India

DEAL UPDATE SNG & Partners represented APS Group and its promoters in a landmark acquisition transaction by SIS Ltd., India’s largest business services company. SIS will acquire 51% in APS upfront and the balance 49% over the next three years, making it the largest buyout in India’s private security industry.  Our team advised APS on all aspects of diligence, structuring, negotiation and execution of the definitive agreements. The acquisition was structured in two tranches: (i) initial 51% stake acquisition at closing, and (ii) deferred acquisition of remaining 49% based on agreed performance-linked milestones, to be completed within three to four years.   The transaction was led by Mr. Aasish Somasi (Associate Partner) and comprised Ms. Ayushi Parnami (Senior Associate), Ms. Aditi Mishra (Associate), Mr. Mohit Goyal (Associate) and Mr. Arjun Khanna (Associate).   Mr. Amit Aggarwal, (Managing Partner - Corporate and Non-Contentious Practice) and Ms. Devyani Dhawan (Of-Counsel) provided strategic inputs during the course of the transaction.   APS Group is a leading Indian private security services provider with a strong nationwide presence in guarding, manpower, and facility solutions. SIS Limited is India’s largest business services company, offering security, cash logistics, and facility management across India and multiple international markets. This phased acquisition combines APS Group’s established expertise in security and facility solutions with SIS’s scale and leadership in business services. Mr. Aasish Somasi Mr. Amit AggarwalMs. Devyani Dhawan 

We are pleased to share that Argus Partners advised UAE-based CE-Invests, the strategic investments platform of Crescent Enterprises, on its Series C investment in Flipspaces, a leading tech-first interior design and build company for commercial spaces operating across India and the USA. The investment formed part of Flipspaces’ Series C fundraise of USD 50 million, which also saw participation from other investors, including Panthera Growth Partners and the SMBC Asia Rising Fund. Flipspaces will utilise the fresh capital to scale its business across India, the USA, and the UAE, deepen supply-chain integration, and further enhance its proprietary technology stack with AI-led interventions. Commenting on the investment, Ghada Abdelkader, Senior Vice President of CE-Invests, stated, “At CE-Invests we look to build enduring partnerships with ambitious businesses that harness transformative global trends to reshape industries. Flipspaces’ ability to scale profitably across India and the USA, while deploying AI and VR to transform a traditional sector, exemplifies the kind of opportunity we are committed to backing. With the UAE as its launchpad for expansion into the wider MENA region, Flipspaces is uniquely positioned to bridge the Asia-UAE-USA innovation corridor. We are proud to support its journey to becoming a category-defining international leader,” Further, Kunal Sharma, Founder & CEO of Flipspaces, added, “This investment is not just a financial boost, it’s a strategic endorsement. Having the backing of CE-Invests reflects strong market confidence in our technology-led model that is transforming the customer experience in interior design and build. Our conviction lies in scaling with both speed and sustainability, driven by a replicable, tech-powered delivery approach that balances innovation with operational and financial discipline,” The team at Argus Partners advising CE-Invests consisted of Abhinav Bhalaik, Vallishree Chandra (Partners) and Kanishk Gambhir, Srishti Sneha, Rohan Lodge, Akshat Khanna, Venkatesh VG (Associates). Read more at: Crescent Enterprises Press Release, Times of India, Dealstreet Asia.

A. Introduction What began as a criminal complaint in 2004, culminated in a landmark ruling by the Hon’ble Supreme Court on a key issue in the field of arbitration. On 30 April 2025, while delivering its judgment in Gayatri Balaswamy v. ISG Novasoft Technologies Ltd[1] [“Gayatri”], the Apex Court addressed the pivotal question of whether Indian courts are empowered to modify an arbitral award under Section 34 of the Arbitration and Conciliation Act, 1996 [“Arbitration Act”]. By a 4:1 majority, led by (Retd.) Chief Justice of India Sanjiv Khanna, the Court held that a court may modify an award under Section 34 of the Arbitration Act, in limited circumstances. Contrary to the majority judgment, Justice K.V. Vishwanathan, in his dissenting opinion, categorically held that a Court, while exercising jurisdiction under Section 34, does not possess the power to modify, alter or vary the arbitral award unless explicitly permitted by law. B. Position of law prior to Gayatri Judgment The judicial approach towards modification of arbitral awards can be traced back to the Hon’ble Supreme Court’s decision in Mc Dermott International Inc. v. Burn Standard Co. Ltd[2], where the Court clarified the limited scope of judicial intervention under Section 34 of the Arbitration Act. The Court emphasized that in a Section 34 proceeding, courts did not possess the power to modify an award, except where the award was tainted with fraud or bias. However, the decision in Mc Dermott was silent on the broader question of whether arbitral awards could be modified by courts. It was only in Project Director, National Highway Authority of India v. M. Hakeem & Anr.[3], that the Hon’ble Supreme Court conclusively resolved this uncertainty by explicitly holding that Indian courts did not have the power to modify an arbitral award under Section 34 of the Arbitration Act. The Court made it clear that the only available recourse is either to set aside the award passed by an arbitrator or to remit the matter back to the arbitral tribunal for fresh consideration. Following the judgment of the Apex Court in M. Hakeem, several High Courts have clarified, that, although courts do not possess the power to modify an arbitral award, they do possess the authority to partially set aside severable portions of an award, which would not amount to modification, but only annulment to the extent possible. Reliance in this regard may be placed on the decision of the Hon’ble Delhi High Court in National Highway Authority Of India (NHAI) v. Trichy Thanjavur Expressway Ltd.