Legal Updates ( April 20 – April 25, 2026 )
CASE UPDATES
The liquidator cannot proceed to auction any property unless he has cogent evidences that MOU, Allotment Letter and Possession Letter are ingenuine and are subterfuge created to defeat the ownership entitlement of corporate debtor
The Mumbai Bench of the National Company Law Tribunal (NCLT) in the case of Bank of Baroda vs Sanghvi Land Developers [IVN. P. (I.B.C)/186/MB/2025] dated April 07, 2026, has held that the liquidator cannot proceed to auction any property unless he has cogent evidences that MOU, Allotment Letter and Possession Letter are ingenuine and are subterfuge created to defeat the ownership entitlement of corporate debtor. It clarified that the powers of the Insolvency Professional under Section 18 and Section 25 of the Code, and of the Liquidator under Section 35, extend only to assets owned by the Corporate Debtor. The Code does not empower the RP/Liquidator to take control of assets belonging to third parties or deal with the rights of third parties in assets even if existing in name of the corporate debtor.
The Tribunal observed that the Society’s maintenance claim and records in the name of the Corporate Debtor were not conclusive evidence that the property belonged to the Corporate Debtor. While the Society may levy dues from the recorded owner, mere recording in the Society’s records cannot conclusively determine ownership, especially where the Applicant’s rights flowed from the registered Development Agreement and were further supported by the MOU, Allotment Letter and Possession Letter, the authenticity of which had not been disputed by the Liquidator.
The Tribunal specifically observed that the Liquidator had made no inquiry from the signatory of the MOU, Allotment Letter and Possession Letter as to whether those documents were validly executed. It further noted that even in the SCC meeting dated October 06, 2025, the Liquidator had framed the issue by acknowledging the existence of an MOU under which SLDPL acknowledged financial liability to Manoj Jahagirdar and allotted Shop No. 004A in settlement thereof, though legal ownership had not yet been transferred.
At the same time, the Tribunal clarified that it was not inclined to conclusively declare the Applicant’s ownership over the premises. It considered that the ends of justice would be met by protecting the possession of the Applicant, subject to final adjudication by a competent forum, and therefore directed the Liquidator to refrain from auctioning Shop No. 004A as property of the Corporate Debtor at present, while granting liberty to challenge the Applicant’s claim if cogent evidence was found.
If plaintiff is the prior user and prior registered proprietor of an inherently distinctive mark, and defendant subsequently adopts a mark that is phonetically, structurally and visually similar for allied and cognate goods sold through identical trade channels, a prima facie case of deceptive similarity and likelihood of confusion is made out
The Delhi High Court in the case of Flipkart India vs Marc Enterprises [FAO-IPD 46/2021] dated April 10, 2026, has held that where Marc Enterprises (respondent) is the prior user and prior registered proprietor of an inherently distinctive mark, and Flipkart India (appellant) subsequently adopts a mark that is phonetically, structurally and visually similar for allied and cognate goods sold through identical trade channels, a prima facie case of deceptive similarity and likelihood of confusion is made out.
In such circumstances, the use of a house mark alongside the impugned mark does not by itself obviate infringement or passing off, and the appellate court will not interfere with an order granting interim injunction unless the Trial Court’s exercise of discretion is shown to be perverse or manifestly erroneous.
The Court observed that in an appeal against an interim injunction, the appellate court is confined to examining whether the discretion exercised by the Trial Court is perverse or legally indefensible, and cannot substitute its own view merely because another view is possible. Interference is permissible only where the decision is one that no reasonable person, applying the relevant facts and law, could have reached.
The Court observed that the respondent is the admitted prior user of the mark “MARC”, with user claim since 1981 and first registration in 1984, whereas the appellant adopted the impugned marks only in 2017 for large electronic items. The Court further observed that the respondent had established that “MARC” is a uniquely coined term, inherently distinctive, and that the goods in question are covered by the respondent’s registrations.
