Anand and Anand

The evolution of India’s securities market has brought with it an increasingly sophisticated regulatory ecosystem. At the centre of this framework stands the Securities and Exchange Board of India (SEBI), tasked not merely with punishing violations, but with preserving market integrity and investor confidence. Among the many enforcement tools available to SEBI, perhaps none has generated as much debate as the settlement mechanism. For instance, SEBI concluded proceedings against four entities linked to the former Indiabulls Real Estate Ltd. by accepting a settlement amount of ₹10.49 crore. The investigation focused on alleged diversion of funds from Albasta Infrastructure Ltd, a subsidiary of Indiabulls, to entities connected to promoters between fiscal years 2010 and 2017. By entering into a consent order, the companies avoided contested adjudication proceedings under SEBI’s PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) regulations. The regulator clarified that the settlement order is without prejudice to its right to initiate enforcement action. It said such action could be initiated if any representation made during the settlement proceedings is subsequently found to be untrue, if any settlement condition is breached, or if any discrepancy is found in arriving at the settlement terms. The settlement for some represents regulatory pragmatism which is often viewed as an efficient way to resolve disputes, reduce litigation, and ensure faster compliance. For others, it raises uncomfortable questions about accountability, transparency, and whether financial penalties alone can adequately address serious market misconduct. The answer, perhaps, lies somewhere in between. The Philosophy Behind Settlement The settlement framework allows entities and individuals facing regulatory proceedings to resolve matters without admission or denial of guilt, usually upon payment of a settlement amount and adherence to certain conditions. The idea is not unique to India. Mature regulators across jurisdictions, including the U.S. Securities and Exchange Commission (SEC), routinely rely on negotiated settlements as part of modern enforcement strategy. Litigation is expensive, time-consuming, and uncertain. Markets, however, require speed and stability. SEBI’s settlement mechanism emerged from this practical reality. Not every violation warrants years of adjudication. Technical lapses, disclosure delays, procedural non-compliance, or interpretational disputes often lend themselves better to negotiated closure rather than adversarial proceedings. Over time, the mechanism has become deeply embedded within India’s securities regulation framework. Where Settlement Has Worked Effectively One of the strongest arguments in favour of settlement is its ability to preserve commercial continuity while still ensuring regulatory compliance. For listed companies, prolonged proceedings can have severe consequences far beyond legal costs. Investigations may affect stock prices, financing opportunities, mergers, investor sentiment, and governance perceptions. In many cases, even unresolved allegations can become commercially damaging. Settlement offers finality Several large corporates and market intermediaries have used the settlement route to resolve disclosure-related proceedings, delayed filings, broker compliance issues, and procedural violations without prolonged reputational warfare. In such matters, settlement has often allowed businesses to undertake corrective measures while avoiding years of uncertainty. The settlement mechanism has also proved useful in cases where violations were not necessarily fraudulent but arose from ambiguity in regulatory interpretation. For example, disputes relating to takeover disclosures, inadvertent insider trading window violations, or delayed compliance reporting have frequently been resolved through settlement. In these situations, SEBI secures penalties and compliance commitments, while businesses avoid drawn-out litigation before the Securities Appellate Tribunal (SAT) and higher courts. The mechanism also benefits the regulator institutionally. SEBI deals with thousands of enforcements matters across intermediaries, listed entities, investment advisers, brokers, and market participants. Full adjudication of every proceeding would place enormous strain on administrative and judicial resources. Settlements allow SEBI to focus enforcement attention on more serious cases involving systemic fraud, market manipulation, or investor exploitation. The Cases That Triggered Criticism Despite its utility, the settlement framework has repeatedly come under public scrutiny particularly when deployed in high-profile matters involving influential market participants. Criticism tends to intensify when allegations involve insider trading, fraudulent disclosures, accounting irregularities, or market manipulation. In such cases, settlement is often viewed not as pragmatic enforcement, but as negotiated escape from accountability. The most commonly cited concern is the perception of “pay and move on.” This criticism became especially prominent in certain high-profile corporate matters where entities settled proceedings involving serious allegations without any formal admission of wrongdoing. While legally permissible, such outcomes often leave investors dissatisfied because the underlying factual issues remain unresolved. In some cases, involving insider trading allegations, market observers questioned whether monetary settlements alone sufficiently deter future misconduct. Critics argued that when serious allegations conclude without detailed findings or admissions, the regulatory process may appear opaque or lenient. The criticism is not entirely misplaced. Capital markets operate heavily on