[4], where a single bench of Justice Yashwant Varma, while adjudicating two cross petitions under Section 34 of the Arbitration Act opined that the term “modify” connotes a variation or modulation of the ultimate relief granted by an arbitral tribunal. However, when deciding an application under Section 34, the Court may exercise its power to partially set aside an award, which does not constitute modification or variation. Instead, it involves annulling only the offending portion of the award. Applying the doctrine of severability, The Court emphasized the distinction between modification and partial setting aside of an award and held that where an award addresses distinct claims separately, the Court is empowered to strike down the offending parts while allowing the remainder of the award to stand and remain enforceable. C. Modification of an award viz-a-viz Article 142 of the Constitution Notwithstanding the absence of a statutory framework permitting modification of arbitral awards in India, and despite consistent judicial precedent opposing such alteration, courts have, in exceptional circumstances, deviated from this norm in the larger interest of justice. This position is exemplified by the decision of the Hon’ble Supreme Court in Krishna Bhagya Jala Nigam Ltd. v. G. Harishchandra Reddy & Anr.[5], where the Hon’ble Court, while adjudicating a civil appeal arising from a judgment of the Division Bench of the Karnataka High Court under Section 37(1)(b) of the Arbitration Act, invoked its powers under Article 142 of the Constitution to reduce the future rate interest from 18% to 9%, keeping in view the prevailing economic reforms in the country at that time. Likewise, the Hon’ble Apex Court in S.V. Samudram v. State of Karnataka[6], relying on its judgment passed in M. Hakeem reiterated that modification of an award under Section 34 is impermissible, as the court lacks the authority to alter an arbitral award and any such attempt would amount to “crossing the Lakshman Rekha”. However, with respect to the dispute concerning the interest amount, the Hon’ble Court, once again invoked Article 142 to award pendente lite interest at 9% p.a. from the date of award till the date of payment.   D. The Gayatri Judgment: The much-awaited answer   I. Facts: Gayatri Balaswamy, then Vice President (M&A Integration Strategy) of ISG Novasoft Technologies Limited (Novasoft), tendered her resignation alleging sexual harassment by Novasoft’s Chief Executive Officer, Krishankumar Srinivasan. A criminal complaint was subsequently filed against Krishnakumar Srinivasan under the Indian Penal Code, 1860 and the Tamil Nadu Prohibition of Harassment of Women Act, 1998. As counter measures, Novasoft instituted proceedings alleging defamation and extortion. The parties engaged in prolonged legal battles before ultimately approaching the Hon’ble Supreme Court. The Hon’ble Supreme Court, in SLP (Cri) No. 8272 of 2009[7], taking into account the arbitration clause in Gayatri Balaswamy’s employment agreement, appointed the Hon’ble Justice (Retd.) T.N.C. Rangarajan as the sole arbitrator to resolve the dispute between the parties. Pursuant thereto, Gayatri filed her Statement of Claim seeking recovery of Rs. 28,88,55,500/-, under twelve (12) different heads of claims. The Ld. Sole Arbitrator, however, accepted just one head of claim (claim for severance benefit) and awarded a sum of Rs. 1.68 Crores, rounded off to Rs. 2 Crores, in Gayatri’s favour, while rejecting the remaining eleven claims. Aggrieved by the award, Gayatri preferred an application under Section 34 of the Arbitration Act, before the Hon’ble Madras High Court. II. Decisions of the Hon’ble Madras High Court: The Single Bench of the Hon’ble Madras High Court, by its order dated 2 September, 2014[8], observed that the decision of the Ld. Sole Arbitrator in so far as the 12th claim was concerned, was contradictory to the principle laid down by the Hon’ble Supreme Court in ONGC v. Saw Pipes[9]. Consequently, the Hon’ble Court modified the award passed by the Ld. Sole Arbitrator and granted an additional sum of Rs. 1.68 Crores, towards the 12th claim, directing Novasoft to make such payment within a period of two months from the date of receipt of the order. Dissatisfied and aggrieved by the order of the Single Bench, both parties preferred two separate appeals being, (i) O.S.A. No. 59 of 2015 by Novasoft, questioning the correctness of the order passed by the Hon’ble Single Bench and (ii) O.S.A. No. 181 of 2015 by Gayatri, seeking further enhancement of the compensation amount with respect to disallowed portion of the claim. By a common judgment passed on 8 August, 2019[10], the Division Bench of the Hon’ble Madras High Court dismissed the appeal preferred by Gayatri and partly allowed the appeal filed by Novasoft, by reducing the amount of Rs. 1.68 Crores awarded under Claim No. 12 to Rs. 50,000/- (Rupees Fifty Thousand Only). Dissatisfied with the decision of the Division Bench, Gayatri challenged the judgment before the Hon’ble Supreme Court by way of a Special Leave Petition under Article 136 of the Constitution. III. Litigation before the Supreme Court: The Special Leave Petitions [SLP(C) Nos. 15336-15337 of 2021] preferred by Gayatri, were first heard by a three-Judge Bench led by (Retd.) Chief Justice N.V. Ramana, J, on 1 October 2021. The proceedings were subsequently listed before multiple benches before it was finally taken up by a three-Judge Bench led by Justice Dipankar Datta. By its order dated 20 February 2024[11], the Hon’ble Bench noted that the proceeding raised a pivotal question of whether the Courts had the power to modify an arbitral award under Sections 34 and 37 of the Arbitration Act. Acknowledging the complexity of the issue and the potential implication for arbitration jurisprudence in India, the Hon’ble Bench referred the proceeding to a Five-Judge Constitutional Bench, led by (Retd.) Chief Justice of India, Sanjiv Khanna. E. Decision of the Constitution Bench. On 30 April 2025, the Hon’ble Supreme Court, by a 4:1 majority, led by (Retd.) Chief Justice of India, Sanjiv Khanna, J, held that Courts possess limited authority to modify an arbitral award, in specific circumstances, notwithstanding