The Court found that “MARC” and “MARQ” are nearly identical and deceptively similar, and that an average consumer of average intelligence and imperfect recollection is likely to be confused between the competing marks. The marks were held to be phonetically, structurally and visually similar, and the fact that the appellant sold its goods exclusively through an e-commerce platform did not negate the relevance of phonetic similarity or the likelihood of confusion.
The Court further held that, applying the anti-dissection rule, the rival marks when compared as a whole are deceptively similar. Mere addition of the house mark “Flipkart” was held insufficient to eliminate the likelihood of confusion, particularly when the house mark appeared in a miniscule manner and in some instances was not used at all with the impugned mark. The Court also rejected the plea that “MARC”, “MARK” or “MAR” were common to trade, holding that common to register does not establish common to trade unless substantial usage by other persons is proved.
Lastly, the Court pointed out that the respondent’s products were offered on the appellant’s platform, while the appellant’s products were sold exclusively through the same platform, showing identical trade channels, overlapping customer base, and allied and cognate goods. It also held that later registration obtained by the appellant for “Flipkart MarQ” in Class 7 and “MarQ by Flipkart” in Class 42 after the impugned order did not affect the injunction in the present case, especially as no such registration existed when the impugned order was passed and the Class 42 registration did not pertain to the products in question.
A foreign judgment sought to be enforced under Section 44A read with Section 13 CPC is not conclusive or enforceable in India, if it is rendered by summary judgment without prior permission of the Central Government or RBI required as per Section 47(3) FERA
The Supreme Court in the case of MESSER GRIESHEIM GMBH vs GOYAL MG GASES PVT LTD [2026 INSC 401] dated April 21, 2026, has held that a foreign judgment sought to be enforced under Section 44A read with Section 13 CPC is not conclusive or enforceable in India where it is rendered by summary judgment despite the existence of bona fide triable issues supported by contemporaneous material, because such adjudication is not a judgment on merits within Section 13(b) and is opposed to natural justice within Section 13(d).
The Court observed that the core question under Section 13 CPC was whether the English Court’s summary judgment was a judgment on merits and whether the procedure adopted was consistent with natural justice. The Bench found that the respondent had raised triable issues based on three alleged oral agreements and had relied upon contemporaneous documents such as balance sheets and board minutes carrying statutory significance under the Companies Act, 1956. In such circumstances, the respondent ought not to have been foreclosed from a full opportunity to defend.
The Court further clarified that the English Court was a court of competent jurisdiction under the contractual clauses conferring English law and jurisdiction, and no case of fraud under Section 13(e) CPC was made out. However, the foreign judgment failed the tests under Section 13(b), (c), (d) and (f) CPC because it was rendered by summary judgment despite bona fide triable issues, failed to give due effect to statutory permissions and conditions under Indian foreign exchange law, denied leave to defend, and sustained a liability contrary to law in force in India.
The Court observed that even under the principles governing summary judgment, both in Indian law and under the UK CPR, summary disposal is inappropriate where triable issues exist and fuller investigation may affect the outcome. Since the respondent had produced contemporaneous documentary material and sought leave to defend, the English Court ought to have refrained from disposing of the matter summarily. The grant of summary judgment therefore resulted in premature adjudication of disputed questions of fact and denied a meaningful opportunity to establish the defence through oral evidence and cross-examination.
Accordingly, the Supreme Court upheld the dismissal of the execution of the English judgment, holding that the foreign judgment was unenforceable in India as it fell within the exceptions under Section 13 CPC, though the High Court’s broader view that the RBI condition created an absolute bar to enforcement was reversed as a matter of legal principle.
