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The Insolvency and Bankruptcy Code, 2016 (“Code”) was enacted in 2016 to unify India’s fragmented insolvency framework to ensure a time-bound Corporate Insolvency Resolution Process (“CIRP”). The jurisprudence of the Code since its enactment has been continuously evolving through frequent landmark judgments and regulatory amendment to address the procedural bottlenecks and lacunas in the practical application of the Code. The Lok Sabha on 12 August 2025 introduced the, Insolvency and Bankruptcy Code Amendment Bill, 2025 (“Bill”), which is the most comprehensive and substantial reform proposed since the enactment of the Code in 2016. KEY AMENDMENTS AND THEIR IMPLICATIONS Stricter Enforcement of Statutory Timelines and Removal for Judicial Discretion The Bill casts an obligation upon the Adjudicating Authority to dispose of applications under section 7,9 and 10 of the Code within 14 days failing which reasons for delay are to be recorded in writing. The amended sections mandate admission once (a) the default is established, (b) the application is complete, and (c) no disciplinary proceedings are pending against the proposed Resolution Professional. The judicial discretion of the Adjudicating Authority recognized in “Vidarbha Industries Power Ltd. v. Axis Bank Ltd”[1] has also been neutralised and dispensed with. Appointment of Interim Resolution Professional (Section 10 of the Code) In the case of voluntary application for insolvency under section 10 of the IBC, the Corporate Debtors right to proposes an Interim Resolution Professional (“IRP”) has been removed. The amendments enhances transparency and prevents the backdoor entry of erstwhile promoters or management. Upon admission of the Section 10, Application under the Code, the Adjudicating Authority will seek IBBI’s recommendation for an IRP. Restricted Withdrawal (Section 12A of the Code) Stricter compliances for withdrawal of CIRP applications have been proposed, which would permit withdrawal only after CoC has been constituted, there is a 90% vote of the COC in favour of the withdrawal, and the withdrawal is permitted only up till the first call for resolution plans. Further the Adjudicating Authority would also be required to dispose of such applications within 30 days. Enhanced Supervisory Role of CoC (Section 21) The CoC would be empowered to supervise the liquidation process conducted by the liquidator under Chapter III thereby strengthening creditor oversight. Transfer of assets of Guarantor of Corporate Debtor during process (Section 28A of the Code) Proposes amendment to section 28A of the Code permits Creditors of the Corporate Debtor who have taken possession of guarantors to transfer/sell such assets, and proceeds will form part of the CIRP or liquidation estate. Where the guarantor is also under CIRP/Liquidation or personal insolvency, the COC of the Guarantor must also grant approval (except during liquidation where approval is not needed if the creditor has not relinquished the asset under Section 52.) The sale proceeds shall form part of the corporate insolvency resolution process or the liquidation estate of the Corporate Guarantor Mandatory Minimum Amount for Dissenting Creditors (Section 30) Dissenting financial creditors shall receive an amount not less than the liquidation value or what they would receive under the plan if proceeds were distributed, whichever is lower, as determined under Section 53. This protects dissenting creditors while reinforcing the collective decision-making authority of the CoC, thereby reducing instances of strategic dissent and litigation over payout disputes. Opportunity to Rectify Defects: Two-Stage Approval of Resolution Plan (Section 31 of the Code) The Bill, introduces a proviso to Section 31(1)(a), to establish a dual approval process for the resolution plan. The Adjudicating Authority will (a)first approve the resolution plan for implementation and management of the corporate debtor, enabling it to resume operations as a going concern and (b) lastly within 30 days, a second order will be passed approving the distribution of proceeds to creditors. By separating implementation from distribution, the amendment facilitates quicker revival of the corporate debtor, preserves business value and employment, and minimizes delays and disputes over creditor payouts thereby ensuring a more efficient and timely resolution process. Further, the bill proposes that Adjudicating Authority may before rejecting a Plan, give notice to the CoC to rectify such defects. Avoidance of Preferential and Fraudulent Transactions (Sections 43–49) The look-back period for identifying preferential, undervalued, and extortionate transactions, has been revised to two years or one year from the date of filing, instead of from the date of admission, and to include the period during which a CIRP application is pending. The Bill further empowers creditors to initiate action where the Resolution Professional or Liquidator has failed to take action and the proceedings may continue even after the completion of CIRP, liquidation, or dissolution. Stricter Timelines The Bill mandates stricter timelines with the requirement that the Adjudicating Authority record its reasons for delay in concluding the following: Withdrawal of CIRP: within 30 days Liquidation/Dissolution orders: within 30 days Challenge to CIRP initiation: within 30 days Withdrawal of liquidation: within 14 days Other Key Changes Expanded definition of service provider to include all IBBI-regulated entities. • Extended moratorium under Section 14 to the liquidation stage. • Stricter penalties for frivolous litigation. • Government dues clarified as unsecured under Section 53. • Liquidation to be completed within 180 days, extendable by 90; voluntary liquidation capped at one year. • Interim Moratorium under Sections 96 & 124 not applicable for personal guarantors during resolution and bankruptcy. New Concepts Introduced Creditor-Initiated Insolvency Resolution Process (CIIRP) (Sections 58A–58K) The Bill introduces CIIRP for specified corporate debtors and financial creditors. The process may be initiated jointly by notified financial creditors having a 51% voting consent, after notice to the corporate debtor for 30 days. If uncontested, CIIRP starts with a public announcement. The Board of Directors remains in control under the supervision of the IRP/RP. Moratorium may be sought if approved by 51% creditors. CIIRP shall be completed within 150 days, extendable by 45 days. Failure or non-cooperation may lead to conversion into regular CIRP. Group Insolvency Framework (Section 59A) The Bill introduces the concept of coordinated resolution of multiple interconnected group companies belonging to the same corporate 'group' by allowing joint creditor committees, a common insolvency professional, and joint hearings before a single bench. This prevents duplication and maximizes recovery. Cross-Border Insolvency Framework The Bill introduces a globally aligned cross-border framework that will provide for recognition of foreign insolvency proceedings, cooperation between Indian and foreign courts, and coordinated resolution of multinational group insolvencies, thereby enhancing investor confidence. III. Concerns and Challenges Litigation Risks under CIIRP CIIRP, despite its aim of avoiding delay, may result in litigation regarding default verification, creditor documentation, and oversight. In the absence of detailed rules, this can become highly contentious. Rigidity in Withdrawal Rules Limiting withdrawal to post-CoC stage may discourage early settlements, undermining the Code’s objective of negotiated resolution where disputes can be resolved without formal proceedings. Uncertainty in Two-Stage Approval of Resolution Plant The second stage of approval of Resolution Plant for distribution may lead to fresh rounds of litigation, regulatory delays, and prolonged recovery especially for operational creditors. Mandatory Admission of Sections 7 & 9 Applications May Incentivise Malicious Filings Compulsory admission upon proof of default eliminates judicial discretion and, therefore, may motivate creditors to utilize insolvency for debt recovery purposes. Ambitious Timelines and Capacity Issues The proposed timelines of 14 days for admission and 180 days for liquidation may not be feasible due to the prevalent backlog with the Adjudicating Authority and shortage of qualified insolvency professionals. The Insolvency and Bankruptcy Code (Amendment) Bill, 2025 is a significant step toward a faster and more transparent, and globally aligned insolvency regime. By introducing CIIRP, group insolvency, and cross-border frameworks, it modernizes the Code and reinforces creditor empowerment. However, effective implementation will require detailed rules, institutional strengthening, and calibrated judicial oversight to prevent misuse and ensure that the reforms achieve their intended impact. [1] 2022 SCC OnLine SC 841

The Government of India has operationalized the Digital Personal Data Protection Act, 2023 (“Act”), through the notification of the Digital Personal Data Protection Rules, 2025 (“Rules”) on November 13, 2025. Together, the Act and the Rules have created India’s first privacy legislative text that confers new rights to citizens, such as the right to revoke consent for processing personal data, the right to correct and erase personal data and right to redressal against grievances relating to misuse of personal data. In this Article, we aim to provide a comprehensive breakdown of the newly notified Rules and explain its implementation. The Rules outlay a pragmatic, phased implementation schedule that gives institutions time to build governance capacity before the full-scale compliance begins. Nonetheless this period does not lessen the gravity of the forthcoming obligations and timely commencement of compliance preparations shall be determinative in preventing future lapses. THREE PHASED IMPLEMENTATION The Rules and the provisions of the Act are to be implemented in three phases, with the initial phase being effective immediately, the second phase to commence in twelve (12) months and the final phase commencing eighteen (18) months post notification. It is important to note that the first phase, which is now in effect is focused entirely on the establishment of the Data Protection Board (“Board”), the State’s adjudicatory machinery under the Act. This initial phase establishes the Board's structure, its composition, authority, and the appointment processes for its chairperson, members, officers, and staff. The next phase of enactment begins in November 2026, when the provisions relating to the registration of Consent Managers comes into force. Finally, the 18-month timeline, ending in May 2027, is the final and most crucial phase, activating all remaining provisions of the Act including the obligations relating to reasonable security safeguards, privacy notices, breach reporting, data erasure, and verifiable parental consent. CLICKWRAP TO CONSCIOUS CONSENT: One of the key requirements under Rule 3 mandates that data privacy notices be “presented and be understandable independently of any other information”, signalling the end of ‘clickwrap’ prompts where crucial terms are buried within lengthy privacy policies, which are accepted comprehensively by Data Principals through a single “I Accept” checkbox. Notices must instead now use clear and plain language with itemized descriptions of the personal data to be processed, the specific purpose linked to specific goods or services and explicitly address mechanisms for Data Principals to withdraw consent, exercise rights or file complaints with the Board. This itemized requirement forces businesses to abandon vague justifications like “improving our services”. This operates in the benefit of Data Principals and triggers substantial implementation work for Fiduciaries, spanning legal redrafting, UI/UX redesign and the development or modernisation of consent management mechanisms. MANDATORY SAFEGUARDS AND THE 72-HOUR BREACH REPORTING CLOCK: By mandating “reasonable security safeguards”, Rule 6 transforms the internal IT security measures from a voluntary best practice into a binding legal requirement. In particular, all Data Fiduciaries must implement, at a minimum, appropriate data security measures such as encryption, obfuscation, masking or the use of virtual tokens, while taking measures to effectively control access to the physical computer resources. Data Fiduciaries are required to retain access logs for a period of one year, which will necessitate corresponding investments in storage infrastructure and audit capabilities. Rule 7 operationalizes the most high-pressure obligation with a detailed, two-part breach reporting mechanism: (a) one with respect to notifying Data Principals and (b) with respect to notifying the Board. In the event of a personal data breach, Fiduciaries must notify the affected Data Principals without delay in clear language, outlining consequences and mitigation steps. Simultaneously, a report must be filed with the Board, which is further divided into two steps. An initial breach intimation must be sent without delay, followed by a detailed report within 72 hours starting from the point of becoming aware of the breach. This detailed report requires a comprehensive breakdown of the events, root causes and any findings regarding the perpetrators of the breach. This creates a unique dual clock scenario where legal and technical teams must meet this reporting standard while simultaneously complying with the existing 6-hour CERT-In mandate requiring the same incident to be reported through two separate disclosures. VERIFIABLE CONSENT FOR VULNERABLE PRINCIPALS: Rule 10 clarifies the mechanism for obtaining “verifiable parental consent”. It requires that before collecting or processing personal data of a child, the Data Fiduciary must ensure that the parent approves such collection and processing on the basis of reliable verification of the child’s identity and age. Reliable identity details may be retrieved from data already held by the Data Fiduciary or can be voluntarily provided through virtual tokens like Aadhaar Virtual ID and authenticated via digital locker services like DigiLocker. This establishes a de facto technical standard for parental verification tied directly into the India Stack ecosystem. While innovative, this presents significant integration challenges, particularly for non-Indian entities who must build entirely new workflows to accommodate these authentication requirements. These conditions are however subject to certain legitimate exemptions under Rule 12 and the Fourth Schedule to the Rules. Similar obligations are placed with respect to the data of persons with disability under Rule 11, wherein the Data Fiduciary must verify the guardianship status requiring the ingestion and verification of legal guardianship documents. SIGNIFICANT DATA FIDUCIARIES, ALGORITHMS, AND THE SUNSET CLAUSE: Rule 13 sets a higher burden for Significant Data Fiduciaries (“SDFs”). Going beyond Data Protection Impact Assessments (“DPIAs”), cross-border transfer restrictions and independent audits, the Rules also add the requirement to verify that any "algorithmic software" employed by SDFs do not pose risks to user rights. This effective inclusion of a continual algorithmic audit forces SDFs to scrutinize artificial intelligence and automated decision-making systems for possible bias or harm to Data Principals. These systems introduce an additional layer of complexity which grants Data Principals the right to access, correct, erase and nominate. SDFs must now ensure that the algorithmic systems they employ can also operationally support such user rights. Rule 14 also operationalizes the grievance redressal right by mandating Fiduciaries to establish an accessible 90-day grievance redressal system, which must be statutorily followed before a complaint may be escalated to the Board. This encourages companies to resolve most issues internally, thereby preventing the Board from being burdened with simple or frivolous complaints at the first instance. Further, Rule 8 provides for the data retention limits, mandating that data must be erased once its deemed purpose is served. CONCLUSION With a hard deadline of May 2027 set, the notification of the Rules signals a reset for India’s digital economy and the prevailing business logic that taught to capture as much data as possible, even if for undefined future use. The DPDP regime fundamentally inverts that model, replacing infinite data hoarding with a system based on purpose limitations and mandatory erasures. While the 18-month implementation window may appear generous, it practically offers little cushion for businesses that have not already begun reorienting their data handling practices. The operational overhaul from re-engineering user interfaces to integrating India Stack mechanisms, demands both institutional unlearning and substantial new infrastructure. Businesses may now have to dismantle legacy systems built on implicit consent and rebuild them around the strict architecture of privacy-by-design, a transition that requires more than just IT upgrades. With the Rules relying on qualitative thresholds like 'reasonable security safeguards' and 'demonstrable consent,' compliance under this new regime ultimately demands both robust engineering and strategic legal guidance that can navigate ambiguities and ensure technical implementations withstand regulatory scrutiny.

Introduction: In a recent judgement, the High Court of Karnataka (High Court), in Deputy Director, Directorate of Enforcement v. Asadullah Khan & Others[1], examined the intersection between the Prevention of Money Laundering Act, 2002 (PMLA) and the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI). The Appeals filed under Section 42 of the PMLA, assailed an order of the Appellate Tribunal, PMLA whereby attachment orders passed by the ED were set aside. The ruling of the High Court provides crucial clarity on the rights of secured creditors and the scope of attachment under the PMLA, particularly when bank funds, not illicit proceeds, form the source of property acquisition. The main issue was whether properties mortgaged to a bank, which had itself suffered losses due to fraudulent loan disbursals, could be subjected to attachment under the PMLA & consequently, whether the immovable properties mortgaged to a bank as a security for loans, could be treated as “proceeds of crime” under Section 2(u) of the PMLA. Brief facts of the case: The Central Bureau of Investigation (CBI) initiated a criminal investigation in 2009, against the officials of the Syndicate Bank and certain borrowers for offences under Section 120B, 409, 420, 467 and 471 of the Indian Penal Code and under Section 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act, 1988 (PC Act). The allegations related to irregular sanctioning of loans in violation of banking norms, causing a loss of over Rs. 12,63,65,120/- to the Bank. Based on the predicate offence, the Enforcement Directorate registered a case under the PMLA and provisionally attached seven properties mortgaged to the Bank as security. The Appellate Tribunal (PMLA), New Delhi, by order dated 18.09.2017, set aside the attachment, holding that the mortgaged properties were not proceeds of crime. The ED thereafter preferred four Miscellaneous Second Appeals before the Karnataka High Court under Section 42 of the PMLA. Background about ‘Proceeds of Crime’ (PoC): The concept of “PoC” is central to PMLA. Under Section 2(1)(u) of PMLA, it refers to any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence. Section 5(1) of the PMLA empowers the ED to attach such properties and Section 8 of the PMLA prescribes the adjudication process, requiring the Adjudicating Authority to issue notice to the persons claiming interest in the property. Pertinently, the provisos to Section 8(1) and 8(2) mandate that any person holding interest in the attached property must heard before the confirmation of attachment. On the other hand, under the SARFAESI Act, a secured creditor, is empowered under Sections 13(2) and 13(4) to enforce its security interest without the intervention of courts. The statute ensures priority of repayment of debts out of secured assets. Both PMLA & SARFAESI aim to protect the financial system, by preventing money laundering, and by enabling recovery of legitimate loans, respectively. The High Court made it clear that the properties mortgaged as security for the loans were part of legitimate banking transactions and were not acquired out of any PoC. Even though the securities were insufficient to cover the losses, they did not qualify as “PoC” under Section 2(u) of PMLA. Therefore, ED had no authority to treat these mortgaged assets as tainted property or to confiscate them under the Act. The PMLA targets property derived from tainted sources, not property obtained from lawful funds that are misused later. Where the origin of money is traceable to legal banking channels, such as loans from regulated financial institutions, the property created therefrom does not lose its legitimate character unless it can be shown that the loan itself was obtained as part of the criminal conspiracy. This distinction becomes particularly significant in situations where loans were sanctioned in an improper manner, even though the money advanced came from the bank’s legitimate resources. Findings of the Court: The High Court held that the mortgaged properties could not be treated as PoC since the loans advanced by the Bank were sourced from legitimate funds of the Bank. The Court emphasised that the Bank was the victim of the fraud perpetrated by its officials and borrowers and not a participant in the criminal conspiracy. Therefore, the assets mortgaged to it could not be said to have been “derived or obtained” from any criminal activity. The Court further noted that the Adjudicating Authority had failed to comply with the mandatory requirement of issuing notice to the Bank, despite being aware that the properties in question were mortgaged to it. This omission according to the Court violated the principles of natural justice as well as the express provisions of the PMLA. Further, the Court observed that allowing attachment to continue would effectively defeat the Bank’s right as a secured creditor to recover dues under the SARFAESI Act. The purpose of the PMLA is to trace and confiscate illicit proceeds, not to impede lawful recovery of public funds. Since the Bank had already taken possession of the properties and initiated SARFAESI proceedings, the ED’s attachment could not override those rights. A similar view was taken by the Delhi High Court in The Deputy Director, Directorate of Enforcement v. Axis Bank & Ors[2]. The Court made it clear that properties acquired through ordinary banking channels cannot be labelled as “proceeds of crime” merely because the borrower or certain bank officials later faced allegations in a scheduled offence. It also emphasised that the rights of secured creditors under the SARFAESI Act cannot be pushed aside by an attachment under the PMLA unless there is a definite and proven connection between the attached property and the alleged criminal activity. This approach mirrors the position adopted in the present case, reinforcing the principle that assets funded through legitimate loans remain lawful unless the loan itself is shown to be part of the wrongdoing. Accordingly, the Court held that the Appellate Tribunal’s order confirming the order of Adjudicating Authority was legally sound. The appeals filed by the ED were accordingly, dismissed. Conclusion: According to the authors the High court has rightly found the balance between the powers of the enforcement authorities and the rights of financial institutions. The law (PMLA) serves a national purpose, but it must be restricted to (a) property intricately connected with crime and or (b) property which is acquired by PoC. To extend coverage to any assets acquired with the benefit of any credit transaction would stretch the definition of the term "proceeds of crime" too far and erode public confidence in the banking system. The reasoning of the Court was that in such cases the banks, who are trustees of public money and are victims of cheating in their credit business, should not be penalized especially when that have proceeded to recover their dues under the SARFAESI Act. This decision will reinforce the principle that anti-money laundering tools should be used proportionately, fairly and with respect for the letter and spirit of the statutory framework. The judgment is a step further in the articulation of the idea that justice in financial crime is not achieved by the widest use of power, but by its most disciplined and reasoned application. Authors: Mr. Ishwar Ahuja (Partner) Shilpa Gireesha (Associate) [1] MSA No. 78, 87, 88, 89 of 2020 [2] (2019) 3 SC C 571