the absence of any express provision under the Arbitration Act. The majority reasoned that such authority is derived from the inherent powers of the Court wile exercising jurisdiction under Section 34 of the Arbitration Act, and in the case of the Hon’ble Supreme Court, from the extraordinary powers conferred under Article 142 of the Constitution. IV. Ratio of the Majority: The majority opinion, authored by the Chief Justice, observed that although Section 34 of the Arbitration Act does not expressly empower courts to modify or vary an arbitral award, yet such authority exists in a limited context as an inherent judicial power. While addressing the question of the extent to which the principles of equity and justice can be incorporated without transgressing the jurisdictional fabric of Section 34, the majority arrived at the following findings with regard to modification: a. Partial Setting aside of an arbitral award: Placing reliance on the judgment of the Hon’ble Delhi High Court in Trichy Thanjavoor and invoking the principle of omne majus continent in se minus, (the greater contains the lesser),  the majority reasoned that where an arbitral award contains portions that are invalid or beyond the scope of arbitration, courts are empowered to sever the offending portion and uphold the remainder of the arbitral award. The rationale being that a court which is vested with the authority to set aside an award under Section 34 of the Arbitration Act, also possesses the power to set aside an award partially. b. Addressing the principle of modification: The majority, departing from the view taken in M. Hakeem, acknowledged that although minimal judicial interference is an essential ingredient of arbitration, courts nonetheless play a crucial role in ensuring speedy and effective dispute redressal. It reasoned that in the absence of a limited power to modify arbitral awards, courts would be compelled to set aside such awards in entirety, thereby necessitating fresh arbitration proceedings and incurring additional cost. Such an outcome would undermine the very purpose of opting for arbitration as a mechanism for dispute resolution. The majority in the judgment held as follows: “42. Given this background, if we were to decide that courts can only set aside and not modify awards, then the parties would be compelled to undergo an extra round of arbitration, adding to the previous four stages: the initial arbitration, Section 34 (setting aside proceedings), Section 37 (appeal proceedings), and Article 136 (SLP proceedings). In effect, this interpretation would force the parties into a new arbitration process merely to affirm a decision that could easily be arrived at by the court. This would render the arbitration process more cumbersome than even traditional litigation.” c. Modification to what extent possible: The majority, while delineating the scope of modification permissible under Section 34 of the Arbitration Act, circumscribed the power in a manner that prevents re-evaluation of the merits of the dispute. The majority held that such power may be exercised only to rectify clear and obvious errors including computational, typographical, clerical and other manifest errors apparent on the face of the award. d. Modification of award by courts or remitting back to arbitral tribunal: The majority, while addressing this issue, held that under Section 34(4) of the Arbitration Act, a court may remit an arbitral award to the tribunal for correction of curable defects upon request. The majority further clarified that where the modification sought is straightforward and the error is apparent on the face of the award, the Court may itself carry out the necessary corrections. However, if the issue is complex and not amenable to simple correction, then the award should be remitted back to the tribunal. The Court also opined that these powers extend equally to an appellate court exercising jurisdiction under Section 37 of the Arbitration Act. e. Enforcement of foreign awards: The majority rejected the submissions that the power to remit an award back to the arbitral tribunal renders modification unnecessary, terming such an argument as misconceived. The majority held that recognising a limited power of modification under Section 34 is not conflict with the New York Convention 1958. The Court reasoned that once Section 34 is reinterpreted to encompass a narrowly circumscribed power of modification, the exercise of such authority would neither undermine the international commercial framework nor impede the enforcement of foreign awards. f. Interest portion in arbitral awards: The majority, while deciding on whether courts possessed the power to declare or modify interest, including post award interest, held that the courts do have the authority to modify post award interest granted under Section 31(7)(b) of the Arbitration Act. The provision prescribes a default rate of 2% above the prevailing interest rate in cases where the award is silent towards the interest amount. The majority reasoned that post award interest is future-oriented and may not be always be adequately determined by an arbitral tribunal, thereby justifying judicial correction at a later stage. However, the majority categorically clarified that the interest awarded for the period pendente lite lies beyond the scope of judicial alteration by courts under Section 34 and Section 37 of the Arbitration Act. g. Power vested under Article 142: With regard to the scope and applicability of the Hon’ble Supreme Court’ power under Article 142, the majority held that such power must be exercised with great care and caution, solely for the purpose of ensuring complete justice. It further emphasized that the exercise of Article 12 must remain consistent with the fundamental principle and objective underpinning the Arbitration Act. “82. As far as the applicability of Article 142 of the Constitution is concerned, this power is to be exercised by this Court with great care and caution. Article 142 enables the Court to do complete justice in any cause or matter pending before it. The exercise of this power has to be in consonance with the fundamental principles and objectives behind the 1996 Act and not in derogation or in suppression thereof. 