Embargo under paragraph 2.5(a) of the RBI Master Circular RBI/2014-15/73 dated July 1, 2015 cannot be mechanically continued for five years after removal of the borrower’s name from the list of wilful defaulters in a case where the account has been successfully settled by compromise and the compromise amount has been fully paid
The Bombay High Court in the case of Ravi Arya vs Reserve Bank of India [Writ Petition No. 2545 of 2021] dated March 25, 2026, has held that the embargo under paragraph 2.5(a) of the RBI Master Circular dated July 1, 2015 cannot be mechanically continued for five years after removal of the borrower’s name from the list of wilful defaulters in a case where the account has been successfully settled by compromise and the compromise amount has been fully paid, unless the case involves siphoning/diversion of funds, misrepresentation, falsification of accounts, or fraudulent transactions.
The Court noted that the purpose of the Master Circular was to disseminate credit information pertaining to wilful defaulters so as to caution banks and financial institutions and ensure that further bank finance is not made available to them. It extracted the definition of “wilful default” under clause 2.1.3 and emphasized that identification of wilful default must be made keeping in view the borrower’s track record, that it should not be decided on isolated incidents, and that the default categorised as wilful must be intentional, deliberate and calculated.
The Court examined clause 2.5(a) of the 2015 Master Circular, which provided that no additional facilities should be granted to listed wilful defaulters and that companies and their promoters, where siphoning/diversion of funds, misrepresentation, falsification of accounts and fraudulent transactions had been identified, should be debarred from institutional finance for floating new ventures for five years from removal of their names from the list of wilful defaulters. The Court observed that the controversy centred on whether this five-year embargo could continue even after compromise settlement and removal of the borrower’s name from the wilful defaulters list.
The Court placed weight on the subsequent RBI Directions of 2024 and 2025, which expressly dealt with treatment of compromise settlements. It noted that under the 2024 Directions, an account included in the List of Wilful Defaulters would be removed when the borrower had fully paid the compromise amount, and that the revised regime also distinguished between the bar on additional credit facility, which would operate for one year after removal of the name, and the bar on credit for floating new ventures, which would continue for five years.
The Court also referred to RBI’s FAQ on the June 8, 2023 framework for compromise settlements and technical write-offs, which clarified that compromise settlement with borrowers categorised as wilful defaulters was not a new regulatory instruction and that the penal measures applicable to wilful defaulters would continue to apply. At the same time, the Court noted that RBI itself had, in later policy, given due weightage to compromise settlement and permitted removal of the borrower’s name from the wilful defaulters list upon full payment of the compromise amount.
The Court found merit in the petitioners’ contention that a party which attempts compromise and settles the NPA account cannot be placed on the same footing as a party which continues in default without settlement. It observed that once the compromise amount is paid and the name is deleted from the list of wilful defaulters, continuation of the five-year penalty is unjustified unless it is established that the defaulter is guilty of fraud or has siphoned off funds.
RBI circular dated June 07, 2019 on “Prudential Framework for Resolution of Stressed Assets” to provide a framework for early recognition, reporting, and time-bound resolution of stressed assets, is economic policy decision, and cannot be interfered by writ court
The Bombay High Court in the case of S.E. Transstadia Pvt Ltd vs Reserve Bank of India [Writ Petition No. 3865 of 2022] dated March 17, 2026, has held that the impugned RBI circular dated June 07, 2019 on “Prudential Framework for Resolution of Stressed Assets” was a policy decision taken by an expert body in larger public interest and, in the absence of mala fides, arbitrariness, or manifest unreasonableness, the Court would not interfere with such economic and regulatory policy. The Court found no arbitrariness in the scheme merely because it repealed the earlier circulars, including those relating to flexible structuring for infrastructure projects, and accordingly upheld the circular.
The Court noted that the purpose of the impugned circular was to provide a framework for early recognition, reporting, and time-bound resolution of stressed assets. It emphasized early identification of stress through SMA classification and reporting to CRILC, and required lenders to undertake a prima facie review within thirty days of default, with liberty to decide the resolution strategy or initiate insolvency or recovery proceedings.