Introduction: Among the various categories of trademarks available to businesses, a select few are classified as “unconventional marks.” These include marks based on sound (such as advertisement jingles), shape, colour, and even smell. Securing registration for such marks has historically been challenging, primarily due to difficulties in representation and the stringent distinctiveness criteria they must satisfy. For certain businesses, a distinctive scent, much like taste can leave a lasting impression on consumers. In such cases, smell has the potential to function as a source identifier, helping differentiate one business from its competitors. Traditionally, in India, smell marks have not been granted registration due to legal and practical limitations. However, in a significant recent development, one smell mark has been accepted by the Indian Trade Marks Registry. In this article, we analyse the prosecution history of the accepted smell mark and discuss its implications in the context of unconventional trademark protection. Facts: A Japanese company called Sumitomo Rubber Industries Ltd, has come up with a unique smell for one of their tiers. The said smell has been described as “A complex mixture of volatile organic compounds released by the petals interact with our olfactory receptor, creating a rose like smell. Using the technology developed by IIIT Allehabad. This whole rose like smell is represented as vector. Whereas   the seven dimensional vector represents one of the fundamental smells such as floral, fruity, woody, nutty, pungent, sweet and minty”. Under Section 2(z)(b) of the Trade Marks Act, 1999, a trademark must be capable of graphical representation. This requirement has long been the primary obstacle for unconventional marks such as smells, as representing a scent graphically is inherently difficult. In the case of Sumitomo’s application, the Registry initially raised objections on precisely these grounds—that the mark was incapable of being represented graphically. During multiple rounds of hearings, the Applicant’s attorneys argued that while graphical representation is indeed essential, the sensory pie chart and vector representation provided were sufficient to meet the statutory requirement. They further contended that a rose-like smell is universally recognisable, reducing the need for a more elaborate graphical depiction. It was also emphasized that adding a rosy fragrance to a tyre has no functional or technical purpose, thereby supporting its eligibility for trademark protection. The Applicant also cited successful registrations of the same smell mark in the UK and other jurisdictions to demonstrate its acceptability globally. Based on the materials and explanations submitted, the Registry ultimately concluded that the mark, as presented, was precise, clear, intelligible, self-contained, objective, and capable of graphical representation through adequate means, and accordingly accepted the smell mark for registration. Conclusion: With the evolving nature of modern businesses, it has become increasingly important to recognise and protect unconventional marks, whether through traditional trademark registration or through sui generis mechanisms. The acceptance of a smell mark suggests a gradual shift towards aligning with global trends and recognising non-traditional indicators of trade origin. However, several concerns remain unaddressed. In the present case, the mark has been represented using a sensory graph describing the scent as fruity, floral, minty, woody, nutty, sweet, and pungent. While such descriptors may be meaningful to experts in the field, they are unlikely to convey a precise or universally understood representation to the average consumer. This inconsistency becomes problematic because trademarks are intended to function as identifiers from the perspective of the relevant public, not specialists. Moreover, although the Registry has accepted the smell mark, it has not provided any concrete framework or guidelines for the graphical representation of such unconventional marks. In the absence of clear criteria, applicants are left without direction on how to meet statutory requirements for clarity, precision, and objectivity. This ambiguity not only makes it difficult for others to file similar applications but also risks inconsistent examination standards and challenges in enforcement. Another challenge that one might face in such cases will be with respect to the enforcement of such marks. Smell marks, by nature, are subjective; they vary with perception, environment, and even product conditions. The Registry did not sufficiently examine how infringement would be determined, how olfactory similarity would be tested, or whether consistent reproduction of the scent across goods could be verified. By accepting the mark without addressing these enforcement gaps, the Registry may have opened the door to ambiguity and potential litigation complexity. Lastly the applicant has discussed in length that smell in terms of tires is not functional and hence can become a source identifier for the product. However, whether the consumers perceive the smell as a source identifier of the said product or not is a question that is left unanswered. A scent that is unfamiliar in a particular product category does not automatically become a source identifier. The decision fails to demonstrate that consumers would perceive the smell as indicating trade origin rather than as a novelty feature. This raises doubts about whether the distinctiveness requirement central to the registration of any mark was adequately met. It is safe to say that the acceptance of this mark may encourage other businesses to explore unconventional branding strategies and strengthen their intellectual property portfolios. However, it also raises a critical question: was this step taken as a thoughtful evolution of Indian trademark jurisprudence, or merely an attempt to mirror developments in jurisdictions such as the UK, Australia, and the US? Until clearer guidelines and a consistent framework for assessing unconventional marks are established, the decision risks appearing more aspirational than principled. The true impact of this acceptance will ultimately depend on whether India develops its own coherent standards rooted in statutory requirements and practical enforceability rather than simply following global trends. Co-authored by Sanika Mehra, Co-Managing Partner ([email protected]) and Shilpa Chaudhury, Principal Associate ([email protected])

Saga Legal has advised Ultrahuman, a Bengaluru-based health technology company building one of the world’s most comprehensive wearable and ambient health ecosystems, on its ₹100 crore venture debt infusion from Alteria Capital. This growth financing will enable Ultrahuman to strengthen its innovation roadmap, scale its market expansion efforts, deepen sports and research partnerships, and accelerate development of new feature-led and software-driven revenue streams. The transaction supports Ultrahuman’s strategy of capital-efficient and profitable growth, reinforcing its mission to make advanced, actionable health insights accessible globally. Ultrahuman’s product suite includes the Ultrahuman Ring AIR, M1 CGM, Blood Vision, Ultrahuman Home, and Cycle & Ovulation Pro, positioning the company at the forefront of next-generation health optimisation technologies. The transaction team at Saga Legal comprised Neeraj Vyas (Partner), Mehak Chadha (Associate) and Cyril Chacko (Associate). This financing marks a significant step in Ultrahuman’s rapidly expanding global footprint and underscores investor confidence in India’s growing health-tech and wearable innovation ecosystem.

INTRODUCTION The Supreme Court in one of its recent judgments in Nabha Power Limited v. Punjab State Power Corporation Limited and Ors.[1] (‘Judgement’) provided a significant clarification relating to availability of deemed export benefits under Foreign Trade Policy, 2009-2014 (‘FTP’) and interpretation of "Change in Law" provisions under Power Purchase Agreements (‘PPAs’) with regards to any change in taxes being introduced/withdrawn by Government vide circulars/orders/public notices. This decision would now serve as a crucial precedent on the eligibility criteria for deemed export benefits and the contractual obligations arising from policy changes affecting power sector projects. The Judgement concerned disputes of coal-based thermal power projects namely, Nabha Power Limited (‘NPL’) and Talwandi Sabo Power Limited (‘TSPL’) relating to “Change in Law”. NPL was incorporated by the Punjab State Electricity Board (‘PSEB’) in September 2007 to develop a 2×700 MW project at Rajpura. After PSEB’s unbundling, L&T Power Development Limited acquired full ownership of NPL through a competitive bidding process in 2009, and Punjab State Power Corporation Limited (‘PSPCL’), PSEB’s successor, entered into PPAs with both NPL and TSPL. The dispute, as per the judgment, arose when both NPL and TSPL being denied “Change in Law” and FTP related benefits had approached the Punjab State Electricity Regulatory Commission (‘Commission’) seeking compensation under Article 13.1.1(ii) of their respective PPAs for the alleged withdrawal of Foreign Trade Policy benefits post the cut-off date (1st Round). They also sought a declaration that Mega Power Project benefits were factored into their bids and hence did not warrant pass-through to PSPCL. The Commission dismissed these petitions on November 12, 2012, holding that the NPL & TSPL were precluded from claiming concurrent benefits under both the Mega Power Policy (Policy) and FTP. Following an appeal (2nd Round), APTEL remanded the matter for reconsideration. Upon remand (3rd Round), the Commission reiterated its earlier position in its order dated December 16, 2014. The companies then approached APTEL again (4th Round), which delivered its judgment on July 4, 2017, rejecting their claims. This led to filing of the present appeals (Final Round) before the Supreme Court under Section 125 of the Electricity Act, 2003 (the Act). QUESTIONS OF LAW The Supreme Court was called upon to decide three critical questions of law; Whether deemed export benefits under Paragraph 8.3 of the FTP Policy were available to the Appellants as of the bid cut-off date, and whether subsequent notifications issued by the Directorate General of Foreign Trade constituted a "Change in Law" under the PPA? Whether the Press Release of Cabinet Decision on the change of threshold for deemed export benefits would constitute a "Change in Law" under the PPA? If such changes constituted "Change in Law", whether the Appellants were entitled to any restitutionary relief? INTERPRETATION OF "CHANGE IN LAW" PROVISIONS The Supreme Court's analysis centred on Article 13.1.1 of the PPA which defined "Change in Law" as any enactment, bringing into effect, adoption, promulgation, amendment, modification, or repeal of any Law after the specified cut-off date. Applying the golden rule of contractual interpretation, the Court emphasized that words should be given their ordinary and grammatical meaning. The Court relied on its decision in NPL v. PSPCL[2] wherein it had determined that the Press Release dated October 1st , 2009 regarding the Union Cabinet's decision to modify the Mega Power Policy did not constitute a "Change in Law" as it lacked the essential characteristic of being a binding command. The Court in that case further noted that the legal framework required such notifications to be issued in a prescribed manner and duly published in the official gazette to take effect, consistent with Section 21 of the General Clauses Act, 1897. It is to be noted that in the present case, since the Court had held NPL to be ineligible for claiming benefits under FTP, it had not dwelled on the issue whether public notices dated April 27th and 28th, 2011 amounted to “Change in Law”. DEEMED EXPORT BENEFITS UNDER FOREIGN TRADE POLICY After careful examination of Chapter 8 of the FTP, the Court identified following five essential prerequisites that must be satisfied to be eligible for deemed export benefits: The claim for Deemed Export Benefits must relate exclusively to "goods" and is inapplicable to anything that is not "goods." The Court referred to various definitions of "goods" as denoting movable items, excluding immovable properties and actionable claims. An integrated power plant comprising boilers, turbines, and civil works do not qualify as "goods" under this definition. The goods must be "manufactured in India" as defined under Paragraph 9.36 of the FTP. The Court clarified that "manufacture" requires transformation resulting in a new product with distinctive name, character, or use, referencing the authoritative definition from Union of India and Another v. Delhi Cloth and General Mills Co. Ltd.[3] Crucially, the Court noted that manufacturing and production activities are normally associated with movable articles and goods and are not used to denote construction activity. There must be an actual "supply of goods" to the power project as contemplated under Paragraph 8.2(g) of the FTP. The supply must be affected by either main contractors or sub-contractors to the concerned project, not through self-manufacturing by the project entity. Procurement must adhere strictly to International Competitive Bidding (ICB) procedures as mandated by Paragraphs 8.2 and 8.4.4(iv) of the FTP. The Court found that the Appellants did not satisfy these prerequisites and that the projects were not eligible for deemed export benefits under FTP. The Court specifically rejected attempts of the Appellants to interpret the embedded thermal power plant as "capital goods" eligible for deemed export benefits and while doing so observed that an entitlement to the deemed export benefits only accrue when the goods, as manufactured by the main contractor, are supplied to the Project, i.e., NPL/TSPL, or in the alternative, the goods are manufactured by the sub-contractor and supplied directly to the project or through the main contractor; which according to the Court had not transpired in the case at hand. EFFECT OF DGFT NOTIFICATIONS The Supreme Court held that the Directorate General of Foreign Trade (‘DGFT’) notifications dated 28 December 2011 and 21 March 2012 were "merely clarificatory in nature" rather than introducing new legal interpretations. The Court found that no prior interpretation existed suggesting that developers could import goods for power plant assembly and simultaneously claim deemed export benefits. This principle establishes that administrative clarifications distinguishing existing legal positions do not constitute a "Change in Law". CONCLUSION ON COMPENSATION CLAIMS Having determined that the Appellants had failed to establish their eligibility to claim deemed export benefits, and that neither the Press Release nor the DGFT notifications constituted a "Change in Law", the Court concluded that no question of compensation as restitutionary relief could arise. The Supreme Court thus dismissed both Appeals. IMPACT ON VARIOUS STAKEHOLDERS AND WAY FORWARD The judgement has significant implications for stakeholders across multiple dimensions of power sector jurisprudence and commercial law; and thus the Authors apprehend a Review being filed against the judgment to request the Court to have a relook at the judgment from a different and a broader perspective For power developers, the decision has established stringent criteria for claiming deemed export benefits, effectively stating what many considered a beneficial interpretation of a FTP. With respect to contractual interpretation, the judgment has clarified the significance of express contractual terms over business efficacy considerations and has established that "Change in Law" provisions must be interpreted strictly according to their plain & ordinary meaning. The decision has upheld the sanctity of contractual risk allocation while laying down jurisprudence on the intersection between FTP and power sector regulations. Vide the present judgment the Court has provided a yardstick to be used for future power sector transactions, in case of such “Change in Law” disputes and aspects to be factored in by a power producer/Project SPV while entering into PPAs . The judgment serves as a cautionary reminder that contractual benefits cannot be claimed without satisfying all statutory prerequisites, regardless of commercial expectations or industry practice. The views and opinions expressed in this Article are those of the author(s) alone and meant to provide the readers with understanding of the judgment passed in Nabha Power Limited v. Punjab State Power Corporation Limited and Others [2025 INSC 1002]. The contents of the aforesaid Article do not necessarily reflect the official position of Saga Legal. The readers are suggested to obtain specific opinions/advise with respect to their individual case(s) from professional/experts and not to use this Article in place of expert legal advice. Co-authored by : Ishwar Ahuja, Partner ([email protected]) and, Bhairavi SN, Senior Associate ([email protected]), assisted by Sanjeevani Midha, Intern [1] 2025 INSC 1002 [2] (2025) 5 SCC 353 [3] 1962 SCC OnLine SC 148