83.********** While exercising power under Article 142, this Court must be conscious of the aforesaid dictum. In our opinion, the power should not be exercised where the effect of the order passed by the court would be to rewrite the award or modify the award on merits. However, the power can be exercised where it is required and necessary to bring the litigation or dispute to an end. Not only would this end protracted litigation, but it would also save parties' money and time.” IV. Dissenting Judgment: Hon'ble Justice K.V. Vishwanathan, in his dissenting opinion, took a contrary view to that of the majority. He held that Section 34 of the Arbitration Act does not confer upon courts the power to modify, alter and/or change an arbitral award. He observed that the term “modify” signifies a change or an alteration, which cannot be read into the limited framework of Section 34 of the Arbitration Act, particularly when the legislature has not been expressly vested such power. On the issue of partially setting aside of arbitral awards, Justice Vishwanathan drew a clear distinction between setting aside severable portions of an award and modifying an award, noting that the two operate in entirely different spheres and cannot be treated as of the same genus. Drawing reference to the Arbitration Act, 1940, which expressly permitted modification, he emphasized that the Arbitration Act, despite multiple amendments contains no such provision, reflecting deliberate legislative intent. Rejecting the majority’s reliance on implied powers, Justice Vishwanathan took a divergent view by holding that such power may only be invoked where it is necessary to enforce the final powers of the statute. Since Section 34 of the Arbitration Act embodies the principle of minimal judicial intervention, recognising an implied power to modify an award would, in his view, undermine the very foundation of the statute’s objective. In support of his decision, he laid emphasis on the legislations of other countries such as United Kingdom and Singapore, where the legislation itself has granted express power. On the applicability of Article 142, Justice Vishwanathan firmly rejected its use for modifying arbitral awards as he maintained that allowing the Apex Court to invoke its inherent powers to alter awards, would bypass the lucid statutory limits maintained by the Arbitration Act. Concluding his dissent, he underscored that arbitration is a distinct and self-contained mechanism of dispute resolution mechanism and permitting courts to modify an award at the final stage of the litigation would introduce significant uncertainty, contrary to the foundational objectives of the Arbitration Act. F. Conclusion By conclusively addressing the long-awaited question, the Hon’ble Supreme Court has attempted to settle one of the most complex questions in Indian arbitration jurisprudence viz. the permissible scope of judicial intervention in arbitral awards. For decades, courts and practitioners have grappled with the tension between the two competing objectives, the need to uphold the finality and sanctity of arbitration as a party driven dispute resolution mechanism, and the equally compelling necessity of ensuring that arbitral awards do not perpetuate patent errors or injustices. Through this judgment, the Hon’ble Supreme Court has delineated the narrow circumstances in which modification of an award may be undertaken, thereby creating a carefully balanced framework. On one hand, the Hon’ble Supreme Court reaffirmed that arbitration must remain largely insulated from judicial interference, preserving the principle of party autonomy and the efficiency that underpins the arbitral process, and on the other hand, the Hon’ble Supreme Court has recognized that a rigid bar against modification could compel courts to set aside entire awards even for limited defects, thereby triggering costly and time consuming arbitrations, an outcome that would defeat the very rationale of arbitration. The majority’s decision represents an attempt to reconcile efficiency with fairness, finality with flexibility. While it opens the door for limited judicial correction of manifest errors, it simultaneously reaffirms that courts cannot re-evaluate the merits of the dispute or sit in appeal over arbitral reasoning. The dissenting view, however, reminds us that the evolution of the law must remain grounded in legislative intent and constitutional principle, highlighting the delicate balance between judicial creativity and judicial restraint. In its broader significance, the judgment of Gayatri Balaswamy v. ING Novasoft not only settles a contentious legal debate but also reflects the dynamic and evolving nature of arbitration laws in India. It signals India’s gradual move towards a more mature arbitral regime, one that seeks to harmonise global best practices with the unique requirements of domestic jurisprudence, while reinforcing the judiciary’s role as a safeguard against manifest injustice. Authored by Swarajit Dey - Associate Partner & Saptarshi Kar - Associate This Update has been prepared by Swarajit Dey, and Saptarshi Kar, who can be reached at [email protected] and [email protected] respectively. This Update is only for informational purposes and is not intended for solicitation of any work. Nothing in this Update constitutes legal advice and should not be acted upon in any circumstance. [1] SLP (C) No. 15336-15337 of 2021 and reported in 2025 SCC Online SC 986. [2] Civil Appeal No. 4492 of 1998 and reported in (2006) 11 SCC 181. [3] SLP (C) No. 13020 of 2020 and reported in (2021) 9 SCC 1. [4] O.M.P.(COMM) 95 of 2023 and reported in 2023 SCC OnLine Del 5183. [5] Civil Appeal No. 149 of 2007 and reported in 2007 SCC OnLine SC 62. [6] Civil Appeal No. 8067 of 2019 and reported in 2022 SCC OnLine SC 19. [7] SLP (Cri) No. 8272 of 2009 [Gayatri Balaswamy v. Krishankumar Srinivasan] with SLP (Cri) No. 6135 of 2009 [Krishna Srinivasan v. Gayatri Balaswamy]. [8] Original Petition No. 463 of 2012 and reported in 2014 SCC OnLine Mad 6568. [9] (2003) 5 SCC 545 [paragraph 31]. [10] 2019 SCC OnLine Mad 15819. [11] Order dated February 20, 2024, in SLP(C) No. 15336 of 2021 and SLP(C) No. 15337 of 2021 and reported in 2024 SCC OnLine SC 1681.