The Court noted that the framework required all lenders, in cases involving multiple lenders, to enter into an inter-creditor agreement during the review period, and that a decision approved by 75% by value and 60% by number would bind all lenders. The framework also contemplated resolution plans involving regularisation of overdue, sale of exposure, change in ownership, and restructuring, and defined restructuring to include modification of terms, alteration of payment period, rollover of facilities, and sanction of additional finance for curing default.
The Court accepted the RBI’s submission that the June 07, 2019 circular was intended to address stress before default and to avoid “evergreening” of loans, where fresh lending masks defaults instead of reporting them. The Court observed that the new framework involved restructuring with supervisory review and stringent supervisory/enforcement action, while also carving out exceptions for projects under implementation, MSME revival and rehabilitation, and natural calamities.
Although restructuring could result in classification consequences, the circular provided a mechanism for upgradation upon satisfactory performance during the monitoring period, and further provided for treatment of additional finance and interim finance as standard assets subject to the conditions set out in clauses 13 and 14. This showed that the framework itself contained safeguards for both lenders and borrowers, added the Court.
Where no shares are issued or allotted and no consideration is paid, internal accounting entries such as goodwill, share premium, reduction of share capital, and profit and loss adjustments cannot be treated as consideration or transaction value for the levy of stamp duty
The Bombay High Court in the case of Seco Tools India Pvt Ltd vs State of Maharashtra [Writ Petition No. 3704 of 2011] dated April 01, 2026, has held that although an order of amalgamation under Section 394 of the Companies Act, 1956 is a “conveyance” within the meaning of Section 2(g) of the Maharashtra Stamp Act, stamp duty on such order can be computed only in the manner prescribed under Article 25(da) of Schedule I to the Stamp Act, namely with reference to the value of shares issued or allotted and the consideration paid. Mere chargeability as a conveyance does not conclude the issue of computation of stamp duty, which must be determined strictly under Article 25(da).
The Court observed that Article 25(da) contemplates levy with reference to the market value of shares issued or allotted in exchange or otherwise, and the amount of consideration paid for the amalgamation. The Court held that where no shares are issued or allotted and no consideration is paid, internal accounting entries such as goodwill, share premium, reduction of share capital, and profit and loss adjustments cannot be treated as consideration or transaction value for the levy of stamp duty.
In the present case, since Drillco Seco Limited was a wholly owned subsidiary of the petitioner, no new shares were issued, no money was paid, and the shares already held by the petitioner merely stood cancelled upon amalgamation.
The Court rejected the State’s contention that the expression “or otherwise” enabled the authorities to rely on figures such as profit and loss, goodwill and share premium for stamp duty computation. It held that the words “or otherwise” are connected with the phrase “shares issued or allotted in exchange or otherwise” and cannot be read as conferring an unlimited power to treat accounting entries as the basis of levy.
The Court further observed that reduction of share capital, adjustment of losses, and creation of goodwill were internal accounting steps undertaken to balance the books after amalgamation. Such figures did not represent real payment, issuance of shares, or consideration received by shareholders, and therefore could not be treated as consideration for the purposes of Article 25(da).
SARFAESI Act cannot operate as an independent source of enforcement power once a resolution plan under IBC extinguishes the underlying debt. Thus, continuation of lien in absence of a subsisting enforceable debt is alleged to be without authority of law and violative of Article 300-A of the Constitution
The Orissa High Court in the case of Sree Metaliks Limited vs Zonal Manager, State Bank of India [W.P.(C) No.27912 of 2025] dated March 13, 2026, has held that Section 31 of the SARFAESI Act cannot operate as an independent source of enforcement power once a resolution plan under the Insolvency and Bankruptcy Code extinguishes the underlying debt. Section 31 excludes certain secured assets and transactions from the Act’s enforcement mechanism, meaning SARFAESI recovery powers do not apply to them. Thus, the bank could not appropriate the deposit after the debt stood satisfied.