INTRODUCTION The Reserve Bank of India (“RBI”) has notified the Foreign Exchange Management (Foreign Currency Accounts by a Person Resident in India) (Seventh Amendment) Regulations, 2025, which came into effect on 6th October 2025. The said amendment, issued by the RBI in exercise of the powers conferred upon it under Foreign Exchange Management Act, 1999 (“FEMA”), seeks to amend certain provisions of the Foreign Exchange Management (Foreign Currency Accounts by a Person Resident in India) Regulations, 2015 (hereinafter referred to as the “Principal Regulations”). KEY AMENDMENTS INTRODUCED Inclusion of IFSC Definition Under Regulation 2 of the Principal Regulations, dealing with definitions, the RBI has introduced a new clause defining “International Financial Services Centre” or “IFSC”. The new clause provides that the term shall have the same meaning as assigned to it under clause (g) of Section 3 of the International Financial Services Centres Authority Act, 2019 (“IFSCA Act”). This insertion creates a formal linkage between FEMA and the IFSCA Act, ensuring consistency across regulatory frameworks. Prior to this, FEMA regulations referred generally to accounts “outside India,” without recognising IFSCs as a permissible jurisdiction despite their legislative establishment in 2019. The amendment thus aligns FEMA’s foreign currency account regime with India’s evolving financial architecture. Substitution of Regulation 5(CA) The principal amendment introduced by the RBI substitutes sub-regulation (CA) of Regulation 5 of the Principal Regulations, which governs the eligibility of persons resident in India, specifically exporters, to open, hold, and maintain foreign currency accounts outside India. The newly substituted provision stipulates that a person resident in India, being an exporter, may open, hold, and maintain a foreign currency account with a bank outside India for the purpose of realisation of the full export value or receipt of advance remittance towards the export of goods or services. The funds held in such account may be utilised by the exporter for making payments towards its imports into India or may be repatriated to India within a period not exceeding: three months, in the case of accounts maintained with banks located in an IFSC; or the end of the next month, in respect of accounts maintained with banks in all other jurisdictions. It is further stipulated that such utilisation or repatriation of funds shall be effected from the date of receipt of the funds, after adjusting for forward commitments, and shall be subject to compliance with the realisation and repatriation requirements prescribed under the Foreign Exchange Management (Export of Goods and Services) Regulations, 2015, as amended from time to time. This is a significant relaxation for IFSC accounts. Earlier, exporters were required to utilise or repatriate funds within one month from the date of receipt, regardless of where the account was maintained. Insertion of Clarificatory Explanation At the end of Regulation 5, the RBI has inserted an explanation stating: “For the purpose of regulation 5, the foreign currency accounts permitted to be opened ‘outside India/abroad’ can also be opened in IFSC.” This clarification removes ambiguity regarding whether IFSCs, which are geographically within India but designated as special financial zones, qualify as “outside India” under FEMA. The explanation explicitly affirms that such accounts are deemed equivalent to foreign currency accounts outside India. COMPARATIVE ANALYSIS OF THE OLD AND NEW REGIMES Under the earlier Regulation 5(CA) of the Principal Regulations, exporters were permitted to open and maintain foreign currency accounts outside India solely for the purpose of realisation of export proceeds and receipt of advance remittances. The utilisation of such funds was restricted to payments towards imports into India or required to be repatriated to India within one month from the date of receipt, subject to compliance with Regulation 9 of the Foreign Exchange Management (Export of Goods and Services) Regulations, 2015. The 2025 Amendment introduces several material refinements to this framework: Extended Retention Period: Exporters maintaining foreign currency accounts with banks located in IFSC may now retain export proceeds for a period of up to three months, as against the earlier limit of one month. This provides exporters with greater operational flexibility for meeting import obligations and managing foreign exchange exposures. Jurisdictional Distinction: The amended regulation establishes a clear distinction between accounts maintained in IFSCs and those held in other foreign jurisdictions. While the one-month retention period continues to apply to the latter, accounts maintained in IFSCs benefit from a three-month retention window, thereby conferring a regulatory advantage on IFSC-based banking operations. Dynamic Cross-Referencing: The earlier regulation referred specifically to Regulation 9 of the Export of Goods and Services Regulations, 2015. The amended version, however, makes a dynamic reference to the said regulations “as amended from time to time.” This change obviates the need for future technical amendments each time the underlying export regulations are revised, ensuring regulatory continuity. Legal Recognition of IFSCs: The insertion of an Explanation at the end of Regulation 5 formally integrates IFSCs within the ambit of FEMA’s foreign currency account framework. For this purpose, IFSCs are now deemed equivalent to jurisdictions “outside India,” thereby resolving prior interpretive ambiguities. LEGAL AND POLICY RATIONALE The amendment reflects a confluence of economic and legal objectives. From a policy standpoint, it represents a continuation of India’s strategic efforts to enhance the global competitiveness of its IFSCs, particularly the Gujarat International Finance Tec-City (GIFT City). By permitting exporters to retain foreign currency proceeds for an extended period in IFSC based accounts, the RBI seeks to incentivise the use of onshore IFSC banks rather than overseas institutions. This measure is expected to deepen India’s domestic foreign exchange ecosystem while ensuring that such transactions remain within the ambit of Indian regulatory supervision. From a legal standpoint, the clarification that IFSCs are to be regarded as “outside India” for the purposes of the FEMA effectively resolves a long standing interpretive gap. While FEMA has historically distinguished between transactions “in India” and “outside India,” IFSCs occupy a unique hybrid position, being geographically located within India but functionally treated as offshore jurisdictions for certain financial activities. The amendment explicitly acknowledges this duality, thereby eliminating potential ambiguity and compliance uncertainty. Furthermore, the extension of the permissible retention period for export proceeds, from one month to three months in the case of IFSC accounts, aligns India’s export regulatory framework more closely with prevailing international trade and settlement practices. This modification facilitates improved cashflow management for exporters without compromising the prudential safeguards embedded within FEMA’s foreign exchange control regime. CONCLUSION The amendment to the Principal Regulations represents a timely and forward looking reform. It not only integrates IFSCs into FEMA’s operational framework but also enhances the ease of foreign exchange management for exporters. By extending the permissible retention period for export proceeds in IFSC based accounts and clarifying their legal status, the RBI has effectively aligned regulatory clarity with broader economic policy objectives. This reform reflects a balanced and prudent approach, facilitating trade efficiency, strengthening the IFSC ecosystem, and preserving the integrity and stability of India’s foreign exchange management framework. Co-authored by Neeraj Vyas, Partner ([email protected]) and Mehak Chadha, Associate ([email protected]).

INTRODUCTION The dishonour of cheques has long posed significant challenges in commercial transactions, raising questions of both civil and criminal liability. One recurring issue under Section 138 concerns the statutory demand notice required under proviso (b) of the Negotiable Instruments Act, 1881 (“the Act”). The law mandates that upon dishonour of a cheque, the payee or holder in due course must issue a notice demanding payment of the dishonoured amount within a stipulated time. While the provision appears straightforward, disputes often arise regarding the validity of such notices, particularly when there is a discrepancy between the cheque amount and the amount mentioned in the notice, or when the notice contains additional claims like interest, damages, or legal costs. The central legal question is just how strictly must the notice match up with the cheque amount to be called as ‘said amount’ incorporated in the language of Section 138, proviso (b). One side favours a broad equitable approach to favour the Complainant who is owed monies and while the other side underscores the strict compliance doctrine applicable under penal statutes as such this matter has ignited conflicting debates. When navigating these debates, the courts have been called upon for balancing two competing considerations that is firstly, the Act's commercial purpose, which seeks to promote confidence in financial transactions by deterring cheque dishonour; Secondly, the technical rigour of criminal law, which demands exact adherence to statutory conditions. SUPREME COURT RECENT RULING: The recent Supreme Court judgment in Kaveri Plastics v. Mahdoom Bawa Baharudeen Noorul[1] has once again underlined the strict compliance requirements under Section 138 of the Act. The Court while dismissing the SLP, addressed a crucial question as to whether a demand notice under proviso (b) to Section 138 remains valid if it mentions an amount different from the dishonoured cheque. The Court reaffirmed the principle that strict compliance with statutory requirements is indispensable under Section 138 of the Negotiable Instruments Act, 1881. The Court held that the statutory notice must demand precisely the cheque amount, neither more nor less. Any discrepancy, even if explained as a typographical or inadvertent error, is fatal to the validity of the notice. It was also held that the errors in the amount, however minor or unintended, vitiate the notice and render the prosecution unsustainable. FACTS OF THE CASE The cheque(s) which were issued by the Accused No.1 to the Appellant herein, under a Memorandum of Understanding (“MoU”) was retuned on the ground ‘insufficient funds’. In pursuance thereof, the Appellant issued a demand notice dated 08.06.2012 to the Accused No. 1 Company and its directors and vide the said Notice, while stating that the cheque amount was for Rs. 1,00,00,000/- sought the entire debt i.e., Rs. 2,00,00,000/-. Since, no payment was made to the Appellant, a criminal complaint came to be filed which was quashed by the High Court on the grounds of discrepancy in the amounts mentioned in the statutory notice. Said Order was assailed before the Hon’ble Supreme Court. Appellant argued that the Court ought to have looked at the substance of the matter rather than becoming technical. It was also argued by the Appellant that offence under Section 138 of the Act is a civil wrong in the colour of criminal offence, due to which technicality should not prevail. On the other hand, Respondent argued that in the notice under Section 138 (b) of the Act, gave incorrect details as the amount claimed was of Rs. 2,00,00,000/- while the cheque of Rs. 1,00,00,000/- was issued and it was urged that the notice was invalid in the eyes of law. It was further argued that such discrepancy cannot be termed as a mere a typographical error. Respondent while relying on R. Indira vs Dr. G Adinarayana[2] highlighted the important components rather stages of Section 138 of the Act which would make the offence complete, and urged that it is only the amount of the dishonored cheque which would be termed as “said amount of money” for the purposes of Section 138 (b). DECISIONS RELIED AND PREVAILING LAW ON THE SUBJECT THUS FAR: After relying on the case of Suman Sethi vs Ajay K. Churiwal & Anrs [3] the Court observed that phrase “payment of any amount of money” mentioned in Section 138, means the cheque amount itself. Therefore, any notice under clause (b) of the proviso must specifically demand payment of the cheque amount. The Court further observed that a specific demand in the notice has to be made for the cheque amount only. However, seeking additional amounts, such as notice charges and other costs that are distinct and severable from the cheque amount mentioned in the notice, cannot be branded as bad in law. In case of Central Bank of India vs Saxons Farms and others[4] for the purpose of proviso (b) to Section 138 of the Act, the Court emphasized the purpose of the notice is to give the drawer a fair chance to make payment and avoid criminal prosecution. If the drawer complies by paying the cheque amount within 15 days, no offence is made out. This mechanism balances deterrence with fairness, ensuring the provision does not become unduly harsh. In similar case of K.R. Indira (Supra) the Court has laid down the ingredients of Section 138, including the mandatory requirement that the notice must demand payment of the cheque amount. In that case, since the notice failed to specify the precise cheque amount, it was declared invalid. The ruling reinforced the idea that specific demand for the cheque sum is indispensable. Additionally, in case of Rahul Builders v. Arihant Fertilizers [5] the complainant sent a notice demanding the entire outstanding liability for Rs. 8,72,409/-, although the dishonoured cheque was for only Rs.1,00,000/-. The Court held that the demand must strictly match the cheque amount. It was observed in this case that the service of notice is a trite and imperative character for maintaining the complaint. Since the notice demanded more amounts, it was defective. This decision reflects the strict construction principle applicable to penal provisions. Further, the Hon’ble Supreme Court in the case of Dashrathbhai Trikambhai Patel v. Hitesh Mahendrabhai Patel[6], while reiterating earlier rulings had observed that the notice must demand the “said amount of money,” i.e., the cheque amount, and compliance with the provisos to Section 138 is mandatory. The judgment further reinforced consistency in interpretation and confirmed that statutory conditions cannot be diluted. In Gokuldas v. Atal Bihari[7], it was held by the Madhya Pradesh High Court that even a small variance in cheque amount and notice amount renders the notice invalid, as Section 138 is a technical offence requiring strict compliance. In M/s Yankay Drugs v. Citibank[8], it was held by the Andra Pradesh High Court, if the notice demands either more or less than the cheque amount, prosecution fails, as the statutory requirement is not met. Therefore, mentioning the cheque amount is very much mandatory. Further, in Chhabra Fabrics v. Bhagwan Dass[9], it was held by the High Court of Punjab & Haryana that even typographical mistakes, such as in cheque number, cannot be excused when they affect compliance with Section 138. Further, in K. Gopal v. T. Mukunda[10], the Karnataka High Court observed that a mismatch where cheques worth Rs. 2,00,000/- each was issued but the demand for only Rs. 10,000/- was made in the legal notice, which invalidated the notice, despite arguments of typographical error. Also, the Court, after referring to the case of Sunglo Engineering v. State and others[11], opined that a demand for double the cheque was held to be fatal, mirroring the Kaveri Plastics situation. The Court also referred to M. Narayanan Nambiar vs State of Kerala[12], which had in turn referred to English decision for rule of construction of penal provision, Dyke vs Elliot[13], wherein the Privy Council’s decision is a classic authority on the strict construction of penal statutes and wherein, Lord Justice James had observed that: Firstly, Courts must ensure that the act charged as an offence is clearly within the plain meaning of the statutory words; Secondly, Judges should not “strain” the language to cover situations that might have been intended but are not expressly included; and Lastly, penal liability must be confined strictly to what Parliament has enacted, without resorting to notions of equity or any presumed intent. By citing this case, the Supreme Court reinforced that Section 138 proviso(b) cannot be interpreted liberally to excuse errors in the demand notice. If the cheque amount is misstated, the requirement of the offence is not technically completely met with. CONCLUSION: In conclusion, while the reasoning is doctrinally sound, especially in light of the rule that criminal law must be construed strictly, it also reveals a tension between technical compliance and substantive justice. The very object of Section 138 is to deter dishonour of cheques and to instil confidence in commercial transactions. When a cheque amount is clearly described in the notice, along with cheque number, date, and bank details, treating an inadvertent mistake in figures as fatal seems to prioritise technicality over substance. This judgment serves as a strong reminder to lawyers that precision in drafting statutory notices and especially under Negotiable Act, 1881 is non-negotiable. Until the legislature or judiciary provides leeway for minor errors, the safest course is meticulous compliance. By: Ishwar Ahuja, Partner, Saga Legal Shilpa Gireesha, Associate, Saga Legal. [1] 2025 INSC 1133 [2] (2003) 8 SCC 300 [3] (20000 2 SCC 380 [4] (1999) 8 SCC 221. [5] (2008) 2 SCC 321 [6] (2023) 1 SCC 578 [7] MCRC 5458 /2023 [8] 2001 DCR 609 [9] Crl. Appeal No. 1772/ 2002 [10] Criminal Appeal No. 1011/2010. [11] Crl. M.C. No. 3 /2021. [12] AIR 1963 SC 1116 [13] (1872) 4 PC 184  