Introduction Clinical Trials have been critical to the healthcare sector, serving as the cornerstone of drug development and medical device safety. Without Clinical Trials, it would be impossible to characterize the benefits and risks of a treatment or evaluate the efficacy of a medicine. The market for Clinical Trials in 2024 has been valued at USD 1.42 billion and is expected to grow at a CAGR of approximately 8% (eight percent) until 2030.[1] The Indian government basis the trends of budgetary allocation has further been observed to have steadily increased its budget allocations for health research indicating a steady 11% increase in budgetary allocation in the past years currently making the sum total of the budgetary allocation to health research to INR 3,901 crores.[2] Additionally, fiscal incentives under the Income Tax Act, 1961, such as allowing up to 100% tax deductions on expenditure for scientific research including clinical drug trials, coupled with the product patent regime under the Patents Act, 1970 ensuring strong protection for proprietary drugs, incentivized multinational corporations to establish and expand in-house research and development in India. Foreign Direct Investments in India In lieu of the promotion of clinical research through financial incentives and requisite patent protection being provided, India has observed a steady influx of foreign direct investments in pharmaceutical and medical devices sector. For instance, in the previous financial year, India recorded foreign direct investment (“FDI”) inflows of INR 19,134 crores.[3] While the Consolidated FDI Policy, 2020 (“FDI Policy”), as well as the Foreign Exchange Management (Non-Debt Instruments) Rules, 2019 (“NDI Rules”) do not provide a specific classification for clinical research organizations (“CRO”)[4] under any business sectors explicitly, resulting in such unclassified activities to fall under the residual category for which 100% FDI is permitted under the automatic route, subject to applicable laws, regulations, security, and other conditionalities. Regulatory Framework With the growing emphasis on incentivizing clinical research in India, it became necessary to regulate and streamline clinical research processes with patient safety as the primary consideration. To this end, the licensing and regulatory framework in India was further strengthened through the introduction of the New Drugs and Clinical Trials Rules, 2019 (“NDCT Rules”). In the present regulatory framework, clinical research in India is primarily governed by the NDCT Rules, which have superseded the earlier provisions of Schedule Y of the Drugs Rules, 1945. These rules were introduced to streamline the regulatory process, enhance participant protection, and align India's clinical research regulations with international standards. This article provides an overview of the regulatory framework governing the conduct of clinical research under the NDCT Rules read with the Drugs and Cosmetics Act, 1940 and the emerging legal perspective and challenges in clinical research in India. NDCT Rules regulates the following forms of clinical research: (i) clinical trials (as defined under NDCT Rules); (ii) bioequivalence and bioavailability studies; (iii) biomedical and health research. Stakeholders of Clinical Research Clinical research refers to the systematic study of pharmaceutical products in human participants to evaluate their safety, efficacy, and overall risk–benefit profile prior to regulatory approval and commercial distribution. The conduct of such research typically involves three key entities: the pharmaceutical companies (“Sponsors”), contract research organizations (“CROs”), and ethics committee. With the increasing complexity and scale of clinical research, Sponsors engaged in the manufacture of drugs for global distribution are increasingly relying on CROs to assist in the design, management and conduct of clinical research. To ensure that CROs possess the requisite competence, including infrastructure, qualified personnel, and quality systems to undertake clinical research-related activities, the revised regulatory framework prescribes specific obligations such as appointing responsible and trained personnel, maintaining documented standard operating procedures, ensuring proper delegation of trial-related duties, implementing quality assurance and control mechanisms, regularly training staff, ensuring investigator preparedness, maintaining comprehensive trial records for prescribed periods, and upholding strict confidentiality and regulatory compliance throughout the conduct of the study. To regulate and streamline the operations of CROs, the new regulatory framework mandates registration of the CROs with the Drugs Controller, India before conducting any Clinical Trial, bioavailability/ bioequivalence study or biomedical and health research. Applications for such registration must be made in Form CT-07B. Registered CROs must comply with good clinical practices guidelines for the conduct of clinical studies in India, formulated by the Central Drugs Standard Control Organization and adopted by the Drugs Technical Advisory Board and maintain proper documentation. Stages of Clinical Research Pre-clinical studies Prior to undertaking human clinical research in India, one of the general principles under NDCT Rules is to first undertake animal clinical testing, such testing may include animal pharmacology data and toxicology data. However, the Indian government to ensure ethical pre-clinical studies ensures that ethical standards with minimal animal cruelty are undertaken and has established the Committee for the Purpose of Control and Supervision of Experiments on Animals (“CPCSEA”), which has the authority to regulate and oversee all animal experimentation in the country under Prevention of Cruelty to Animals Act, 1960. For any pre-clinical studies requiring animal experimentation being undertaken, an entity requires the same to be registered with CPCSEA under the Breeding of and Experiments on Animals (Control and Supervision) Rules, 1998. Establishments registered under CPCSEA are further mandated to constitute an Institutional Animals Ethics Committee (“IAEC”). IAEC once constituted is required to review and approve all types of protocols for research involving small animal experimentation before the start of the study.