customer interface, and a board resolution stating that the entity does not have and does not intend to access public funds or have a customer interface in the future.
The directions state that such requests will be considered only if the Reserve Bank is satisfied that the NBFC is operating with a conscious and long-term business model without availing public funds and without having a customer interface. NBFCs that meet the same conditions but have an asset size of Rs 1,000 crore or more are required to apply for registration as Type I NBFCs, subject to fulfilment of prescribed conditions.
Where multiple Unregistered Type I NBFCs exist within a group, the asset size of all such entities will be aggregated. If the aggregate asset size reaches Rs 1,000 crore or more, all such entities will be required to be registered as Type I NBFCs. An Unregistered Type I NBFC intending to undertake overseas investment in the financial services sector is required to obtain registration and will be regulated in the same manner as a Type I NBFC. Such entities are not permitted to undertake overseas investment in the non-financial sector.
The amended framework also places reporting obligations on auditors. Statutory auditors are required to submit an exception report to the Reserve Bank in case of any violation of the conditions relating to public funds or customer interface. The amendment also replaces references to “NBFC not availing public funds and not having any customer interface” in specified provisions across multiple RBI directions with the expression “NBFC holding Certificate of Registration as Type I NBFC”.
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RBI reiterates caution against unauthorised and misleading campaigns promising Loan Waivers
The Reserve Bank of India (RBI) vide its Press Release dated May 04, 2026, had cautioned the public against misleading campaigns promising loan waivers, warning that such activities continue despite its earlier press release dated December 11, 2023. The Regulator said that such campaigns not only mislead the general public but also interfere with the orderly functioning of the credit system of the country. This press release was issued because certain individuals and entities are falsely claiming they can secure waivers of outstanding dues to banks and Non-Banking Financial Companies (NBFCs).
These persons are also issuing so-called “debt waiver certificates” or similar documents and collecting fees under various pretexts, including service or legal charges. The RBI clarified that such claims are “false and misleading” and warned that those involved could face legal action under applicable laws. It is also emphasised that such activities undermine the stability of financial institutions, affect the interest of depositors, and association or engagement with such individuals/entities can result in direct financial loss.
Advising caution, the central bank urged people to avoid dealing with such entities, approach their lending institutions directly for any loan-related concerns, and report such misleading campaigns to law enforcement agencies.
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SEBI has specified framework for recognition and operationalisation of Past Risk and Return Verification Agency (PaRRVA)
The Securities and Exchange Board of India (SEBI) vide its Circular No. HO/38/14/(4)2026-MIRSD-POD/I/10557/2026, dated April 29, 2026, has operationalised the framework for the Past Risk and Return Verification Agency (PaRRVA). In its circular, SEBI has recognised Care Ratings Limited as the PaRRVA, while the National Stock Exchange has been designated as the PaRRVA Data Centre under the newly operationalised framework. Care Ratings will begin providing its services after completion of the pilot-phase with operations commencing from 4 May 2026.
Under the framework, a Credit Rating Agency may be recognised as a PaRRVA in terms of the SEBI (Credit Rating Agencies) Regulations, 1999 and the SEBI (Intermediaries) Regulations, 2008. SEBI has mandated that Investment Advisers (IAs) and Research Analysts (RAs) intending to communicate past performance data to clients must register with PaRRVA within three months from the date of operationalisation. Failing such registration, they will not be permitted to use or disclose such data after the expiry of the said period.
SEBI has further stipulated that after two years of PaRRVA becoming operational, IAs and RAs shall only communicate performance data that has been verified by PaRRVA. It has also provided that IAs and RAs seeking to communicate certified past performance data must enrol with PaRRVA by 3 August 2026, and they may communicate such data only up to 3 May 2028.
SEBI has additionally revised the composition of the oversight committee for PaRRVA and the PaRRVA Data Centre, providing for representation from relevant stakeholders along with independent members, with a majority comprising independent members.
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SEBI introduces a fast-track mechanism allowing Alternative Investment Funds, except Large Value Funds, to launch schemes and circulate placement memorandums 30 days after filing
The Securities and Exchange Board of India (SEBI) vide Circular No. HO/19/19/11(2)2026-AFD-RAC2 I/10624/2026, dated April 30, 2026, has introduced a fast-track mechanism allowing Alternative Investment Funds (AIFs), except Large Value Funds, to launch schemes and circulate placement memorandums (PPMs) 30 days after filing with the regulator. The move is aimed at easing timelines for fund launches by shifting to a disclosure-based regime, while retaining regulatory oversight through post-filing review.
Under the circular, AIFs (other than Large Value Funds) can proceed with launching new schemes and circulating PPMs to investors after 30 days from the date of filing the application with SEBI. In the case of first schemes, AIFs may launch from the date of grant of registration or after 30 days from filing of the application with SEBI, whichever is later. SEBI has mandated that any comments issued during this 30-day period must be complied with by the Merchant Banker and the AIF prior to the launch of the scheme or circulation of the PPM.
The regulator has also stipulated that the first close of a scheme must be declared within 12 months from the date on which the AIF becomes eligible to launch the scheme. Responsibility for the accuracy and completeness of disclosures in the PPM, as well as the declarations submitted, will rest with the Merchant Banker and the AIF Manager.
Clarifying the regulatory position, SEBI said that submission of a PPM does not amount to approval by the regulator and that it does not assume responsibility for the accuracy or correctness of disclosures, facts, or claims made in the document. It added that any irregularity or lapse in the PPM would make the concerned entities liable for action. The circular will come into force with immediate effect and will also apply to all pending PPMs of non-Large Value Fund schemes.