Overview On August 13, 2025, the Reserve Bank of India (“RBI”) released the much-anticipated committee report on Framework for Responsible and Ethical Enablement of Artificial Intelligence (“FREE-AI”) in the financial sector. This comprehensive framework, developed by a committee chaired by Dr. Pushpak Bhattacharyya of IIT Bombay, marks a significant milestone in India’s approach to AI governance in financial services. This article seeks to unpack the FREE-AI framework in a manner accessible to legal professionals, policymakers, industry professionals and lay readers alike. It explains the core principles and regulatory vision behind the framework, situates it within India’s broader legal landscape, and evaluates its potential impact on financial institutions, regulators, and consumers. Further, it examines whether the framework adequately addresses the pressing challenges of accountability, consumer protection, and liability in AI-driven decision-making, while highlighting areas where additional legal clarity or regulatory alignment may be required. The Genesis and Necessity The FREE-AI framework emerges at a critical juncture. As AI rapidly transforms financial services, from customer interactions to credit assessments and fraud detection, it brings both unprecedented opportunities and novel risks. The committee, constituted following the RBI’s Statement on Developmental and Regulatory Policies dated December 6, 2024, was tasked with developing guardrails that would enable innovation while protecting stakeholders. Unlike many reactive regulatory approaches globally, the RBI’s initiative is notably proactive, seeking to establish principles before widespread problems emerge. Regulatory Context and Authority The FREE-AI Framework has been released pursuant to RBI’s powers under the Reserve Bank of India Act, 1934 and the Banking Regulation Act, 1949. It reflects the regulator’s intent to bring AI adoption under its supervisory ambit in much the same way as IT governance, outsourcing, and digital lending frameworks were previously regulated. While the framework itself is not yet a binding regulation, it is evident that several of its provisions are intended to be incorporated into Master Directions, which would make compliance mandatory for regulated entities (“REs”). Scope of Application The FREE-AI framework is designed to apply across the spectrum of REs under the RBI’s jurisdiction. This includes Scheduled Commercial Banks (SCBs), Non-Banking Financial Companies (“NBFCs”), Payment System Operators (PSOs), and FinTech entities engaged in providing financial services under RBI’s regulatory ambit. In essence, any institution operating under RBI’s oversight that deploys AI whether for customer interaction, credit assessment, risk monitoring, or operational support falls within the framework’s purview. Interestingly, the framework also contemplates an indirect extraterritorial reach. While offshore technology providers and AI developers are not directly regulated by RBI, they will inevitably be drawn into the compliance net. This is because Indian financial institutions are expected to “flow down” RBI obligations through their contractual arrangements with third-party vendors and service providers. In practical terms, foreign AI suppliers will need to demonstrate compliance with the framework’s requirements such as explainability, fairness, and incident reporting if they wish to continue providing AI solutions to Indian financial institutions. Key Compliance Requirements The FREE-AI framework translates its guiding principles into six major compliance touchpoints for REs. These are not mere technical recommendations but governance mandates that elevate AI oversight to the same level as credit risk or cyber risk management. Now every RE will need a formal, board-signed AI policy that sets out governance structures, defines risk appetite, and allocates responsibility across the AI lifecycle. This firmly places AI oversight on the agenda of directors, exposing them to accountability for lapses. Institutions must adopt stricter protocols around how data is collected, used, retained, and deleted, with explicit safeguards on consent and quality. With the Digital Personal Data Protection Act, 2023 (“DPDPA”) now in play, poor datasets or unchecked bias are no longer just operational weaknesses only but are in fact major compliance risks. AI tools cannot be deployed casually by REs. Design standards, validation, monitoring, and even retirement procedures must follow a documented process. In effect, financial institutions will be expected to exercise the same diligence over AI models as they do over financial products. Existing approval pipelines will need to expand to capture AI-specific concerns, fairness, explainability, consumer impact, and resilience. This adds time and complexity to product rollouts, but it also reduces the risk of post-launch disputes and regulatory censure. Banks and NBFCs must tell customers when they are dealing with AI, give them a channel to challenge AI-driven decisions, and provide stronger protection for vulnerable users. These measures effectively create new grounds for consumer redress. Failures of AI whether in the form of errors, bias, breaches, or breakdowns must be reported promptly. While the RBI signals a cooperative stance, silence or delay in reporting could invite stricter supervisory action. Yet, as with any first-of-its-kind initiative, questions remain about its enforceability and practical impact. Gaps and Challenges While the FREE-AI framework is undoubtedly progressive, several legal and regulatory uncertainties remain that could shape its effectiveness in practice. Enforceability remains the foremost issue. As things stand, the framework is advisory. Until it is formally codified into RBI’s Master Directions or binding circulars, adoption will likely be uneven. Larger banks with established compliance teams may move quickly, but smaller NBFCs and fintech(s) may delay or dilute implementation, resulting in fragmented sector-wide adherence. Liability allocation also requires sharper clarity. The framework places primary responsibility on regulated entities, but does not specify how accountability should be distributed between financial institutions, AI developers, and third-party vendors. In the event of consumer harm — say, a discriminatory credit decision, the precise point of liability in the chain of actors remains ambiguous. Without clearer guidance, disputes will inevitably be pushed into the realm of contract negotiation and litigation. Overlap with existing laws presents another challenge. Many obligations under the FREE-AI framework, such as fairness in decision-making, consent management, and grievance redress, intersect with DPDPA and the Consumer Protection Act, 2019. Without explicit harmonisation, regulated entities may find themselves navigating duplicative or even conflicting compliance requirements, creating both inefficiency and uncertainty. The operational burden cannot be ignored. The framework expects all REs, regardless of size to establish board-level AI oversight, incident reporting mechanisms, and structured lifecycle management of AI models. For smaller NBFCs and fintech(s), these obligations may be disproportionately onerous, increasing compliance costs and potentially stifling innovation at the very stage where agility is most critical. Lastly, global alignment is limited. Although FREE-AI endorses universal principles such as fairness, explainability, and accountability, it does not fully engage with emerging international regimes such as the EU AI Act or supervisory guidance from the US and UK. Indian institutions with cross-border operations may therefore face parallel compliance obligations, heightening the complexity of regulatory conformity across jurisdictions. Final Reflections The FREE-AI framework is more than just a policy document. It is a signal of intent. By setting ethical and governance guardrails at this early stage, the RBI is positioning India’s financial sector to embrace technological innovation without losing sight of accountability and consumer trust. Its message is clear: AI in finance is no longer a side experiment but a matter of regulatory concern at the highest level. That said, several questions remain. Until incorporated into binding directions, the framework risks uneven adoption. Further, the liability among institutions, vendors, and developers is yet to be clarified and overlaps with existing data and consumer protection laws could complicate compliance. The path forward will require careful coordination among regulators and alignment with global practices. In this sense, FREE-AI should be viewed as the beginning or a foundation upon which India’s broader AI regulatory architecture will be built. Co-authored by Vara Gaur, Partner ([email protected]) and Sakina Kapadia, Senior Associate ([email protected]).  

Introduction: In today’s digital age, gaming—like any other form of entertainment—has become readily accessible at our fingertips. While playing for recreation is harmless, in some cases excessive gaming can lead to addiction, financial losses, and even serious mental health concerns such as anxiety and depression. This raises an important question: where does one draw the line between healthy interest and harmful addiction? Recognizing the need to address these growing challenges, the Promotion and Regulation of Online Gaming Bill, 2025 was introduced in the Lok Sabha on August 20, 2025, and was passed by the Lok Sabha on the very same day. Subsequently, the Rajya Sabha passed it on August 21st, 2025. On 22nd August 2025, the said Bill received the assent of the President of India and was thereby made the Promotion and Regulation of Online Gaming Act, 2025 (“Act”). What is ‘Online Gaming’?  According to the new Act, online game means any game, which is played on an electronic or a digital device and is managed and operated as a software through the internet or any other kind of technology facilitating electronic communication[1]. The new Act classifies online games into three categories such as e-sports, social gaming and Real Money games. The definition of the same has been given below: E-Sports: Games which are played as part of multisport event. Duly recognized under the National Sports Governance Act, 2025. The outcome of such game is determined solely by factors such as physical dexterity, mental agility, strategic thinking or other similar skills of users as players. This type of game shall not involve the placing of bets, wagers or any other stakes by any person, whether or not such person is a participant, including any winning out of such bets, wagers or any other stakes. Online Social Game: Games which do not involve money or other stakes. These types of games are played majorly for skill development, recreation or educational purpose. Online Money Game: This type of game can be a combination of both skill and chance. The games are often played by a user by paying fees, depositing money or other stakes in expectation of winning which entails monetary and other enrichment in return of money or other stakes; but shall not include any e-sports; Salient Features of the Act: Prohibition of Online Money Games: The Act imposes a complete blanket ban on money games. In addition, it makes it unlawful for any individual to create, aid, abet, induce, or otherwise participate in advertising—across any form of media—that encourages a person to play or promote online games. The Act further prohibits financial institutions, including banks and payment service providers, from processing or authorizing any transactions related to online money gaming services. Authority on Online Gaming: Under the Act, the Central Government is mandated to establish an Authority for the regulation of online gaming. This Authority will consist of a Chairperson along with such other members as may be required to effectively discharge its functions under the Act. The Authority will be empowered to, upon receiving an application, determine whether a particular game qualifies as an online money game. It will also have the responsibility to recognize and categorize online games in the prescribed manner, in addition to carrying out other functions entrusted to it under the Act. Offences and Penalties: Any person offering or facilitating online money games will be liable to punishment with imprisonment of up to three years and a monetary fine of up to one crore rupees. In the case of unlawful advertisements, the prescribed penalty is imprisonment of up to two years, a fine of up to fifty lakh rupees, or both. For involvement in unlawful financial transactions under the Act, the punishment includes imprisonment of up to three years and a fine ranging from one crore to two crore rupees. All such offences have been classified as cognizable and non-bailable under the Bharatiya Nagarik Suraksha Sanhita (BNSS), 2023. Conclusion: With the rapid emergence of technology, the online gaming sector in India has witnessed exponential growth, led by major players such as Dream11, MPL, and several other platforms that have become household names. However, with the enactment of the new regulatory framework, these companies are now poised to undergo drastic operational and structural changes. The implications of the Act extend far beyond the gaming companies themselves. On the economic front, the new restrictions are expected to influence employment opportunities, particularly in areas such as software development, content creation, marketing, and customer support, which have so far thrived under the booming online gaming industry. The changes may also impact the market landscape, forcing companies to revisit their business models, product offerings, and revenue strategies. This, in turn, could alter the pace of foreign investments flowing into the sector, as global investors often view regulatory uncertainty as a critical risk factor. Another important area of concern is the advertising ban on money gaming services, which is likely to disrupt multiple allied industries. Media houses, digital advertising platforms, and event organizers—who rely heavily on sponsorships and promotions from online gaming companies—may see a significant decline in revenues. This ripple effect could extend to large-scale sporting events, celebrity endorsements, and even grassroots-level sponsorships, which are often funded by online gaming platforms seeking visibility and consumer engagement. Supporters of this Act argue that the Act protects youth and vulnerable groups from addiction, fraud, and financial losses associated with money gaming, citing cases of suicides and illegal activities linked to these platforms. The Bill aims to shut down routes for money laundering and terror financing, closing loopholes that previously existed in online betting. On the other side, critics warn that the blanket ban could hinder India’s rise as a global gaming hub, depriving talented professionals of opportunities and shrinking the job market across digital entertainment. They also speculate that granting authority to enter any premise-digital or physical, block websites and apps or conduct warrantless searches raises concerns about due process and privacy In essence, while the Act seeks to safeguard citizens from the adverse effects of money gaming, it simultaneously introduces a new era of compliance, restructuring, and strategic reorientation for the online gaming sector and its interconnected industries. The coming years will determine how effectively the industry adapts to these regulations and whether it can continue to grow within the boundaries of the new legal framework. [1] 2(f) of THE PROMOTION AND REGULATION OF ONLINE GAMING BILL, 2025 Authors: Vara Gaur, Partner Shilpa Chaudhury, Principal Associate

The Supreme Court’s judgment in Sonali Power Equipments Pvt. Ltd. v. MSEB & Ors. brings much-needed clarity to a long-contested issue under the Micro, Small and Medium Enterprises Development Act, 2006 (“MSMED Act”): Can time-barred claims be referred to conciliation or arbitration under Section 18 of the Act? The Court’s nuanced view, outlines the procedural frameworks applicable to conciliation and arbitration, striking a judicious balance between the rights of MSMEs and the statutory framework of limitation. Genesis of the Case The appellants, small-scale industries registered with the District Industries Centre, Nagpur, being the manufactures of transformers had supplied transformers to the Maharashtra State Electricity Board (MSEB) between 1993 and 2004. Facing delays in payment, they initiated claims in 2005–2006 before the Industry Facilitation Council under the erstwhile Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993 later subsumed by the MSMED Act. The Council passed an award in their favour on 28th January 2010, awarding interest on delayed payments. These awards were set aside by the Commercial Court in 2017 on the ground that the claims were barred by limitation. The High Court upheld this view in part, holding that while conciliation proceedings under the MSMED Act could not entertain time-barred claims, the Limitation Act,1963 applied to arbitration under Section 18(3) of the MSMED Act. The matter reached the Supreme Court for a definitive pronouncement. The law so far: Prior to this ruling, the jurisprudence around limitation under the MSMED Act was divergent: In Silpi Industries v. KSRTC[1], the Supreme Court held that the Limitation Act, 1963 applied to arbitration under the MSMED Act, relying on Section 43 of the Arbitration and Conciliation Act, 1996 (“ACA”). Conversely, some High Courts interpreted the term "amount due" narrowly, holding that time-barred debts fall outside the jurisdiction of the MSME Facilitation Council altogether. A full bench of the Bombay High Court in ___________ 2023 reiterated that conciliation under Section 18(2) could not be used to circumvent the bar of limitation, while arbitration remained subject to it. This divergence created uncertainty for MSMEs seeking to enforce delayed payment claims, especially where business relationships had lasted many years and documentation had aged. The Apex Court’s Findings The Bench comprising Justice P.S. Narasimha and Justice Joymalya Bagchi of the Apex Court has dealt with the issue in two parts: Does the Limitation Act, 1963 apply to conciliation under Section 18(2) of the MSMED Act? Held: No. The Court clarified that conciliation under Section 18(2) of the MSMED Act is a non-adjudicatory, voluntary, and non-binding mechanism. Since it does not result in a judicial or quasi-judicial determination, limitation law has no direct application. The Court held that the parties are free to negotiate and settle even time-barred debts during conciliation. Such settlements are legally valid under Section 25(3) of the Indian Contract Act, 1872 which enables parties to agree to pay time-barred debts. Does the Limitation Act apply to arbitration under Section 18(3) of the MSMED Act? Held: Yes. On arbitration, the Apex Court reaffirmed the view in Silpi Industries (supra), holding that once conciliation fails, and the matter proceeds to arbitration under Section 18(3) of the MSMED Act, the provisions of the ACA, including Section 43 fully apply. Arbitration under the MSMED Act is deemed to arise from an arbitration agreement under Section 7 of the ACA, invoking the entire framework of the ACA, including limitation. While the appellants argued that Section 2(4) of the ACA excludes Section 43 for statutory arbitrations, the Court held that Section 18(3) of the MSMED Act overrides this exclusion, due to its non-obstante clause and the overriding provision in Section 24 of the MSMED Act. Analysis of the Judgement. The decision of the Apex Court has rejected the High Court's reasoning that the definition of "amount due" excludes time-barred claims from the outset. The Supreme Court clarified that only adjudicatory proceedings (like arbitration) are barred by limitation and not conciliatory mechanisms. The Apex Court has also differentiated between "right" and "remedy" reiterating that limitation extinguishes the remedy, not the debt itself, thus preserving the creditor’s right to negotiate payment outside court. The Apex Court has also addressed concerns raised in earlier judgments like State of Kerala v. V.R. Kalliyanikutty[2], clarifying that their application is limited to coercive recovery mechanisms, not consensual dispute resolution like conciliation. The Court also rejected arguments that Silpi Industries (supra) was rendered per incuriam for failing to consider Section 2(4) of the ACA, it held that Section 18(3) and Section 24 MSMED Act prevail in the interpretive hierarchy. This ruling settles a previously contentious issue and brings much-needed clarity on the application of limitation to proceedings under the MSMED Act. For Suppliers: The judgment underlines the importance of initiating recovery proceedings within the limitation period. Suppliers cannot rely solely on the conciliation mechanism to preserve stale claims. For Buyers: The decision offers procedural safeguards against the enforcement of outdated claims and ensures that statutory conciliation/arbitration processes are not misused. For Facilitation Councils: The ruling guides Councils to scrutinize claims even at the conciliation stage and reject those that are clearly time-barred. Crucially, this decision balances the dual objectives of the MSMED Act i.e speedy resolution and fairness in recovery with the long-established principles of limitation law, thus preventing the reopening of long-forgotten disputes while preserving legitimate claims. Hence, the Apex Court has clarified that in conciliation proceedings, the law of limitation does not apply, and even time-barred claims may be raised since the parties are free to settle such debts by mutual agreement. In contrast, arbitration is an adjudicatory process, and the law of limitation strictly applies; hence, time-barred claims cannot be entertained, as arbitration attracts the applicability of Section 43 of the ACA. Our Thoughts and the Impact of the Ruling This ruling is both clarificatory and pragmatic. It prevents misuse of the MSMED framework to revive dead claims through arbitration, thereby protecting buyers from stale liabilities. At the same time, it upholds the protective intent of the MSMED Act by preserving a space for negotiated settlements even in time-barred situations. From a policy standpoint: MSMEs are incentivised to initiate conciliation early, yet retain an informal route to recovery of old dues. Buyers cannot be dragged into arbitration for stale claims, ensuring certainty and finality in commercial dealings. Financial reporting under Section 22 of the MSMED Act (disclosure of unpaid dues in balance sheets) does not revive limitation, but may assist suppliers during conciliation. Going forward, this judgment is likely to: Reduce unnecessary litigation on preliminary limitation objections in MSMED arbitration. Increase the use of conciliation as a meaningful step, rather than a procedural formality. Ensure speedy, cost-effective dispute resolution, aligned with the MSMED Act’s objectives. Conclusion: The Supreme Court has walked a fine line affirming legal discipline in arbitration, while allowing commercial flexibility in conciliation. This balanced interpretation reinforces the MSMED Act as a functional tool for MSMEs, without compromising procedural fairness for buyers. It is now incumbent on both MSMEs and buyers to manage their dispute timelines strategically and to engage with Facilitation Councils constructively. [1] Silpi Industries v. KSRTC, (2021) 18 SCC 790. [2] State of Kerala v. V.R. Kalliyanikutty (1999) 3 SCC 657. Authors: Mr. Ishwar Ahuja- Partner Ms. Nikita Lad– Associate Ms. Zenia Daruwala- Legal Intern.