trust. Investors expect regulators not only to resolve disputes efficiently but also to publicly establish accountability where misconduct affects market fairness. Excessive reliance on settlements in serious matters risks creating a perception that enforcement can be negotiated rather than adjudicated. The challenge becomes even sharper when settlements involve large corporations with substantial legal resources. Smaller market participants may feel that sophisticated entities are better positioned to navigate regulatory negotiations and secure commercially favourable outcomes. The Stiffness Between Speed and Accountability At the heart of the debate lies a deeper institutional question: What should securities regulation primarily seek to achieve? If the objective is administrative efficiency and speedy enforcement, settlement is an effective tool. It reduces pendency, secures penalties quickly, and encourages compliance However, if the objective is public accountability and development of legal precedent, settlements may appear inadequate. Since matters conclude without findings on merits, important questions of securities law often remain unanswered. This has broader implications. Detailed adjudicatory orders help shape jurisprudence, clarify compliance standards, and guide market behaviour. Excessive settlement may deprive the market of such regulatory guidance. At the same time, forcing every matter into litigation may itself weaken enforcement. Delayed proceedings often lose deterrent value, while prolonged uncertainty harms businesses and investors alike. The answer therefore cannot be absolutist. SEBI’s Attempt to Strike a Balance Recognising these concerns, SEBI has gradually tightened its settlement framework over the years. Certain serious offences particularly those involving wilful fraud, market-wide manipulation, diversion of funds, repeat violations, or matters with significant investor impact face greater scrutiny and may not easily qualify for settlement. SEBI has also introduced structured settlement guidelines, internal committees, and more detailed considerations while evaluating applications. Factors such as the gravity of allegations, stage of proceedings, conduct of the applicant, and impact on investors increasingly influence settlement decisions. In recent years, the regulator appears to have adopted a more calibrated approach: using settlement as a compliance tool in appropriate cases while reserving aggressive enforcement for egregious misconduct. This distinction is crucial. A delayed disclosure violation and a pump-and-dump manipulation scheme cannot be treated identically merely because both technically fall under securities law violations. Beyond Law: The Reputation Factor Interestingly, settlement itself has evolved into a reputational calculation for companies. Earlier, settlement was often viewed as a quiet commercial resolution. Today, public scrutiny, media attention, shareholder activism, and governance expectations mean that even settled proceedings can significantly affect corporate reputation. Many companies now weigh not only the legal consequences of settlement, but also the optics of settling. In some situations, entities have chosen to litigate precisely because they believed settlement could be interpreted as implied wrongdoing, despite the “without admission or denial” framework. This changing dynamic reflects the growing maturity of Indian capital markets. Conclusion The debate surrounding settlement with SEBI weighs heavily on context, proportionality, and regulatory judgment. When used carefully, settlement is an indispensable enforcement mechanism. It promotes efficiency, reduces unnecessary litigation, secures compliance, and allows markets to function without prolonged uncertainty. However, when applied mechanically or in cases involving serious misconduct, it risks undermining public confidence and diluting the deterrent force of securities regulation. Ultimately, the legitimacy of the settlement regime depends not merely on the existence of the mechanism, but on how transparently and consistently it is exercised. In modern securities regulation, efficiency matters. But accountability matters just as much. The continuing challenge for SEBI lies in balancing both without compromising either.   By Mr. Safir Anand, Senior Partner, and Ms. Ritu Bhargava, Lead Managing Associate

In a landmark moment for Indian intellectual property law, the Trademarks Registry has accepted for advertisement the country’s first olfactory trademark a floral fragrance reminiscent of roses as applied to tyres. The order represents a paradigm shift in how Indian law perceives and accommodates non-traditional trademarks. It also situates India firmly within an international conversation that has spanned more than three decades and continues to redefine the boundaries of trademark protection. This decision carries special significance because it draws together three powerful forces: global jurisprudence, scientific innovation, and experienced legal stewardship. Among the latter, the appointment of Mr. Pravin Anand as amicus curiae was a critical moment in the proceedings. With decades of experience in trademark law and a history of pushing conceptual boundaries, he offered impartial guidance in an area where Indian precedent is almost non-existent. His APAA article “Science, Art and Law Relating to Smell” had already identified many of the challenges posed by olfactory marks demonstrating not only expertise but a degree of vision. In this case, theory and practice met at precisely the right juncture, helping the Registry navigate an entirely new category of trademark evidence. The International Stage: Three Decades of Experimentation with Scent Marks The question of whether smell can