The Court explained that Section 31 of the SARFAESI Act cannot be construed as a reservoir of enforcement power detached from the existence of a subsisting and legally recoverable debt. The scheme of the Act predicates enforcement of security interest upon the continued existence of a financial liability. Once the debt has been assigned and thereafter resolved and satisfied in accordance with an approved Resolution Plan under the Insolvency and Bankruptcy Code, 2016, the very foundation for invocation of ancillary or derivative rights ceases to exist.
The Court observed that SBI lacked legal authority to retain or appropriate the fixed deposit after extinguishment of the debt and ruled that the action amounted to unlawful deprivation of property under Article 300A of the Constitution. The continuation of lien in absence of a subsisting enforceable debt is alleged to be without authority of law and violative of Article 300-A of the Constitution. The Court thus held that where the action impugned is demonstrably without legal foundation and results in unlawful deprivation of property, relegating the Petitioner to an alternative forum would amount to perpetuating further illegality. Accordingly, the High Court directed SBI to release the fixed deposit along with accrued interest to the petitioner.
Where a statutory authority, during the subsistence of a moratorium under Section 14 of the IBC, directs a bank to place lien on and freeze the bank accounts of the Corporate Debtor, and the bank acts on such direction, such action amounts to execution and enforcement of an order against the Corporate Debtor and is barred by Section 14(1)(a) of the IBC
The Ahmedabad Bench of the National Company Law Tribunal in the case of Wind World vs IDBI Bank [1A/1278(AHM)2023] dated April 01, 2026, has held that where a statutory authority, during the subsistence of a moratorium under Section 14 of the IBC, directs a bank to place lien on and freeze the bank accounts of the Corporate Debtor, and the bank acts on such direction, such action amounts to execution and enforcement of an order against the Corporate Debtor and is barred by Section 14(1)(a) of the IBC. Since such action directly affects the Corporate Debtor’s assets, going concern status, and the conduct of CIRP, the NCLT has jurisdiction under Section 60(5) of the IBC to intervene and grant relief.
The Tribunal held that the Statutory authorities may determine dues, but they cannot enforce recovery outside the mechanism of the IBC during CIRP, and Section 238 of the IBC gives overriding effect to the Code over inconsistent recovery powers under other statutes.
It held that such action directly impacted the functioning of the Corporate Debtor as a going concern and inhibited the Resolution Professional from taking control, custody, protection and preservation of the Corporate Debtor’s assets.
While considering the effect of moratorium, the Tribunal relied on the principle that once moratorium is imposed, a statutory freeze operates so that the insolvency resolution process may proceed unhindered. It also noted that, in view of Section 238 of the IBC, the Code overrides inconsistent provisions contained in other enactments, and statutory authorities, though entitled to determine dues, cannot enforce recovery during the moratorium.
On relief, the Tribunal observed that the Mining Department was required to follow the mechanism under the IBC by filing its claim before the Resolution Professional for dues quantified prior to commencement of CIRP. Regardless of whether the Department was aware of the CIRP, the instruction to create lien and freeze accounts was held to be in violation of the moratorium, and the Tribunal directed IDBI Bank to defreeze the accounts and allow use of the money lying therein for running the Corporate Debtor as a going concern. It also clarified that any lien or attachment created prior to commencement of CIRP would remain subject to the provisions of the Code and could not be enforced during the moratorium period.
REGULATORY UPDATES
Government has tightened grip on Social-Media & Digital News with proposed amendments to Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021
The Government of India, through the Ministry of Electronics and Information Technology (MeitY), has proposed amendments to the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021, with the aim of strengthening intermediary accountability and enhancing oversight of digital media. Issued on 30 March 2026, the notice invites stakeholder feedback on changes designed to ensure a more open, safe, trusted, and accountable internet ecosystem.
Stakeholders have been invited to submit their feedback by 14 April 2026, with assurances that submissions will be treated confidentially to facilitate open and uninhibited participation. The government describes the proposed amendments as clarificatory and procedural, intended to improve legal certainty, ensure consistent enforcement, and streamline regulatory mechanisms without introducing an entirely new framework.