Introduction: The power of courts to modify arbitral awards under Sections 34 and 37 of the Arbitration and Conciliation Act, 1996 (“the Act”), has consistently been a matter of conflicting interpretation, with divergent views expressed by various High Courts and even the Supreme Court of India. The scope of interference with an arbitral award is narrowly defined, with Section 34 providing limited grounds for setting aside an award. However, courts have recently been confronted with situations where complete annulment of an award may not be warranted, but minor errors or unjust outcomes still demand redress. This has led to a gradual evolution in judicial reasoning, allowing for limited modifications in certain cases, raising critical questions about the finality of arbitral awards and the boundaries of judicial intervention. Judicial interference in arbitration has long been a subject of debate in India. The Hon’ble Supreme Court of India, in the case of S.V. Samudharam v. State of Karnataka[1], held that the powers of the court under Section 34 of the Act, are purely supervisory in nature and cannot modify the arbitral award.  It was held that the Court under Section 37 of the Act, where there are only three powers available to the Court, which includes confirming the award of the arbitrator, setting aside the award as modified under Section 34 and rejecting the application under Section 34 and 37 of the Act. The court cannot exercise appellate powers and, consequently, is not empowered to modify arbitral awards. The Hon’ble Supreme Court in the case S.V. Samudharam (supra) has followed the principle laid down in the judgement Project Director, National Highways No. 45 E and 220, National Highways Authority of India v. M. Hakeem and Another[2], wherein it was categorically held that courts are not permitted to modify arbitral awards. However, on the contrary in the case of M/S Oriental Structural Engineers Private Limited vs State of Kerala[3], the Court intervened to modify the rate of interest even though the arbitral award was within the scope of the contract. This illustrates the inconsistency in judicial reasoning, as there are several judgments taking divergent views on the extent of judicial interference. The Act, which is based on the UNCITRAL Model Law, reflects the limited scope of judicial intervention. Section 34 of the Act, adopted almost verbatim from the UNCITRAL Model, does not explicitly provide for or warrant judicial interference, but merely enumerates the specific grounds upon which an arbitral award may be set aside. Further, the interpretation of each clause of Section 34 which provides the grounds for interference has evolved over time, resulting in a dynamic and, at times, divergent judicial approach to the extent of interference permissible under the Act. Recent Supreme Court Ruling: Recently, a majority decision of a Constitution bench of the Hon’ble Supreme Court in Gayatri Balasamy v. ISG Novasoft Technologies Limited[4], held that the courts can modify an arbitral award under certain circumstances under Section 34 as well as Section 37 of the Act. The Bench, which has favoured the modification of arbitral awards, has observed that the principle of omne majus continet in se minus, “the greater contains the less”, is applicable. The rationale was that the power to set aside an arbitral award necessarily encompasses the lesser power to modify it. It was further observed that the court is empowered to sever the “invalid” portion of an arbitral award from its “valid” portion and that this lies within the inherent jurisdiction of the court. However, it was also pointed out that partial setting aside may not be feasible where the valid and invalid portions are so legally and practically intertwined that they cannot be separated. Importance of Reasoned Awards and Section 34(4) of the Act: The majority observed that a reasoned award, must satisfy three essential criteria; proper, intelligible and adequate[5]. Section 34(4) plays a vital role here, as it empowers the court to give the arbitral tribunal a chance to remedy shortcomings in the award’s reasoning before enforcement is refused. This provision is particularly relevant where the tribunal has either failed to explain its conclusions or left significant gaps in its reasoning, provided these defects are capable of being rectified. The aim is to correct fixable errors within arbitration, allowing limited modification of awards and preventing the delays and expense of starting the process all over again. Further, the Court has also observed that the power to modify the arbitral award under Section 34 of the Act would not render the regime under the New York Convention and the enforcement of foreign awards affected. Finally, the Court narrated the usage of the powers vested under Article 142 of the Constitution of India whereunder the Court cannot rewrite or alter an arbitral award on its merits. However, it may appropriately be invoked where doing so is essential to finally resolve the dispute and bring the litigation to a close, and saving both time and costs for the parties. Ultimately, the Courts have the limited power under Sections 34 and 37 of the Act, to modify the arbitral award under certain circumstances; when it is severable, by separating the ‘invalid’ portion from the ‘valid’ portion. It may also be corrected to address clerical, computational, or typographical errors apparent on the face of the record, and post-award interest may be modified in certain circumstances. Dissenting Opinion: On the contrary, the opinion of a Single Judge, observed that the maxim omne majus continet in se minus, is not applicable in the case of the powers vested under Section 34 of the Act. It was pointed out pointed out that appellate powers, which are entirely different from the powers under Section 34 of the Act, operate distinctly and belong to a different genus. The application of Section 34 must be limited to setting aside the award and must not vary at any point, as doing so would render the purpose of the arbitral proceedings futile. It was further pointed out in the dissenting opinion that the court under Section 34 and the courts hearing appeals thereafter have the power to “sever” parts of the award in exercise of the powers of setting aside awards under Section 34. The Court further observed that, before severing any portion of an award, a Section 34 court must undertake a thorough examination to determine whether the “good” part of the award can be distinctly identified both in terms of its liability and quantum without any correlation or dependence on the “bad” portion sought to be set aside. However, this was not same as modification of the arbitral award. International Perspective: Several jurisdictions following the UNCITRAL Model Law either fully or partially recognise limited judicial powers to modify or vary arbitral awards to avoid unnecessary re-arbitration. For instance, Kenya under Section 39, Arbitration Act empowers courts to confirm, vary or remit awards; Singapore, International Arbitration Act under Section 24(b) and Arbitration Act, 2001, Sections 47 and 49 allows remission, confirmation or variation; and Australia, International Arbitration Act, Section 34(4); domestic Act, Section 34A permits suspension, setting aside or limited appeals. The U.S. Federal Arbitration Act, 1925 under Sections 10 and 11 provides for vacating or modifying awards in cases of fraud, corruption or misconduct, while the U.K. Arbitration Act, 1996 under Sections 68 and 69 of the said Arbitration Act, 1996 enables courts to remit or vary awards in cases of defined serious irregularities. The consistent rationale across these jurisdictions is to prevent re-arbitration where defects are minor, ensure cost-efficiency, and promote speedy resolution which is a perspective also recognised by the Hon’ble Supreme Court of India while interpreting the powers of modification of arbitral awards under Section 34 and Section 37 of the Act. Conclusion: The fundamental objective of the Act is to secure the speedy and efficient resolution of disputes between parties. Permitting courts to modify arbitral awards, rather than remitting them or setting them aside entirely, furthers this legislative intent by avoiding unnecessary duplication of proceedings. If every defect in an award were to mandate re-arbitration, the process would become not only cumbersome and time consuming but could also end up being more prolonged than litigation. Such an outcome would directly undermine the very rationale behind the enactment of the Act. The Indian courts, while dealing with cases requiring modification of arbitral awards, may lay down defined ground rules, as reflected in the Supreme Court’s ruling, to ensure that judicial interference remains restricted to specified circumstances. At the same time, the courts must safeguard the sanctity of the arbitral process, treating modification strictly as an exception. Every instance of modification must therefore be accompanied by clear and detailed reasoning, demonstrating why such interference was warranted at that particular stage. The evolving stance on modifying arbitral awards reflects a pragmatic shift towards efficiency and fairness in dispute resolution. While the foundational principle of minimal court interference remains intact, recognising a limited power of modification under Sections 34 and 37 ensures that curable defects can be addressed without undermining the autonomy of arbitration. This approach aligns India with progressive international practices, reducing unnecessary delays, avoiding repetitive proceedings, and reinforcing confidence in arbitration as a viable alternative to litigation. The approach of the Courts must ultimately navigate and maintain the sanctity of the arbitration proceedings. Co-authored by Atul N Menon, Partner ([email protected]) and Shilpa Gireesha, Associate ([email protected]). [1] (2024) 3 SCC 623 [2] (2021) 9 SCC 1 [3] (2021) 6 SCC 150 [4] (2025) 7 SCC 1 [5] Upholding the finding in Dyna Technologies Private Limited v. Crompton Greaves Limited; (2019) 20 SCC 1.

Private unaided schools occupy a peculiar position in Indian education law, they are private enterprises delivering a public good, subject to both the Right of Children to Free and Compulsory Education Act, 2009 (RTE Act) and state-specific education laws. Historically, Delhi relied on a patchwork regime: the Delhi School Education Act, 1973 and periodic government orders. However, judicial interventions from time to time, most notably in Modern School v. Union of India (2004) have exposed the regulatory gaps, particularly in fee oversight. In light of this background, on 8 August 2025, the Delhi Legislative Assembly passed the much-anticipated Delhi School Education (Transparency in Fixation and Regulation of Fees) Bill, 2025 (“Bill”). The legislation intends to introduce stringent regulations and penalties to curb arbitrary fee hikes by schools, while also empowering parents to challenge unilateral decisions made by school managements. The Statement of Objects and Reasons under the Bill clarifies that the existing provisions under the Delhi School Education Act, 1973 has proven insufficient in preventing the free reign of private unaided school managements pertaining to arbitrary fee hikes and lack of financial transparency. Citing persistent complaints from parents and judicial limitations on the Directorate of Education's (DoE) power, the Bill seeks to establish a robust mechanism for fairness and accountability in school fee structures in Delhi. The Bill is applicable to all categories of private unaided educational institutions within the National Capital Territory of Delhi, from pre-primary to senior secondary level, whether recognised or unrecognised by the Government. Through the Bill, the legislature aims to: Establish independent committees to regulate school fee increases; Mandate prior approval of the committee for any fee revision based on financial statements; Promote transparency through mandatory audits and disclosures; Provide a grievance redressal mechanism for parents; and Impose strict penalties for profiteering and collecting capitation fees by the schools. At the core of the Bill sits a new three-level committee structure that shall manage the proposal, approval, and appeal of school fees in Delhi. The “School Level Fee Regulation Committee” or “SLFRC” forms the foundational body at individual school level which is responsible for the initial review and approval of fees. The Bill mandates every school to form an SLFRC by July 15th of every academic year. The SLFRC is designed to be an inclusive body, consisting of a chairperson, a secretary (which shall be the school’s principal), a member body consisting of three teachers and five parents from the school’s parent-teacher associated (selected at random through a draw of lots), and an observer (which shall be a nominee from the Department of Education). The school management must submit its proposed fee structure to the SLFRC by July 31st. The Bill mandates that the fee approvals by the SLFRC must be based on a unanimous agreement of all members, and once approved shall be the binding fee structure for the next three academic years. The approved fee details must also be displayed on the school's notice board and website. The timeline for SLFRC to decide on the amount of fee to be fixed has been fixed at 15th September of the relevant academic year and the management of the school can approach the District Fee Appellate Committee (DFAC) (formed under the Bill) before the 30th September. The Bill accords a statutory right to an aggrieved parents’ group—constituting no less than 15% of the total parents of students in the affected class or school—to prefer an appeal against a determination of the School Level Fee Regulation Committee (SLFRC) before the District Fee Appellate Committee. Such appeal must be instituted within thirty days from the date on which the SLFRC finalises the fee structure. The DFAC is mandated to communicate its decision on the fixation of fees to the concerned parties within thirty days of receiving the appeal, and in any case not later than forty-five days within the same academic year. Should it fail to do so, the matter shall stand automatically referred to the Revision Committee as provided under the Act. Furthermore, the Aggrieved Parents’ Group, the school management, or the Parents-Teachers’ Association, if dissatisfied with the decision of the District Fee Appellate Committee, may prefer a further appeal before the Revision Committee within thirty days from the date of such decision, in the manner prescribed. It further delineates a set of determinative parameters for fixing the fees leviable by a school, including: the geographical location of the institution; the quality, scale, and extent of its infrastructure and facilities; prevailing academic standards; expenditure on administration and maintenance etc.. Notably, the DFAC has been vested with the powers of a civil court for the purposes of conducting any inquiry under the Act, akin to the powers exercisable while trying a suit. In parallel, the Directorate of Education is conferred with civil court like authority for the imposition of penalties under the Bill. Importantly, the Bill contains an express bar on the jurisdiction of ordinary civil courts in respect of matters governed by its provisions, thereby channelling disputes exclusively through the statutory committees and authorities established under the legislation. Non-observance of the mandated procedure for fee approval vests in the Director of Education along with the authority to order the immediate rescission of the revised fees and to compel the refund of any excess amounts collected, within a maximum of twenty working days. The Director is further empowered to levy pecuniary penalties ranging from ₹1–5 lakhs for a first contravention and ₹2–10 lakhs for each subsequent contravention. Persistent defiance of such directives may expose the institution to a penalty equivalent to twice the originally prescribed amount and/or may result in cancellation of recognition of the school itself. The Bill’s introduction of a participatory committee system to govern the approval and appeal of school fees is laudable as an important intervention by the authorities, bringing uniformity and transparency to fee structures, and directly addressing long-standing parental concerns. For the first time, parents have been involved in the decision making process and the penalties prescribed have been high and serious enough to have a material impact on the violators. However, while the goals are valiant, the Bill also poses considerable challenges in implementation, particularly for schools, as the multi-layered approval processes, especially in relation to the need for unanimous approvals, may lead to frequent deadlocks and pushing most decisions to an appellate system. Requiring 15% of parents to initiate a DFAC complaint may also be onerous in large schools, effectively stifling individual grievances. Further, without statutory financial audits, committees may lack robust evidence to determine whether fee hikes are justified. Possible administrative delays and bureaucratic hurdles may also affect the ability of schools to meet dynamic financial requirements and unforeseen expenses. The Bill will also test the ability of the Government of Delhi to effectively execute it over roughly 1700 schools. From a legal standpoint, the Bill is well-intentioned but susceptible to legal and administrative law challenges. The Bill’s success therefore rests on a delicate balance; one which meets its intended fairness for parents while not imposing overly cumbersome administrative load on schools that may compromise their operational flexibility and financial health. Co-authored by Neeraj Vyas, Partner ([email protected]) and Abhishek Malhotra, Associate ([email protected])

INTRODUCTION The question of whether an improper or irregular arrest automatically entitles an accused to bail has been the subject of considerable judicial scrutiny. This issue has gained renewed significance with the enactment of the Bharatiya Nagarik Suraksha Sanhita, 2023 (“BNSS”), particularly Section 483, which governs the grant of bail. While the Constitution of India and various statutory provisions lay down procedural safeguards to protect the liberty of individuals, the law also seeks to ensure that criminal investigations are not impeded by mere technicalities. Courts have consistently struck a delicate balance between safeguarding individual rights and preserving the integrity of criminal investigations. The jurisprudence that has emerged affirms that procedural irregularities in arrest, such as non-compliance with procedure, do not, by themselves, constitute a standalone ground for grant of bail. Rather, the decision to grant bail must be grounded in a holistic appreciation of the facts and circumstances of each case. This article examines the recent Karnataka High Court decision of Edwin Thomas v. State of Karnataka (Criminal Petition Nos. 101502/2025 and 101503/2025 – Judgment dated April 29, 2025), particularly in light of recent developments under the BNSS, and underscores the principle that procedural lapses alone do not ipso facto justify the release of an accused on bail. STATUTORY OVERVIEW REGARDING ARREST The right to life and personal liberty is enshrined under Article 21 of the Constitution of India, which mandates that no person shall be deprived of these rights except according to procedure established by law. This constitutional guarantee encompasses the right of an individual to be arrested only through lawful means and in strict adherence to statutory procedures. Furthermore, Article 22(1) of Constitution of India states that no person who is arrested shall be detained in custody without being informed, as soon as may be, of the grounds for such arrest nor shall he be denied the right to consult, and to be defended by, a legal practitioner of his choice and Article 22(2) of Constitution of India states that every person who is arrested and detained in custody must be produced before the nearest Magistrate within 24 hours of such arrest. In furtherance of these constitutional safeguards, Chapter V of the BNSS outlines certain safeguards, such as informing the arrestee of the grounds of arrest, particulars of the offences for which arrest is made, and the right to bail, the right of an arrested individual to meet an advocate of their choice during interrogation, information as to the arrest of the person and where the arrested person is being held, to his relatives, friends or any other person mentioned by the arrested person, etc. These provisions, when read collectively, establish a comprehensive statutory framework designed to balance the powers of law enforcement authorities with the rights and liberties of individuals and echoes constitutional vision of fair procedure. Any deviation from these prescribed procedures can raise serious constitutional concerns and may invite judicial scrutiny regarding the legality of the arrest. KARNATAKA HIGH COURT’S RECENT DECISION In a recent judgment, the Hon'ble High Court of Karnataka addressed whether procedural irregularities during an arrest automatically grant bail under Section 483 of the BNSS. In the case of Edwin Thomas v. State of Karnataka (Criminal Petition Nos. 101502/2025 and 101503/2025), the Petitioners claimed their arrests were illegal due to the local police not being informed. The Karnataka High Court clarified that procedural lapses do not automatically entitle someone to bail. It ruled that the arrests were not illegal, noting that the only irregularity was a failure to notify the New Delhi police during the transfer of the Petitioners, which the investigating officer apologized for. Consequently, the Court concluded that the Petitioners were not entitled to automatic bail and could seek legal action regarding their arrest, but the arrests themselves were deemed proper. To substantiate their claim, the Petitioners placed strong reliance on two decisions of the Hon’ble Supreme Court, namely Vihaan Kumar v. State of Haryana (2025 SCC OnLine SC 269) and Directorate of Enforcement v. Subhash Sharma (2025 SCC OnLine SC 240). Both judgments pertain to instances where the Court found serious lapses in the process of arrest and recognized the breach of fundamental rights as a ground to grant relief to the accused and were considered to be misplaced. In the case of Vihaan Kumar, the Supreme Court intervened in light of a clear violation of the statutory safeguards and emphasized the protection of personal liberty under Article 21 of the Constitution of India. Similarly, in the case of Subhash Sharma, it was observed that the arrest had been carried out in flagrant disregard of procedural requirements mandated by the Prevention of Money Laundering Act, 2002, and the Accused was denied access to legal representation and basic rights. These cases involved egregious violations which were absent in the present matter. In the instant case, the Petitioners have not alleged any grave violation of their fundamental rights such as illegal detention, denial of legal counsel, or inhuman treatment in custody and neither have the Petitioners alleged that the grounds of arrest were not informed to them. Instead, the foundation of the Petitioners’ argument is based solely on a procedural lapse, which, by itself, does not render the arrest illegal in the absence of demonstrable prejudice or mala fide intent on the part of the police authorities. Furthermore, the Petitioners had earlier approached the Hon’ble High Court of Delhi by filing a habeas corpus petition concerning the very same arrest. During the course of those proceedings, the Investigating Officer had tendered an unconditional and voluntary apology before the Court, acknowledging the procedural oversight, which the Petitioners had accepted without any objection. The said habeas corpus petition was thereafter voluntarily withdrawn by the Petitioners without pressing any further claim of illegal arrest. Therefore, it is evident that the Petitioners had already waived any grievance related to the arrest by accepting the apology of the investigating authorities and by choosing not to pursue the habeas corpus remedy to its logical conclusion. Hence, the Petitioners could not raise the same contention as ag round for bail. This is in consonance with the concurring decision of Justice Bela Trivedi in the case of Radhika Agarwal v. Union of India (2025 SCC OnLine SC 449) where she voiced that, minor procedural lapse on the part of authorized officers may not be seen with a magnifying glass by the courts in the exercise of judicial review, which may ultimately end up granting undue advantage or benefit to the accused persons. The observation was made in relation to special acts and not with respect to offences under IPC / BNS. CONCLUSION The case of Edwin Thomas presents a significant judicial pronouncement that draws a fine line between procedural irregularity and illegality in the context of arrest and custody. While the Indian judiciary has time and again reiterated that violations of procedural safeguards, especially those impacting fundamental rights under Articles 21 and 22 of the Constitution of India, can render an arrest unlawful and illegal, this protection cannot be extended to cover every minor lapse or technical omission by the investigating agency. The Karnataka High Court, sends a clear signal that while procedural fairness is paramount, the same cannot be misused as a tool to escape prosecution. The Courts are duty-bound to protect individual liberty, but they must also prevent the dilution of criminal justice by frivolous or opportunistic claims framed on procedural grounds. The police authorities also have a duty to ensure that the arrest is conducted as per law and that the rights of the arrested person are not affected. More importantly, such lapses do not, by themselves, render the evidence adduced inadmissible, as courts are required to consider the totality of the facts and circumstances of each case. Hence, this serves as a reaffirmation of the principle that the grant of bail must be governed by a holistic assessment of facts, legal merit, and judicial conscience—not by technicalities devoid of substance. It also reinforces the judiciary’s balanced approach in ensuring that the rights of the accused are protected without compromising the integrity and efficiency of criminal investigations.