[5] For approval of experimentation on large animals, the request should be forwarded to CPCSEA in the prescribed manner with recommendation of IAEC. The primary duty of IAEC is to focus mainly on ensuring ethical and methodical handling of animals during and after experiments, so that they have less suffering. Furthermore, IAEC is required to maintain detailed records of experiments, including particulars about animals used, in specified formats and inspect the animal housing facilities from time to time. Human Clinical Research I. Pharmaceutical Clinical Trials ( a) Phases of Clinical Trials Under NDCT Rules, ‘Clinical Trials’ are defined as systematic human studies that generate data on clinical, pharmacological, and adverse effects to determine safety, efficacy, and tolerance of new or investigational drugs. The development process consists of four phases as provided below: Phase I: Tests safety and dosage in small groups of healthy volunteers; determines pharmacokinetics and maximum tolerated dose Phase II: Evaluates effectiveness and side effects in limited patients with target condition Phase III: Confirms efficacy and safety in larger, diverse patient populations; provides basis for marketing approval Phase IV: Post-marketing surveillance to monitor long-term effects and rare adverse events in real-world settings (b) Registration Requirements Under the NDCT Rules, Clinical Trials require permission from the Drugs Controller, India. This centralized approval system ensures consistent application of standards across the country. Applications must be submitted in Form CT-04 with supporting documents as specified in the Second Schedule and fees as specified in the Sixth Schedule. Upon scrutiny, if the authority is satisfied that all requirements have been met, it may grant permission for conducting Clinical Trial. Such decisions must be taken within 90 working days, failing which the application shall be deemed to be approved. In such cases, the applicant must notify the Authority, which shall be taken on record as deemed approval and treated as legally valid authorization to initiate the Clinical Trial. All trials must be registered with the Clinical Trial Registry of India before enrolling the first subject. This registration requirement enhances transparency and allows public access to information about ongoing trials. Trials must follow the general principles and practices specified in the First Schedule of the NDCT Rules. (c) Role of ethics committees and informed consent Any entity intending to undertake Clinical Trials should obtain the approval of an ethics committee. Such ethics committees must be registered with the Drugs Controller, India in Form CT-01. This registration ensures that ethics committees meet minimum standards for protecting research participants. They must comprise at least seven members from diverse backgrounds including medical, non-medical, scientific, and non-scientific areas, with at least 50% (fifty) being non-affiliated with the institution. This composition requirement ensures independent oversight and diverse perspectives. The committee must include at least one lay person, one woman member, one legal expert, and one independent member from another related field. For reviewing protocols, a quorum of at least five specific members is required. Ethics committees are responsible for safeguarding the rights, safety, and well-being of trial subjects. II. Additional types of clinical research  (a) Regulatory framework for Bioavailability and Bioequivalence Under the NDCT Rules, any person, institution, or organization intending to conduct a bioavailability study or bioequivalence study of a new drug or investigational new drug in human subjects must obtain prior permission from the Drugs Controller, India. This centralized approval system ensures uniform standards of review and monitoring. Applications must be submitted in Form CT-05 with supporting documents as specified in the Second Schedule and the prescribed fees under the Sixth Schedule. Upon review, the Central Licensing Authority may grant permission in Form CT-07. In certain cases, deemed approval may arise under the proviso to the prescribed timelines, in which event the applicant must notify the Central Licensing Authority in Form CT-07A prior to initiating the study. All bioequivalence and bioavailability studies must be reviewed and approved by a registered Ethics Committee before enrolment of the first subject. Ethics Committees are required to be registered with the Drugs Controller, India in Form CT-01 and must comply with the composition and quorum requirements under the Rules to ensure independence and adequate representation. The oversight of Ethics Committees is critical to safeguarding the rights, safety, and well-being of study participants. In addition, permissions granted under Form CT-07 remain valid for a period of one year, unless suspended or cancelled earlier, and all conditions applicable to Clinical Trials of new drugs apply mutatis mutandis to bioequivalence and bioavailability studies. (b) Regulatory Framework for Biomedical and Health Research For biomedical and health research not involving new drugs, the ethics committees must be registered with the National Ethics Committee Registry for Biomedical and Health Research. This separate registration pathway acknowledges the different risk profiles of such research. (c) ICMR Guidelines In addition to the above specified statutory regulations, ICMR has issued guidelines that govern research in specific domains such as stem cell research, gene therapy and other advanced biomedical areas. Where clinical research is undertaken in these specialised fields, the respective ICMR guidelines are required to be complied with, in addition to the general regulatory framework. III. Alternative Medicine Research Ayurvedic, Siddha, and Unani Clinical Research: For traditional medicine systems, researchers must follow AYUSH guidelines including the Good Clinical Practice Guidelines for clinical research in Ayurveda, Siddha and Unani Medicine, 2013 and ICMR Guidelines for Biomedical and Health Research Involving Human Participants. Inspection and Compliance Clinical Trial sites and bioavailability or bioequivalence is subject to inspection by authorized officers from the Drugs Controller, India. Non-compliance can result in suspension or cancellation of trial permissions, rejection of trial results, or debarment of investigators and Sponsors conducting future trials. Accordingly, CRO is required to ensure that all necessary documentation is maintained for at least 5 (five) years after trial completion or 2 (two) years after marketing approval, whichever is later. Serious Adverse Events Under the NDCT Rules, an “adverse event” is defined as any untoward medical occurrence (including a symptom, disease, or abnormal laboratory finding) during treatment with an investigational drug or pharmaceutical product in a patient or trial subject, which does not necessarily have a relationship with the treatment. A SAE refers to any