function as a trademark is not new. Globally, jurisdictions have grappled with the tension between legal formality and sensory subjectivity for many years. United Kingdom: The First Rose In fact, Sumitomo’s rose-scented tyres were the first smell mark ever registered in the UK, granted in 1996. The UK Trade Marks Registry at that time accepted a verbal description alone as an adequate graphical representation. That registration stands today as one of the earliest recognitions of olfactory marks anywhere in the world making the present Indian application both novel and historically connected. European Union: From Openness to Caution The EU’s early jurisprudence was adventurous. In Vennootschap Onder Firma Senta (1999), the “smell of fresh cut grass” for tennis balls was accepted again on the basis of a verbal description. The EUIPO compared smell descriptions to musical notation, an imperfect yet workable way to represent a sensory experience. However, this openness was curtailed by the seminal Siekmann decision (2002), where the Court of Justice held that a smell must be represented in a manner that is clear, precise, self-contained, easily accessible, intelligible, durable, and objective. Since no representation at the time met this standard, the EU effectively closed the door to smell marks for nearly two decades. United States: Functionality Above All The U.S. takes a functional approach. A smell can be protected only if: it is non-functional, and it serves purely as a source identifier. Thus, a plumeria scent for sewing thread or bubble gum scent for footwear may be registrable, but any smell intrinsic to a product’s purpose (like perfume or air freshener) is not. Australia: Open but Demanding Australia’s statute explicitly recognises scent marks, yet the onus is heavy. The applicant must demonstrate non-functionality, distinctiveness, and a sufficiently clear description. Very few scent marks have succeeded. Scientific Innovation: A Breakthrough in Graphical Representation The Indian statute requires all trademarks including non-traditional marks to be capable of graphical representation. Historically, this single requirement has defeated every attempt at protecting olfactory marks. In this case, however, the applicant submitted a groundbreaking scientific visualisation developed at the Indian Institute of Information Technology, Allahabad, and adopted by the amicus. This model, reproduced below, depicts the rose-like scent as a vector in seven-dimensional olfactory space, corresponding to seven fundamental scent categories: floral, fruity, woody, nutty, pungent, sweet, and minty.   This representation is not only innovative but bridges the gap between science and law in precisely the way courts worldwide have long sought. It offers: objectivity, through measurable scent-component ratios, precision, through dimensional axes, intelligibility, via a radar-plot visual structure, and durability, as the scientific formulation can be persisted indefinitely. The CGPDTM expressly found that this model satisfied the mandatory requirement for graphical representation under Section 2(1)(zb), echoing the Siekmann criteria while enabling India to chart its own path. Distinctiveness: Arbitrary Scent as Strong Branding Distinctiveness lies at the heart of trademark law, regardless of jurisdiction. The order emphasises that a rose scent on tyres is fundamentally arbitrary a concept echoed repeatedly in international jurisprudence. The Registry reasoned that tyres typically emit a strong rubber smell; thus, the sudden, unexpected perception of roses would create an immediate and unmistakable association with a single source. As the order notes, this olfactory contrast would leave “a very strong impression” on consumers, satisfying both inherent distinctiveness and the practical test of source-identification. This reasoning aligns with cases such as the U.S. registration of scented thread: where a smell bears no connection to the product’s function, its distinctiveness strengthens dramatically. The Role of the Amicus Curiae: Experience and Vision in Uncharted Territory The appointment of Mr. Pravin Anand as amicus curiae was a crucial aspect of this proceeding. Known for his deep experience in trademark litigation and his long-standing scholarship on non-traditional marks, he was tasked with offering an impartial, expert assessment on issues with no prior Indian precedent. What is noteworthy is how closely the issues in the case mirrored those he had previously analysed in his APAA article. There, Mr. Anand argued that smells occupy a unique space where science, art, and law intersect, and that legal systems must evolve to accommodate sensory indicators of origin. His suggestions particularly on the need for technological tools to assist graphical representation found concrete realisation in this case. Thus, while his role remained purely advisory, this matter demonstrates how scholarship, vision, and practical experience can converge to give direction to novel legal problems. Conclusion: India Joins the Global Dialogue The acceptance of India’s first olfactory mark for advertisement marks not only a domestic milestone but an international statement. With this order, India: aligns itself with global jurisprudence, embraces scientific advances in sensory representation, enables businesses to innovate in multisensory branding, and signals openness to the evolution of non-traditional trademarks. As trademark law continues to expand beyond the visual and into richer sensory domains, India’s decision stands as a thoughtful, forward-looking contribution to the global legal conversation on what a trademark can and should be. Authors: Vaishali R Mittal, Senior Partner – Litigation & Strategy, Anand and Anand Email: [email protected]