Saga Legal has recently announced the appointment of Vara Gaur as a Partner in the Litigation & Dispute Resolution practice. Vara will lead disputes related to Technology, Media & Telecom (TMT), given her extensive experience in technology-driven commercial litigation, platform liability, data privacy, and arbitrations. A graduate of the Faculty of Law, University of Delhi, Vara also holds a BBA degree from Amity University. Over the years, she has represented a wide spectrum of clients, from global technology majors to Indian digital startups, in complex, high-stakes disputes before the Supreme Court of India, various High Courts, arbitral tribunals, and sectoral regulators. She is also adept at navigating sensitive matters involving online content, intermediary regulations, and the evolving data protection frameworks. Welcoming her to the firm, Gaurav Nair, Managing Partner, said, “Vara is a welcome addition to the firm’s disputes practice and will be focusing primarily on further deepening our technology litigation practice. She has a comprehensive understanding of the technology and data protection landscape, which is the need of the hour, given the nuanced ways these sectors are evolving. We are looking to further deepen our work in these areas, backed by the breadth of her expertise and experience.” Sharing her thoughts on joining Saga Legal, Vara said, “Joining Saga Legal feels like the right step at the right time. The firm’s ambition, agility, and collaborative culture resonate strongly with me. I am particularly excited to build a specialised TMT disputes practice.” Founded in 2016, Saga Legal is a multi-service law firm with a strong presence in New Delhi, Bengaluru, and Mumbai, advising a diverse clientele on matters ranging from corporate-commercial advisory and transactions to complex litigation and regulatory compliance. The firm’s founding philosophy is rooted in clarity, collaboration, and client-first solutions, and its lawyers are known for their strategic acumen across sectors including fintech, infrastructure, energy, healthcare, and now, technology and media.

OVERVIEW In today’s tech-driven world, Artificial Intelligence (AI) is transforming the way businesses operate, innovate, and connect with consumers. With the emergence of AI, we also see new trends whereby people transform their photos to various animated styles. As AI-generated content becomes more common, it raises important questions about intellectual property (IP) rights. Who owns the work created by AI? Can these works be legally protected? How do we prevent AI from unintentionally copying existing work? These issues are at the heart of the ongoing discussion about AI and IP law. Governments around the world are trying to strike a balance between encouraging AI-driven progress and ensuring fair IP protections. The lack of a global standard makes this even more challenging, as different countries take different approaches. For example, New Zealand has chosen a minimal-intervention, risk-based strategy, trusting that existing laws provide enough safeguards. Other nations, however, are considering broader legal updates to address AI’s growing role in content creation and branding. As AI continues to redefine creativity and production, it also challenges long-standing legal principles like originality. Copyright and trademark laws have traditionally set a low bar for originality, allowing a wide range of works to be protected. But with AI-generated content, a key question arises—should simply providing an instruction or prompt be enough to claim ownership? This article explores the evolving relationship between AI and IP, the legal challenges it presents, and the possible solutions that businesses and policymakers must consider in an increasingly AI-driven world. NAVIGATING THE COPYRIGHT LAW IN THE AGE OF AI The Copyright Act, 1957 defines an “author” as the person who causes a work to be generated by a computer, excluding AI from claiming independent authorship. This means that the individual providing a prompt to AI may be considered the rightful author, while AI developers and the machine itself hold no legal claim. However, this interpretation raises concerns about co-authorship, especially considering AI’s evolving role in content creation. Indian copyright law currently protects only computer-aided works, not computer-generated ones, making it unclear whether AI-assisted creations qualify for protection. Another challenge is the requirement of originality under Section 13[1] of the Act. Indian courts follow the modicum of creativity standard, meaning a work must reflect human skill and judgment to qualify for copyright. AI, operating on algorithms and existing data, lacks human creativity, making it difficult to fit within traditional copyright principles. Additionally, AI’s reliance on large datasets raises ethical concerns about copyright infringement, as AI-generated works may unknowingly incorporate protected material without seeking prior consent. The question of liability—whether it falls on the AI developer, the user, or the copyright owner—remains unresolved. To address these issues, lawmakers could consider declaring AI-generated works ineligible for copyright protection or adapting global legal frameworks such as the EU’s Text and Data Mining exceptions and the US fair use doctrine. Another approach could involve creating a sui generis system for AI-generated content, tailored to address its unique challenges. Technologies like digital watermarking or audio steganography could help track AI’s use of copyrighted material. As AI’s role in content creation grows, India may need specialized legislation, similar to the EU’s proposed AI Act, to ensure copyright law evolves alongside technological advancements. LEGAL COMPLICATIONS OF AI-GENERATED WORK AND TRADEMARKS Trademarks protect the identity and reputation of businesses by preventing unauthorized use of names and logos. However, AI-generated content is challenging this protection, as AI systems, relying on publicly available data, can unintentionally create names or logos that closely resemble existing trademarks. This increases the risk of brand dilution and consumer confusion. The Trademarks Act, 1999, do not recognize AI as a legal entity, making it unclear who owns an AI-generated mark—the developer, the business using it, or the party commissioning the AI. Since AI-generated trademarks are derived from pre-existing data, their distinctiveness also comes into question, potentially making them ineligible for registration under Indian law. Legal gaps in AI and trademark protection are evident in controversies like Disney vs. Microsoft, where AI-generated movie posters imitated Disney’s trademarks, raising infringement concerns. While companies have responded by restricting AI access to certain brand names, users continue to bypass these limitations, exposing businesses to risks. To mitigate trademark conflicts, businesses using AI-generated marks must conduct thorough trademark searches before filing for registration. As AI continues to shape brand development, there is a pressing need for legal clarity on its role in trademark ownership and infringement. PATENT ELIGIBILITY OF AI-RELATED INVENTIONS AI innovations, like any technological advancement, require IP protection to ensure exclusivity, market advantage, and revenue generation. However, existing legal frameworks lack specific provisions for AI-driven inventions, raising key challenges in patentability and ownership. While AI-assisted and AI-generated inventions fall within the scope of patent law, determining the rightful inventor—whether the AI developer, user, or business—is still debated. Additionally, AI-generated works must meet statutory requirements such as subject matter eligibility and sufficient disclosure under the Indian Patents Act, 1970. Patentability of AI innovations in India hinges on demonstrating a “technical effect” rather than mere computational advancements. Courts and patent offices worldwide, including in the EU and UK, have taken differing approaches. While the European Patent Office emphasizes a technical purpose for AI-related patents, the UK courts have recognized artificial neural networks as patentable. In India, AI inventions must navigate Section 3(k)[2] of the Act, which excludes mathematical methods and computer programs from patent protection unless they provide a demonstrable technical contribution. As AI continues to evolve, Indian courts and patent offices must clarify their stance on AI-related patents to ensure balanced innovation protection. WAY AHEAD With the rapid advancement of technology in the field of AI, our dependency on technology has grown immensely from smaller needs such as buying groceries to bigger life decisions such as making and running businesses. As AI systems become increasingly capable of generating content—ranging from art and music to software code and written works—the traditional boundaries between human-created and machine-generated IP are becoming increasingly blurred. Considering these emerging complexities, there is a need of a sui generis legal framework. Such a system distinct from existing IP laws could specifically address the unique issues posed by AI generated content for establishing clear criteria of authorship, ownership, and liability. However, beyond enacting a sui generis statute there is also a pressing need to adopt a more flexible approach to examine the IP in the AI era. IP examiners, policymakers, and courts must be equipped to assess not only the technical and creative merit of AI-assisted works, but also the degree of human involvement and intention behind them. This broader perspective would help ensure that the legal system remains adaptive and equitable as we navigate the evolving intersection of human creativity and AI. Co-authored by Sanika Mehra, Partner ([email protected]) Shilpa Chaudhury, Principal Associate ([email protected]) and Sakina Kapadia, Senior Associate ([email protected]) [1] Section 13: Works in which copyright subsists-(1) Subject to the provisions of this section and the other provisions of this Act, copyright shall subsist throughout India in the following classes of works, that is to say- a. original, literary, dramatic, musical and artistic works, b. cinematograph films, and c. sound recordings. (2) Copyright shall not subsist in any work specified in sub section (1), other than a work to which the provisions of Section 40 or Section 41 apply, unless- (i.) in the case of published work, the work is first published in India, or where the work is first published outside India, the author is at the date of such publication, or in a case where the author was dead at that date, was at the time of his death, a citizen of India, (ii.) in the case of an unpublished work other than a work of architecture, the author is at the date of making of the work a citizen of India or domiciled in India, and (iii.) in the case of work of architecture, the work is located in India (3) Copyright shall not subsist- a. in any cinematograph film if a substantial part of the film is an infringement of the copyright in any other work, b. in any sound recording made in respect of a literary, dramatic or musical work, it in making the sound recording, copyright in such work has been infringed. (4) The copyright in a cinematograph film or a sound recording shall not affect the separate copyright in any work in respect of which a substantial part of which, the film, or as the case may be, the sound recording is made. (5) In the case of a work or architecture, copyright shall subsist only in the artistic character and design and shall not extend to processes or methods or construction. [2] Section 3(k): a mathematical or business method or a computer programme per se or algorithms;

INTRODUCTION Recently, the High Court of Karnataka in the case of Saraswathi Prakash & Others vs. State of Karnataka & Ors.[1], brought much-needed clarity to the legal framework governing management of residential complexes in Karnataka. The judgment addresses the long-standing conflict between the Karnataka Apartment Ownership Act, 1972 (‘KAO Act’) and the Karnataka Co-operative Societies Act, 1959, (‘KCS Act’) particularly concerning the governance and management of residential complexes. The Court reaffirmed the primacy of the KAO Act, holding that upon registration of a Deed of Declaration, the KAO Act becomes the exclusive statute governing such properties. The dispute arose when the Respondents i.e. certain residents of the apartment complex in question, approached the Registrar of Co-operative Societies, Bengaluru (‘Registrar’) for the formation of a cooperative society, and the Registrar allowed the chief promoter of the proposed society to collect share capital contributions from those residents/owners desirous of being part of such society. The Petitioners, also residents of the same residential complex, approached the High Court and contended that (a) their apartments were already governed under the KAO Act by virtue of a duly registered Deed of Declaration and (b) an Apartment Ownership Association as per the KAO Act was already in place. They argued that the formation of a co-operative society under the KCS Act, for the same residential complex was not only superfluous but also legally impermissible. The Petitioners maintained that the registration of the Deed of Declaration triggered the exclusive application of the KAO Act, thereby precluding the applicability of the KCS Act. The Respondents, however, argued that the execution and registration of the Deed of Declaration was not as per the terms of Section 2 of the KAO Act, further that the Deed of Declaration was not signed by all the 150 apartment owners. According to the Respondents, the absence of unanimous consent rendered the Deed of Declaration defective, justifying the creation of an alternative governance body. The Respondents also submitted that their right to form a society was a fundamental right under the Constitution of India.   COURT’S OBSERVATIONS The Court held that the KAO Act provides an exclusive and comprehensive legal framework for the governance of apartment complexes. The Court further held that, the KAO Act is triggered upon registration of a Deed of Declaration irrespective of whether all individual owners have signed it. Interpreting Section 2 of the KAO Act, which expressly applies to residential apartments, the Court clarified that registration of the Deed of Declaration alone suffices to bring the property within the ambit of the KAO Act. Furthermore, the Court referred to Section 5 of the KAO Act, which affirms that each apartment owner shall have exclusive ownership and control over their respective unit. Sub-section (2) of Section 5 of the KAO Act, mandates the execution of a Deed of Apartment by each owner, thereby signifying submission to the provisions of the KAO Act. Consequently, once the Deed is registered, all apartment owners are deemed to have submitted to the statutory scheme provided under the KAO Act and the intent to form an association to be governed by KAO Act becomes clear. The Court while referring to the landmark judgements in Shantharam Prabhu and Ors Vs. Dayanand Rai[2] , VDB Celadon Apartment Owners Association Vs. Mr. Praveen Prakash[3], and highlighting the relevant provisions of the KAO Act, held that the dispute was covered under the KAO Act and that the Petitioners and members of their association were entitled to registration under the KAO Act, and further that a society cannot be registered under the KCS Act solely for managing residential flats unless the aim is to achieve anyone/all of the acts listed under Section 3 of KCS Act. The Court also held that the Karnataka Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act (‘KOFA’), 1972, and its Rules, 1975, apply only when a property includes both residential and commercial units, which is not the case at hand. It observed that since the project consisted only of residential flats, KOFA was not applicable, and registration under the KCS Act was not permissible. Concluding that the Petitioners' claims were valid, the Court allowed the petition and clarified that the Deed of Declaration, Deed of Apartment and Bye Laws would be registered before the Sub-registrar and an intimation about the same has to be sent to Registrar under the KCS Act. CONCLUSION This judgment reaffirms the well-established principle that where a special statute specifically regulates a particular subject matter, it will take precedence over general legislation that might otherwise also apply. The Court emphasized that the KAO Act provides a comprehensive and special code for apartment governance, specifically for properties used mainly for residential purposes. Therefore, any attempt to form a cooperative society in respect of such a project as intended by the Respondents was held to be legally impermissible. The Judgement provides long-awaited clarity on the issue of management and governance of residential complexes, affirming that once a Deed of Declaration is registered under the KAO Act, the property must be governed exclusively under its provisions. This eliminates the possibility of dual or conflicting governance structures such as the simultaneous operation of a co-operative society and a KAO Act compliant association. Further, this Judgment not only resolves ambiguity for apartment owners but also ensures orderly, uniform governance of residential complexes, avoiding overlapping jurisdictions and potential conflicts. This Judgement will also have significant implications for future apartment owners, builders, and developers across Karnataka. For apartment owners, it ensures greater legal certainty and protection by mandating that residential complexes must be governed solely under the KAO Act, once a Deed of Declaration is registered. This removes the risk of dual governance models and protects owners from being compelled to join cooperative societies that may not align with the statutory framework. For builders and developers, the Judgment imposes a clear obligation to structure the management framework of residential projects strictly within the KAO Act regime. They must ensure that a valid Deed of Declaration is executed and registered promptly and that the apartment association is properly formed in accordance with the KAO Act. Developers can no longer promote or facilitate the formation of cooperative societies for residential complexes where the KAO Act is applicable. This ruling will streamline apartment governance, reduce potential litigation, and bring much-needed clarity to the housing sector in Karnataka. However, it is noteworthy that when KOFA applies the Association would be registered under KCS and/or Companies Act, 2013. Authors are Mr. Ishwar Ahuja, Partner ([email protected]) and Ms. Bhairavi SN, Senior Associate  ([email protected]) assisted by Harsha Parakh, Intern. The views and opinions expressed in this Article are those of the author(s) alone and meant to provide the readers with the understanding of the judgment passed in Mrs. Saraswathi Prakash & Others vs. State of Karnataka & Ors. The contents of the aforesaid Article do not necessarily reflect the official position of Saga Legal. The readers are suggested to obtain specific opinions/advise with respect to their individual case(s) from professional/experts and not to use this Article in place of expert legal advice.   [1] 2025:KHC:9743 [2] CRP No.96/2021 D.D. 08.09.2021 [3] WA No.974/2019 & W.A.Nos.1206-1211/2019 D.D. 06.11.2019