such occurrence during a trial or study that results in death, permanent disability, hospitalization (or prolongation thereof), life-threatening events, congenital anomaly, or other significant incapacity. India’s regulatory framework imposes stringent obligations on Sponsors, investigators, and Ethics Committees with respect to the reporting, review, and redressal of serious adverse events (“SAEs”), across all categories of clinical research including (i) Clinical Trials of new drugs or investigational new drugs, (ii) bioavailability and bioequivalence studies, and (iii) biomedical and health research. (a) Clinical Trials of new drugs or investigational new drugs Under the NDCT Rules, Sponsors are required to provide free medical management for any trial-related injury, for as long as required. In the event of a trial-related death or permanent disability, financial compensation must be paid to the subject or their legal heirs according to the formula specified in the rules. The initial report for serious adverse events must be reported to the Drugs Controller, India, Ethics committee within 24 (twenty four) hours and a detailed report would be required to be submitted within 14 (fourteen) days, in each case, from the time of occurrence of such event. This reporting requirement enables timely investigation and intervention. Further, post-trial access to investigational drugs may be provided free of cost under specific conditions. (b) Bioavailability and bioequivalence studies The same standards for medical management, SAE reporting, and compensation applicable to Clinical Trials will apply mutatis mutandis to bioavailability and bioequivalence studies. (c) Biomedical and health research Such research must comply with the National Ethical Guidelines for Biomedical and Health Research Involving Human Participants, 2017 issued by the Indian Council of Medical Research. This regulation mandates registration with the Clinical Trial Registry of India prior to conducting any clinical research for biomedical and health research, obtaining informed consent from each participant, and maintaining quality assurance throughout the trial. Sponsors are also obligated to report SAEs within prescribed timelines, provide free medical management for adverse events (where such events are causally linked to the research), and offer compensation for trial-related injuries. Manufacturing Permission for New Drugs and Investigational New Drugs Under the NDCT Rules, no person may manufacture a new drug or an investigational new drug for the purposes of conducting a Clinical Trial, bioavailability or bioequivalence study, or for examination, test, and analysis, without prior permission from the Central Licensing Authority. An application for such permission must be submitted in Form CT-10, along with the documents prescribed in the Fourth Schedule and the applicable fee under the Sixth Schedule. On receipt of the application, the Central Licensing Authority scrutinizes the information provided and may, if satisfied that the requirements of the Rules are met, grant permission in Form CT-11 within ninety working days. If deficiencies are noted, applicants are given an opportunity to rectify them within a specified period. Where no communication is received within ninety working days, permission is deemed to have been granted, subject to the filing of Form CT-11A for record. The permission remains valid for three years, extendable by one year in exceptional cases. Emerging Legal Perspectives and Challenges in Clinical Research in India While NDCT Rules have modernized India’s clinical research ecosystem, new-age technologies and evolving research models bring fresh legal challenges. Policymakers, regulators, Sponsors, and CROs must anticipate and address these to sustain India’s competitiveness while ensuring participant protection: I. Personal Data Protection Framework The present regulatory framework governs ‘sensitive personal data’ which includes medical records and history.[6]Sponsors and the CROs handling such sensitive personal data must obtain consent before collection, use the data only for the stated purpose, maintain reasonable security practices, and allow individuals to review, correct, or withdraw their data. They are also required to adopt a documented privacy policy, appoint a grievance officer, and ensure lawful transfer of such data outside India. India has recently enacted the Digital Personal Data Protection Act, 2023 (“Act”) and issued draft Digital Personal Data Protection Rules, 2025 (“Draft Rules”), which together create a comprehensive framework for safeguarding personal data in the digital space. However, these provisions are not yet in force. Clinical research activities may qualify for an exemption under the Act, where personal data is processed solely for research purposes.[7] This exemption is not automatic, the Draft Rules clarify that such processing must comply with standards set out in the Second Schedule of the Draft Rules, including lawful use of data, collecting only what is necessary, ensuring accuracy, limiting how long data is kept, and adopting reasonable security safeguards.[8] Further, the entity processing such data must maintain accountability for effective observance of these standards while ensuring the data is not used to make decisions specific to a Data Principal.[9] If these conditions are met, Sponsors or CROs conducting clinical research may be eligible for exemption from the provisions of the Act. These regulations further assume particular significance in the context of genomic data-based trials, which are expanding in oncology and rare diseases such as lysosomal storage disorders, thalassemia, muscular dystrophies, and other neuromuscular conditions. Under the present regulatory framework, genetic data is regarded as sensitive under Indian jurisprudence[10], requiring informed consent that expressly addresses long-term storage, secondary uses, and potential commercialization. Since many genomic datasets are analyzed abroad, their transfer will be subject to government whitelists and the safeguards prescribed under the present regulatory framework i.e., Information Technology (Reasonable Security Practices and Procedures and Sensitive Personal Data or Information) Rules, 2011, as discussed above until the Act is brought into force. Moreover, because genomic findings may inadvertently reveal health risks for family members, such trials necessitate more sophisticated disclosure and counselling frameworks to uphold ethical standards. Further, artificial intelligence (“AI”) is increasingly used in clinical research for patient screening, risk prediction, and monitoring, but raises concerns of