The courts in India have time and again reaffirmed that selective capital reduction is a possibility. However, they continue to be debated and challenged by the shareholders who are impacted by it. Selective capital reduction is a process where the shares of some of the shareholders of a company are cancelled / extinguished by the company while the shares held by the other shareholders remain unaffected. This process is different from that of a voluntary buy-back where the company purchases back the shares issued by it to the shareholders on a proportionate basis. The shareholders whose shares are extinguished in a capital reduction tend to see this as a forced exit. This forced exit is what is objected to, and the aggrieved shareholders approach the NCLT with innovative objections surrounding the aspect of fairness on the part of the Companies. Background One of the companies that faced the heat from its shareholders was Bharti Telecom Limited (“BTL”), whose shares were delisted from the stock exchanges between 1999 and 2000. After a long time in 2018, BTL decided to extinguish 1.09% of its total shareholding belonging to 4,942 individual shareholders (“Identified Shareholders”). When the matter was under scrutiny by the NCLT bench in Chandigarh, some of these Identified Shareholders chose to object to the grant of approval by the NCLT. The NCLT nevertheless granted the approval to BTL[1] and BTL promptly extinguished the shares by informing the Registrar of Companies. The shareholders took the matter to appeal before the National Company Law Appellate Tribunal (“NCLAT”), which has now passed a judgment on the matter[2], making it a valuable precedent for more than one reason. To begin with, NCLAT has not only re-established the legitimacy of selective reduction of share capital as a mechanism for investor exit, but also delivered some guidance on the process involved in capital reduction. Grounds of challenge and the issues framed by NCLAT The grounds of appeal by the shareholders were as follows: The scheme of share capital reduction lacked transparency; The act of selective capital reduction is unfair, unjustified, coercive, discriminatory, and illegal; Since the majority shareholders held 98.91% of the shares of the Company, the votes of the public minority shareholders were rather rendered meaningless; There was a discrepancy in the price at which the shares were offered (valuation) to the Identified Shareholders by way of capital reduction in comparison to the price at which the same was offered only a few months ago to the SingTel Group. The NCLAT, after analysing the above grounds raised by the Appellants, identified several issues and sub-issues for determination. These covered issues pertaining to the validity of the selective capital reduction process followed by the Company, the fairness in the valuation and the consideration of the Discount for Lack of Mobility for arriving at the price, the transparency while taking the shareholder approval for the capital reduction. Findings The validity of Selective Capital Reduction :  The NCLAT had no difficulty in arriving at the conclusion that the selective reduction of share capital undertaken by BTL was in accordance with the provisions of Section 66 of the Companies Act, 2013 and that the statutory procedure provided therein was duly complied with.  The NCLAT also affirmed that the phrase “in any manner” as used under Section 66 is inclusive in nature and does not restrict the methods or modes of reduction and includes selective capital reduction which is a domestic and internal decision of the Company. With over 99% of the shareholders including majority of the minority shareholders approving the scheme, the NCLAT followed a plethora of judgments to uphold the prerogative of the majority shareholders to determine the mode and manner of capital reduction. Drawing a parallel with the commercial wisdom of the Committee of Creditors under the Insolvency and Bankruptcy Code, the Tribunal observed that shareholders, as the true owners of the company, are best placed to decide what serves the company’s and their interests. As such, the decision on capital reduction lies within the exclusive domain of shareholders, with minimal scope for judicial intervention. Forced exit of minority shareholders :  What the critical point of the judgment is its observation that the Companies Act, 2013 does not require a separate class resolution for capital reduction (unlike in a scheme of arrangement). Consequently, the unwillingness of minority shareholders alone cannot invalidate a duly passed special resolution for capital reduction, even if it results in their exit from the company. The law does not mandate that reduction must affect all shareholders equally or proportionately and that the minority shareholders do not have any vested rights for their continuation as shareholders of a company. Valuation : On the matter of share valuation, the NCLAT clarified that valuation is inherently a matter of commercial judgment based on assumptions, prevailing market conditions, and various empirical factors relying on the judgment of the Bombay High Court in In Re: Cadbury India Limited.[3] The role of courts is limited to ensuring that the valuation process has been fair, unbiased, and conducted by an independent and competent valuer. The fact that shares were previously allotted at a higher price does not by itself render the current valuation invalid. The NCLAT also observed that the shares of Bharti Airtel Ltd. (whose stock prices had a strong influence on the BTL share prices) was at a much higher price as opposed to when the capital reduction was approved and that this justified the difference in valuation. The Appellants’ challenge to the 25% Discount for Lack of Mobility (“DLOM”) while arriving at the offer price was also turned down by the NCLAT while clarifying that DLOM is appropriate for unlisted companies due to illiquidity of its shares. Fairness in the process : In so far as the fairness of the process followed by BTL, it was observed by the NCLAT that the valuation report was not required to be shared with the shareholders along with the explanatory statement in terms of Section 102 of the Companies Act and the provision only mandated BTL to allow for inspection of the said documents. The NCLAT also endorsed the NCLT’s view that virtual voting has enhanced participation, and this aligned with modern practices, dismissing the need for physical meetings. Analysis The NCLAT has reiterated that the ultimate authority in such matters lies with the shareholders, who, as true owners of the company, are deemed best positioned to act in the interest of the company and its members, provided such decisions are made within the legal framework. The judgment reinforces the legality of selective capital reduction under Indian law, and affirms the discretion of the companies in choosing the valuation and voting mechanisms. The judgment gives a glimpse of how a handful of minority shareholders can stall the majority will of the company through allegations of lack of fairness and impropriety, while in reality, there would be no basis for such arguments in law. However, since fairness and transparency in activities such as capital reduction and scheme of arrangements are necessary as they also involve approval from the majority shareholders, the tribunals cannot take such allegations at face value and will necessarily have to deal with them. Although objections, such as the objection to the application of DLOM and non-supply of valuation reports along with explanatory statements, are common objections that are being raised in most capital reduction matters, findings of binding nature to address these issues are not in abundance. This is partly the reason why the objectors continue to raise them. Hopefully, the detailed findings and observations with respect to the different allegations and objections raised through 14 separate appeals in this judgment would put a quietus to such issues in the future or at least help NCLTs to decide and dispose of capital reduction petitions at a much faster pace. The judgment would also help in overturning narrow interpretations being given to selective capital reduction by NLCTs such as the one adopted by the NCLT, Kolkata, in the Philips case[4], which held that capital reduction is permissible only under the specific scenarios listed in Section 66(1), thereby overlooking the inclusive and non-exhaustive nature of the statutory language. Conclusion The judgment sets a positive tone to state that companies can use capital reduction confidently, knowing that the law supports them against minority handouts. For investors, the lesson is that “your say grows with your stake”, whereas for those with smaller holdings, it is about the need to weigh the risks of being outvoted. The case serves as a critical reference for companies and shareholders navigating capital restructuring in an ever-evolving corporate landscape. [1] Order dated 27.09.2019 passed by the NCLT, Chandigarh Bench, in CA Nos. 226/2019 & 553/2018 in C.P No. 167/Chd/Hry/2018 [2] Judgment dated 03.04.2025 in Comp. Appeal (AT) 273 of 2019 [3] (2014) SCC OnLine Bom 4934 [4] CP/312(KB)2023 Authors: Atul N Menon, Partner and Antra Ahuja, Principal Associate.

In a significant ruling, the Hon’ble Delhi High Court reaffirmed the principle that accepting goods under an invoice constitutes acceptance of its governing terms and conditions, including an arbitration clause. The case of Radico Khaitan Limited v. Harish Chouhan [2025:DHC:1767] highlights the enforceability of arbitration agreements and the limited scope of judicial intervention in such matters where the arbitration clause is provided in an invoice issued by the service provider. Background The judgement stems from a petition filed by Radico Khaitan Ltd (‘Petitioner’) under Section 11(6) of the Arbitration and Conciliation Act, 1996 seeking the appointment of an arbitral tribunal to adjudicate the disputes between them and an individual - Mr. Harsih Chouhan (‘Respondent’). The Petitioner and Respondent were engaged in a business relationship wherein the Petitioner was supplying alcoholic beverages to the Respondent against purchase orders. In the course of these transactions, the Petitioner either directly or through its subsidiaries, associates, or sister concerns, issued several invoices in the Respondent’s name after supplying the agreed-upon goods. These invoices contained a section labeled "Terms & Conditions," with Clause 5 explicitly providing that any dispute arising between the parties would be referred to arbitration by a sole arbitrator, with Delhi designated as the seat of arbitration. The dispute arose when a cheque issued by the Respondent against the invoice, purportedly intended to fully discharge his outstanding liability toward the Petitioner, was dishonored. Consequently, the Petitioner issued a legal notice and initiated proceedings under Section 138(b) of the Negotiable Instruments Act, 1881. Subsequently, a dispute emerged regarding the respondent’s alleged outstanding liability. In response, the Petitioner invoked arbitration under Section 21 of the Arbitration and Conciliation Act, 1996, asserting that the dispute fell within the ambit of the arbitration agreement as contained in the tax invoices. Contentions and the issue before the Court The Petitioner contended that both parties had mutually agreed, at the inception of their commercial relationship, that all transactions would be governed by the terms and conditions printed on these invoices. It was further argued that Clause 5, being a part of these terms, constituted a binding arbitration agreement. The Petitioner also emphasized that the Respondent, having accepted and acted upon these invoices without protest, continued receiving supplies and making partial payments toward the outstanding liabilities in a running account maintained between the parties. The central legal question before the Court was; whether an arbitration clause contained in an invoice, unilaterally issued by one of the parties, constitutes a valid and enforceable arbitration agreement between the parties? Finding of the Court The Court while reiterating the Supreme Court’s decision in Concrete Additives and Chemicals Pvt. Ltd. v. S.N. Engineering Services Pvt. Ltd. [Civil Appeal No.7858 of 2023] held that that while an invoice is typically a document unilaterally prepared by the seller, its terms can still be binding if the recipient, through conduct, demonstrates an intention to be governed by those terms. The Court in the present case observed that the conduct of the parties is a determinative factor in assessing the existence of a valid arbitration agreement. In the case of the Petitioner, the Respondent and his sons had engaged in transactions with the Petitioner between 2020 and 2021 without raising any objections regarding the terms of the invoices. Furthermore, their partial payments toward outstanding liabilities evidenced an implicit acceptance of the invoice terms, including the arbitration clause. The bench underscored the pro-arbitration stance adopted in Indian jurisprudence, wherein courts are mandated to refer disputes to arbitration even if there is a slight doubt regarding the existence or validity of the arbitration agreement. The Court while referring to the decision of the Supreme Court in Cox & Kings Ltd. v. SAP India (P) Ltd. [ (2024) 4 SCC 1] also reiterated that when dealing with a petition under Section 11 of the Arbitration and Conciliation Act, 1996 the court's jurisdiction is limited to making prima facie opinion as to the existence of an arbitration agreement. It is within the power of the Arbitration tribunal to conduct a detailed examination and validate the existence of the agreement. If such an agreement is found to exist, even on a preliminary stage, the dispute must be referred to arbitration, leaving all further determinations to the arbitral tribunal. Analysis and implication Based on the above principle, and several precedents the bench held that a prima facie case had been made out in favor of the existence of an arbitration agreement between the parties. Consequently, it referred the dispute to arbitration in accordance with Clause 5 of the invoice terms. The subject decision serves as a reaffirmation of the Indian judiciary’s pro-arbitration approach and its commitment to minimizing judicial interference in arbitration proceedings. By recognizing an arbitration clause contained within an invoice as enforceable, the judgment reinforces the principle that commercial parties must honor their contractual obligations, even when those obligations arise from standard business documents like invoices. While Radico’s case is not the first case where the court has recognized the arbitration agreement which is issued by one party by way of an invoice, the issue is one that keeps coming up for consideration. The question that the court then has to check is how the other party has responded to the invoice. Where the parties have made part-payments or acted in furtherance of the invoices issued (which provide for an arbitration clause), the courts have been fairly consistent in upholding the existence of an arbitration agreement even though it may not have been signed by both parties. In some rare cases, the courts have taken a contrary stand like the one in Mr. Mohammad Eshrar Ahmed v. M/s Tyshaz Buildmart India Private Limited ;[2024 DHC 6809] where the Delhi High Court noted that there was no consent to the recitals of the agreement contained in the invoice which was sent only a few days before the arbitration notice was issued. Therefore, the conduct of the party receiving the invoice, upon receipt of the invoice becomes necessary to adjudicate whether there exists a valid arbitration agreement or not. This ruling is particularly significant for businesses that routinely conduct transactions based on invoices containing arbitration clauses. It underscores the importance of raising objections at the earliest opportunity if a party intends to dispute the applicability of such terms. The views and opinions expressed in this Article are those of the author(s) alone and meant to provide the readers with understanding of the judgment passed in Radico Khaitan Limited v. Harish Chouhan [2025:DHC:1767]. The contents of the aforesaid Article do not necessarily reflect the official position of Saga Legal. The readers are suggested to obtain specific opinions/advise with respect to their individual case(s) from professional/experts and not to use this Article in place of expert legal advice [1] Authored by Mr. Atul N Menon (Partner) and Ms. Bhairavi S N (Senior Associate) of Saga Legal

The Supreme Court in Saranga Anil Kumar Aggarwal v. Bhavesh Dhirajlal Sheth & Ors., 2025 SCC Online SC 493, has addressed a crucial legal question concerning the intersection of the Consumer Protection Act, 1986 (“CP Act”), and the Insolvency and Bankruptcy Code, 2016 (“IBC”). The case examined whether execution proceedings under Section 27 of the CP Act —which prescribes penalties for non-compliance—can be stayed when an interim moratorium under Section 96 of IBC is in effect. Rejecting the Appellant’s plea, the Court reaffirmed that regulatory penalties are distinct from debt recovery proceedings and do not fall within the protective scope of an interim moratorium under Section 96 of IBC. This judgment clarifies the extent of IBC’s moratorium provisions, ensuring that statutory penalties for non-compliance remain enforceable despite ongoing insolvency proceedings. BACKGROUND: The dispute arose on account of failure of real estate developer (Appellant) to deliver possession of flats to homebuyers. In response to multiple consumer complaints, the National Consumer Dispute Redressal Commission (“NCDRC”) directed the Appellant to complete construction, hand over possession and imposed penalties on the Appellant for deficiency in service. When homebuyers sought enforcement of these penalties, the Appellant contested the execution proceedings on the grounds of the interim moratorium imposed under Section 96 of IBC, triggered by ongoing insolvency proceedings which were initiated under Section 95 of IBC. PROCEDURAL HISTORY: The NCDRC vide its Order dated 07.02.2024 held that the interim moratorium under Section 96 of the IBC did not bar penalty proceedings under Section 27 of the CP Act against a personal guarantor. NCDRC’s ORDER: NCDRC while relying on State Bank of India v. V. Ramakrishnan & Anr., (2018) 17 SCC 394, observed that interim moratorium under Section 96 & 101 of IBC applicable to personal guarantors is distinct from the broader moratorium under Section 14, applicable to corporate debtors. The NCDRC observed that criminal proceedings under Section 27 of the CP Act are unaffected by the interim moratorium under Section 96 of the IBC and held that individuals associated with a Corporate Debtor remain liable. Additionally, the NCDRC emphasized that the penalties imposed were regulatory and did not constitute financial obligations, making them ineligible for protection under the IBC’s moratorium provisions. APPEAL BEFORE THE  APEX COURT (SC): The Appellant before the Supreme Court argued that the interim moratorium under Section 96 applies to all legal actions related to debt and that the penalties imposed by NCDRC should be considered financial obligations and be treated as a form of debt recovery proceedings. The Respondents countered that penalties under Section 27 of the CP Act are punitive and do not fall within the definition of “debt” under the IBC.  SUPREME COURT’s RULING: The Court upheld the NCDRC’s judgment and ruled that penalties imposed by the NCDRC are regulatory and arise from statutory obligations rather than financial liabilities owed to creditors. The Court emphasized that the IBC’s moratorium provisions are not intended to shield individuals from regulatory penalties-which are technical Excluded Debts. Unlike civil debt enforcement, Section 27 of the CP Act ensures compliance with consumer forum orders and carries the possibility of imprisonment for non-compliance, indicating its penal rather than debt-recovery nature. The Court clarified that the moratorium under Section 96 applies only to “debts” and does not extend to fines, damages for negligence, or penalties for statutory violations. The Court distinguished between the moratorium under Section 14 of the IBC, which applies to corporate debtors and is broader in scope, and the moratorium under Section 96(1)(b)(i) of IBC, which applies to individuals and personal guarantors. Citing P. Mohanraj & Ors. v. Shah Brothers Ispat Pvt. Ltd., (2021) 6 SCC 258, the Court reiterated that a distinction must be made between debt recovery proceedings and penalties imposed by regulatory bodies in the public interest cannot be stayed on account of pending insolvency proceedings. Furthermore, the Court emphasized that the legislative intent behind Section 96 of the IBC must be upheld, and a blanket stay on all penalties would undermine consumer protection laws. The IBC is designed to address financial insolvency and restructuring, not to nullify statutory obligations. Allowing consumer penalties to fall under the moratorium would create an unfair advantage for defaulting developers. The Court also clarified that damages awarded by the NCDRC arise from a consumer dispute and do not constitute ordinary contractual debts. Instead, they serve to compensate consumers. The  Supreme Court held that the NCDRC rightfully imposed penalties on the Appellant for failing to comply with consumer protection laws, reinforcing that these penalties serve a regulatory function rather than constituting debt recovery proceedings. Additionally, the Court distinguished between proceedings under Section 138 of the Negotiable Instruments Act, 1881, and Section 27 of the CP Act. Under the Negotiable Instruments Act, the presumption of debt is inherent, whereas Section 27 of the CP Act is remedial rather than criminal. CONCLUSION: This landmark judgment by the Supreme Court strengthens consumer rights and ensures that insolvency proceedings cannot be misused. By distinguishing between financial debts and regulatory penalties, the Court has provided clarity on the scope of the IBC’s moratorium provisions. This judgment reaffirms regulatory penalties which are distinct from debt recovery proceedings and do not fall under the protective shield of the IBC’s moratorium. This decision ensures that consumer protection laws remain effective, even in cases where insolvency proceedings are pending. The views and opinions expressed in this Article are those of the author(s) alone and meant to provide the readers with understanding of the judgment passed in Saranga Anil Kumar Aggarwal v. Bhavesh Dhirajlal Sheth & Ors., 2025 SCC Online SC 493. The contents of the aforesaid Article do not necessarily reflect the official position of Saga Legal. The readers are suggested to obtain specific opinions/advise with respect to their individual case(s) from professional/experts and not to use this Article in place of expert legal advice.