bias, liability, and ethical compliance. Unlike the US FDA[11], India has yet to establish AI-specific accountability frameworks, making regulatory clarity urgent. II. Decentralized Clinical Trials Another emerging concept within the landscape of Clinical Trials is decentralized clinical trials (“DCTs”) leverage digital technologies to conduct research remotely, reducing participant burden and expanding access. Several emerging start-ups are moving into the DCT landscape. However, this emerging approach faces a significant regulatory vacuum in India. The regulations governing Clinical Trials in India lack specific provisions for governing the specific challenges in relation to virtual trials such as confidentiality, data privacy, maintenance of digital trail, electronic consent, acceptable mode of digital Clinical Trials. While telemedicine gained regulatory recognition in 2020[12], these guidelines explicitly exempt research and evaluation activities, leaving DCTs without clear direction for remote participant interactions. While the regulations governing Clinical Trials do not specifically provide for safeguards of the sensitive data collected during the course of Clinical Trials, limited comfort can be drawn from the provisions of Information Technology (Reasonable Security Practices and Procedures and Sensitive Personal Data or Information) Rules, 2011, which prescribes certain safeguards as specified in the preceding paragraphs. With the global shift toward decentralized methodologies accelerated by COVID-19, this regulatory void presents both challenges and opportunities. Further, the ICMR’s draft guidance on digital health and remote clinical trials (released in May 2025) is the first step toward recognizing e-consent, remote monitoring, and secure data storage as legitimate practices.[13] Yet, these are not binding, and hence, a lack of statutory recognition for e-consent raises enforceability concerns if challenged. Thus, companies must navigate uncertain requirements while regulators have the opportunity to develop forward-looking frameworks that balance innovation with participant protection in India's rapidly evolving clinical research landscape. Technology-enabled trials tend to blur traditional lines of responsibility. As regards telemedicine trials, in case of an SAE, ambiguity continues to exist on whether liability rests with the principal investigator, the teleconsulting doctor, or the Sponsor. Further, malfunctioning of remote monitoring devices may raise product liability questions and thereby whether manufacturers, CROs, or Sponsors would need to bear responsibility for such liability remains to be clarified. Lastly, current Clinical Trial insurance frameworks may not adequately cover risks from digital interfaces and cross-border data handling[14], which may need to be considered while generally considering revision of frameworks to seamlessly adopt technology-enabled trials in India. III. ESG and Responsible Innovation Globally, pharma companies are being evaluated on ESG metrics.[15] Regulators and investors expect evidence that trials recruit across diverse populations and do not exclude marginalized groups. Trial sponsors may soon be required to disclose the carbon footprint of their operations, including trial site infrastructure and digital data centres. Transparent reporting of trial outcomes, adverse events, and data practices is also becoming part of ESG accountability, influencing investment decisions. Conclusion India’s evolving regulatory ecosystem supports pharmaceutical development through streamlined clinical research rules, structured FDI treatment, and ethical oversight mechanisms. The 2019 reforms ensure participant safety, while sector-specific FDI policies encourage both Sponsor-led and CRO-led research. Additionally, the Act offers research exemptions for entities meeting prescribed data safeguards. Together, these legal, fiscal, and compliance frameworks make India a competitive, secure, and transparent destination for clinical research, medical device testing, and pharmaceutical innovation. However, with the growing global shift towards decentralized clinical trials, India’s current regulatory framework remains silent on key aspects such as virtual participant engagement presenting both challenges and opportunities for policymakers to craft forward-looking regulations that enable innovation while ensuring robust participant protection. Given technological advancements world over, the future of clinical research will likely be shaped by the ability to integrate digital health technologies, AI, genomic safeguards, liability clarifications, and ESG principles. Policymakers must move quickly to align regulations with these global trends, ensuring India remains a hub for responsible and innovative clinical research. This paper has been written by Anantha Krishnan Iyer (Partner), Shubham Tiwary and Anusha Nookala (Associates). [1]India Clinical Trials Market Size, Share & Trends Analysis Report By Phase (Phase I, Phase II, Phase III, Phase IV), By Study Design, By Indication, By Service Type, By Sponsor, And Segment Forecasts, 2025 – 2030, grandviewresearch (2024) https://www.grandviewresearch.com/industry-analysis/india-clinical-trials-market. [2]Demand for Grants 2025-26 Analysis, prs india (March 01, 2025) https://prsindia.org/files/budget/budget_parliament/2025/DFG_Analysis_2025-26-Health.pdf [3]FDI in India's pharma sector crosses Rs 19,134 crore during 2024-25, economictimes (April 14, 2025) https://cfo.economictimes.indiatimes.com/news/corporate-finance/fdi-in-indias-pharma-sector-crosses-rs-19134-crore-during-2024-25/120268260. [4] ‘Clinical research organization’ or ‘CRO’ wherever referred in this article means a legal entity by whatsoever name called, to which undertakes tasks, duties or obligations regarding clinical trial or bioavailability or bioequivalence study. [5] IAEC can only clear research project proposals that involve experiments on animals higher on the phylogenetic scale than rodents. [6]Information Technology (Reasonable Security Practices and Procedures and Sensitive Personal Data or Information) Rules, 2011, R. 3. [7]Digital Personal Data Protection Act, 2023, S. 17(2)(b). [8]Digital Personal Data Protection Rules, 2025, Second Schedule. [9]Id. [10]Justice K.S. Puttaswamy v. Union of India 10 S.C.C. 1 (India). [11]US FDA Discussion Paper on AI/ML in Drug Development, 2023. [12]Telemedicine Practice Guidelines, 2020. [13]ICMR Draft Guidance on Digital Health Trials, May 2025. [14] IRDAI (Health Insurance) Regulations, 2016, Regulation 17; see also IRDAI Circular on Clinical Trial Insurance (2021). [15] World Economic Forum, ESG Metrics for Pharma & Biotech (2024).