In a step further towards its efforts to expand its services across key cities in India, Saga Legal is pleased to announce the appointment of Atul N. Menon as a Partner in its Bangalore office. Atul will lead the Litigation and dispute resolution practice in Bangalore, bringing significant experience in handling legal matters across various judicial and regulatory forums in India. With his addition to the firm, Saga Legal’s Partner strength goes to 5 (Five) Partners operating out of 3 (Three) Offices in Delhi, Mumbai and Bangalore. An alumnus of the National University of Advanced Legal Studies, Kochi and Queen Mary University of London, Atul is a highly experienced legal professional and has done a wide variety of matters in white-collar crimes, telecom litigation, arbitration, writ petitions, etc. He appears in various forums across India, including High Courts, Supreme Court and tribunals and advises and represents some of the leading multinational corporate entities. Atul has been a part of some of the path-breaking litigations across India, some of which have been widely reported and covered in legal circles. He brings experience of almost 13 years to the firm, and prior to joining Saga Legal, he worked at AZB & Partners as a Counsel. Atul is the second Partner to join the firm’s Bangalore office after the firm announced the hiring of Neeraj Vyas from Samvad Partners in November 2023, as a Partner to take charge of the firm’s General Corporate and PE-VC practice in Bangalore. Gaurav Nair, Managing Partner of Saga Legal, commented on Atul’s appointment, stating, “We welcome Atul to Saga Legal. His experience in litigation and dispute resolution will be valuable to our firm. Atul’s expertise will support our dispute resolution practice, particularly in Bangalore, and contribute to our ability to provide holistic legal services to our clients. With Atul taking charge of the litigation and dispute resolution vertical and Neeraj handling the corporate practice – we are fairly well-equipped to service almost the entire spectrum of legal requirements of our clients. Atul’s addition to the team brings wholesomeness and lends a holistic edge to the Bangalore office. ” Sanika Mehra, Co-Managing Partner, further stated, “Saga Legal has recently expanded its operations with the opening of new offices in Mumbai and Bangalore and the relocation to a larger, modern office space in New Delhi. All these are significant milestones for our firm. In the coming years, we aspire to serve a much wider range of clientele, and Atul’s onboarding is part of our plan to have talented individuals as a part of our leadership cohort, whether they specialize in our current practice areas or have the capacity to introduce new verticals to our repertoire.” Atul N. Menon also shared his perspective on joining the firm, saying, “I look forward to working with Saga Legal and leading the litigation and dispute resolution team in Bangalore. The firm’s structured approach and focus on client service make it a good platform to continue my professional journey. I look forward to collaborating with my colleagues and contributing to the firm’s litigation practice.” Saga Legal has been expanding its presence across India. In November 2024, the firm also announced the opening of its office in Mumbai, marking another step in its growth. The Mumbai office is headed by Ishwar Ahuja and is expected to serve as a hub for arbitration, litigation, and corporate-commercial matters. About Saga Legal: Headquartered in New Delhi and with a presence in Mumbai and Bangalore, Saga Legal was founded in 2016 and has solidified its reputation as a multi-service law firm providing a wide gamut of legal services in diverse areas of practice, ranging from dispute resolution to corporate advisory, the firm provides manifold legal solutions to its valued clients under one roof.  

On 10th January 2025, the Insurance Regulatory and Development Authority of India (“IRDAI”) published a press release stating that in the interest of maintaining an “agile, progressive, and forward-looking regulatory framework,”it has notified two new regulations along with three amendments to existing regulations. These are: IRDAI (Regulatory Sandbox) Regulations 2025; IRDAI (Maintenance of Information by the Regulated Entities and Sharing of Information by the Authority) Regulations 2025; IRDAI (Re-insurance Advisory Committee) (Amendment) Regulations 2025; IRDAI (Insurance Advisory Committee) (Amendment) Regulations 2025; and IRDAI (Meetings) (Amendment) Regulations 2025. Aiming to align with a principle-driven regulatory architecture, the IRDAI has introduced measures to support innovation, improve governance policies, and most notably referencing data security as a key facet in the increasing digitalized insurance sector. The new IRDAI regulations introduce several major changes and as it brings forth a forward-looking shift for the landscape. Here’s a comprehensive look into what the new reforms entails for the industry: Regulatory Sandbox Regulations The newly introduced Regulatory Sandbox Regulation, replacing the 2019 Regulations, governing experimental regulatory sandboxes has perhaps received the most benefit of all the notified Regulations. It expands on the scope of regulatory sandbox with the purpose of promoting innovation, adaptability, and operational efficiency, in the industry. The Sandbox Regulation now permits “Inter-Regulatory Sandbox Proposals” which cuts across more than one financial sector within the regulatory sandbox framework. The process and procedures in dealing with such inter-regulatory sandbox applications, along with other aspects of the Sandbox Regulation such as timelines (which has been entirely omitted from the repealed Regulation), have not yet been notified and shall be made operational later through an upcoming master circular. The Sandbox Regulation makes explicit mention of the Digital Personal Data Protection Act, 2023 (DPDP Act), specifying compliance with the not-yet implemented data privacy act as a mandatory prerequisite to be granted permission to establish a regulatory sandbox. By natural implication, this also subjects the sector to the authority of the Data Protection Board under the Act ensuring an added layer of digital personal data protection. Another change in the Sandbox Regulation is the formal shifting of powers and the creation of a distinction between “Authority” and “Competent Authority”. The IRDAI (“Authority”) is now considered a separate entity than the Chairman of the IRDAI (“Competent Authority”). Whole-Time Member(s) of the IRDAI or Officer(s) of the IRDAI, as may be decided by the Chairman, could also be considered as Competent Authority under the new Regulation. All matters pertaining to regulatory sandbox applications and operations are therefore now to be handled directly by such Competent Authority and decisions taken by the Competent Authority is considered final on all accounts. Maintenance of Information by the Regulated Entities and Sharing of Information by the Authority Regulations Although new by title, this Information and Records Regulation is essentially a consolidation and simplification of three existing regulations, which have respectively been split into three chapters of the new Regulation, namely: (I) IRDAI (Sharing of Confidential Information Concerning Domestic or Foreign Entity) Regulations, 2012; (II) IRDAI (Maintenance of Insurance Records) Regulations, 2015; and (III) IRDAI (Minimum Information Required for Investigation and Inspection) Regulations, 2010. The new Information and Records Regulation greatly streamlines the structural arrangement of provisions under the old Regulations, substantially improving readability and ease of reference, reducing clutter and overlap. With regards to the sharing of confidential information by the IRDAI concerning domestic or foreign entities, the new Information and Records Regulation features a few minor tweaks and additions which slightly expands on the powers of the IRDAI. Under the requirement of when the IRDAI is expected to disclose information available with it which is not available in the public domain, the new Information and Records Regulation adds an additional condition of all applicable laws permitting the sharing of such information, for the IRDAI to even consider such a request. This reads all applicable laws, most discernibly, emerging laws such as data privacy laws, to permit such sharing of information with regards to foreign entities. Similarly, the new Information and Records Regulation incorporates the requirement for maintenance systems to contain a data governance framework, also evidently in furtherance of the soon imminent implementation of the DPDP Act; however, explicit mention of the DPDP Act is not made in the Regulation. While the old Regulation permitted insurers to allow access to insurance records for inspections by the IRDAI, the new Information and Records Regulation also permits for such investigations, as well as “any other purpose” as deemed necessary by the IRDAI. This vague wording substantially widens the powers of the IRDAI to scrutinize insurance records. The regulation regarding maintenance of records have also been more widely expanded to also include insurers solely involved in the business reinsurance. Similarly, the IRDAI Board approved policy of the insurer relating to record maintenance now requires insurers to implement all appropriate security mechanisms necessary to protect electronically stored records and include “any other matters, as specified by the (IRDAI)” through the issue of circulars, guidelines, or instructions. Finally, the old Regulation relating to Minimum Information for Investigation and Inspection have been now expanded under the new Information and Records Regulation to incorporate the data collected to be stored in “ thFinally, the old Regulation relating to Minimum Information for Investigation and Inspection have been now expanded under the new Information and Records Regulation to incorporate the data collected to be stored in “data centres located and maintained in India”, apart from principal place of business, branches, and other offices of the insurer. This is yet a reflection that is incorporated in furtherance of India’s new data privacy regime ensuring data localization as the norm. Additionally, as opposed to the old Regulation’s permittance of information to be stored in “physical or electronic form”, the new Information and Records Regulation substitutes the word “physical” and instead permits information and records to be stored in “electronic form and if required, in any other form, as may be appropriate for its business” Why such substitution has been made and what other forms of record maintenance it incorporates apart from electronic and physical, has not been clarified by the Information and Records Regulation.   Re-insurance Advisory Committee [Amendment] The Re-insurance Advisory Committee Amendment Regulation now permits the IRDAI to remove any member of the Re-insurance Advisory Committee owing to insolvency, physical or mental incapability, conviction of any offence involving moral turpitude, acquisition of financial or other interests prejudicial to their being in the Committee, abuse of power, failure to attend three consecutive meetings of the Committee without cause, or if in the IRDAI’s opinion is no longer fit to be on the Committee. This essentially gives unfettered power to the IRDAI to remove a member from the Committee if it feels such member should no longer be on the Committee. Additionally, the Amendment permits online mode of meeting for the Committee. Insurance Advisory Committee [Amendment] The Insurance Advisory Committee Amendment designates the Secretary of the Insurance Advisory Committee as the “Designated Officer” who is responsible for circulation of notices and agenda of meetings as well as sending minutes of meetings. It changes the minimum requirement for meetings of the Committee to be conducted twice in a calendar year to twice in a financial year. It also permits online mode of meeting for the Committee. It provides for emergency meetings (with at least 24 hours’ notice) and permits for meetings to be conducted with less than 7 days’ notice if approved by the Chairman of the IRDAI. The Insurance Advisory Committee Amendment also permits the IRDAI to remove any member of the Committee owing to insolvency, physical or mental incapability, conviction of any offence involving moral turpitude, acquisition of financial or other interests prejudicial to their being in the Committee, abuse of power, failure to attend three consecutive meetings of the Committee without cause, or if in the IRDAI’s opinion is no longer fit to be on the Committee. Meetings [Amendment] The Meetings Amendment governing meetings of the IRDAI also sees certain procedural changes. It similarly designates the Secretary of the IRDAI Board as the “Designated Officer” entrusted with the responsibility of issuance notices, circulating agendas, and handling of meeting minutes. It changes minimum number of meetings for the Board from “six times in a year” to “4 times in a financial year”. It permits for online mode of meetings and permits meetings conducted with less than seven days’ notice with the Chairman’s approval along with emergency meetings called by the Chairman with at least 24-hours’ notice. Emergency meetings must be requisitioned in writing specifying purpose of the meeting, and signed off by not less than half of the total strength. Key Takeaways and Concluding Remarks The IRDAI’s latest regulatory reforms mark a notable shift towards a more agile and digitally-oriented insurance sector in India. Key changes under the new regulations and strategic amendments include the expansion of regulatory sandbox capabilities, enhanced data protection measures aligned with the DPDP Act, streamlined information management systems, and more flexible operational procedures for the various committees. These reforms collectively reflect the regulator's forward-looking approach in balancing technological advancement with robust oversight, setting a progressive foundation for the insurance industry's future growth while ensuring adequate consumer protection through improved data security and governance measures. Authors: Mr Neeraj Vyas, Partner, Ms Mona Gupta, Principal Associate, and Mr Sidharth S. Kumar, Intern

Social security serves as a crucial safeguard for individuals, ensuring access to healthcare and income security,particularly during circumstances such as old age, unemployment, illness, disability, maternity, or the loss of a primary breadwinner. However, gig workers—often referred to as “independent contractors,” “freelancers,” and “on-demand workers”—across the globe frequently find themselves unable to access social security benefits. These gig workers are connected with clients, customers, or service opportunities through platform aggregators who provide them with a certain fee on a case-to-case basis. As businesses increasingly rely on gig workers to meet their operational needs, there is a growing recognition of the need to protect the rights of these workers. In response, the government has been taking steps to formulate laws and frameworks aimed at safeguarding gig workers' rights and ensuring their social security. The Code on Social Security 2020 (“Code”) introduced the definition of “Aggregator" as a digital intermediary or a marketplace for a buyer or user of a service to connect with the seller. The Government of Rajasthan, on July 24, 2023, passed the Rajasthan Platform based Gig Workers (Registration and Welfare) Act, 2023 (“Rajasthan Act”), which broadened the definition of Aggregators so as to include any entities that coordinate with one or more aggregators for providing the services. The Karnataka government followed suit, using a similar definition of Aggregators in drafting the Karnataka Platform based Gig Workers (Social Security and Welfare) Bill, 2024 (“Karnataka Bill”). This bill was made available to the public through a public notice dated June 29, 2024; however, it is yet to come into effect. Under all the foregoing legislations, the primary responsibility is of the Aggregators to register themselves as well as the gig workers by providing the information of the gig workers onboarded or registered with them. The state government has the authority, as per state laws, to set up a gig workers' welfare board to exercise the powers granted and fulfil the duties assigned to it. The aggregator then has to proactively update the gig workers welfare board of any change, including any increase or decrease in the number of gig workers. The registration has to be done on the e-Shram portal launched by the Ministry of Labour & Employment, Government of India, on August 26, 2021, with an aim to create a comprehensive National Database of Unorganised Workers verified and seeded with Aadhaar. Pursuant to this, the gig workers will be provided with a Universal Account Number (UAN). UAN can open the door to a plethora of opportunities for gig workers by enabling them to register themselves under various governmental schemes/portals including the National Career Service (NCS) Portal and Pradhan Mantri Shram-yogi Maandhan (PM-SYM) and also to provide them with skill enhancement and apprenticeship opportunities. Apart from the above, the Rajasthan Act introduced several key changes aimed at improving the welfare of gig workers. Some of the key changes/benefits are highlighted herein below: Welfare Board Establishment: The Rajasthan Act establishes a dedicated Gig Workers Welfare Board, tasked with overseeing the implementation of welfare measures for gig workers. Contribution to Welfare Fund: All platform-based gig workers shall have access to general and specific social security schemes based on contributions made as may be notified by the State Government from time to time. Welfare Fee: Aggregators are required to contribute a percentage of their transaction value to a welfare fund for gig workers. This fund is intended to finance various social security measures. Dispute Resolution Mechanism: A dedicated mechanism is established for resolving disputes of gig workers in relation to any grievance arising out of entitlements, payments, and other benefits. The Karnataka Bill goes a step further by offering additional benefits to platform-based gig workers. Some of these benefits are outlined below: It includes a provision ensuring that the contract to be entered between the aggregators and platform-based gig workers shall have simple language that is easily comprehensible. It shall contain an option in favour of the worker to allow them to terminate the contract if the change/amendment adversely affects their interests. State government shall lay down the guidelines, which will be specific to the sector in which the goods/services are being provided. Establishment of an Automated Monitoring and Decision Making System which is to be employed by the aggregators and gig workers will have a right to seek any information in relation to their engagement. Each gig worker will be provided with a human point of contact for all clarifications under the provision of the Karnataka Bill and will be provided on the respective account of the gig workers on the platform application. The Ministry of Labour and Employment, Government of India, recently published an advisory dated September 16, 2024, wherein the authorities emphasize the need for more aggregators to extend their support by ensuring registrations to take provide this agenda a big push and help it reach a fruitful stage. The advisory focuses primarily on the aggregators providing the following list of goods/services: Ride Sharing services Food and grocery delivery services Logistic services E-Marketplace (both marketplace and inventory model) for wholesale/retail sale of goods and/or services (B2C and B2B) Professional service provider Healthcare Travel and Hospitality Content and media services Any other goods and service provider platform The government further laid down a standard operating procedure for the online onboarding of platform aggregators on the e-Shram portal through proper verification and authentication using Aadhar eKYC. The inclusion of gig workers under social security frameworks is a vital step towards ensuring equitable protection and welfare for all workers in the evolving digital economy. The recent legislative efforts by the Rajasthan and Karnataka governments, along with the proactive measures by the central government, underscore the growing recognition of gig workers’ rights. As the gig economy continues to expand, the success of these initiatives will depend heavily on effective implementation, cooperation from aggregators, and continuous policy refinement. By addressing the gaps in social security for gig workers, India sets a promising precedent for other regions grappling with the complexities of protecting this dynamic workforce. Authors: Neeraj Vyas (Partner) & Abhishek Malhotra (Associate)