Changes in Part II – Intermediary Due Diligence
Part II of the IT Rules, 2021, lays down the due diligence obligations of intermediaries such as social media platforms and online service providers. It defines the conditions under which intermediaries can claim safe harbour protection under Section 79 of the IT Act.
Proposed Changes:
Clarification on Data Retention (Rules 3(1)(g) & 3(1)(h)): The amendments clarify that data retention obligations imposed on intermediaries will operate without prejudice to obligations under other applicable laws, ensuring there is no legal conflict or ambiguity.
Insertion of Rule 3(4) – Mandatory Compliance Requirement: A new provision mandates intermediaries to comply with all clarifications, advisories, directions, SOPs, codes of practice, and guidelines issued by the Ministry. This requirement is explicitly included within due diligence obligations, thereby strengthening enforceability and linking compliance directly to safe harbour protection.
Changes in Part III – Digital Media Ethics Code
Part III of the IT Rules, 2021, deals with the Code of Ethics and regulatory framework for digital media, including publishers of news and current affairs content and online curated content (OTT platforms).
Proposed Changes:
Clarification of Applicability (Rule 8): The amendments clarify that Part III applies not only to publishers but also to intermediaries hosting content and news and current affairs content posted by non-publisher users. This significantly broadens the scope of regulation.
Strengthening Rule 14 – Inter-Departmental Committee: The role of the Inter-Departmental Committee is expanded to consider matters beyond complaints and examine issues referred directly by the Ministry.
Key Amendments under Insolvency and Bankruptcy Code (Amendment) Act, 2026
The Insolvency and Bankruptcy Code (Amendment) Act, 2026 receives Presidential assent on April 6, 2026, marking a significant overhaul of India’s insolvency framework. It shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint provided that different dates may be appointed for different provisions of this Act and any reference in any such provision to the commencement of this Act shall be construed as a reference to the coming into force of that provision.
Key Amendments:
Expanded Definitions & Clarifications (Sections 3 & 5): The amendment introduces and clarifies several critical terms:
“Registered valuer” aligned with the Companies Act, 2013.
“Service provider” expanded to include insolvency professionals, agencies, information utilities, and other notified entities.
Clarification that security interest must arise from agreement, not merely by operation of law.
New definitions for “avoidance transactions” and “fraudulent or wrongful trading.”
Stricter Timelines for Admission of Insolvency Applications: Sections 7, 9, and 10 have been amended to mandate:
14-day timeline for admission or rejection of applications.
Mandatory recording of reasons for delay by Adjudicating Authority.
Clarification that records of default with information utility is sufficient proof for financial creditors.
Overhaul of Withdrawal of Insolvency Applications (Section 12A)
Withdrawal now barred before CoC constitution and after invitation of resolution plans.
Requires 90% CoC approval.
NCLT must decide within 30 days, failing which reasons must be recorded.
Strengthening Moratorium & Guarantor Protection (Section 14): Clarifies that moratorium applies even when sureties initiate proceedings against corporate debtor under guarantee contracts.
Enhanced Role & Powers of Resolution Professional:
Mandatory verification and valuation of claims by IRP (Section 18).
Broader obligation on all persons (not just personnel) to cooperate (Section 19).
RP now explicitly empowered to file applications for avoidance and wrongful trading (Section 25).
Creditors Empowered in Avoidance Actions (Section 47)
Creditors, members, or partners can directly approach NCLT if RP/liquidator fails to act.
Tribunal can also initiate disciplinary action against RP/liquidator for inaction.
Committee of Creditors (CoC) Gains Oversight in Liquidation
CoC to supervise liquidation process (Section 21).
Power to replace liquidator with 66% vote (new Section 34A).
CoC continues even in ongoing liquidation cases in certain situations.
New Framework for Resolution Plans (Sections 30 & 31)
Protection for dissenting financial creditors must receive minimum liquidation value or proportionate distribution.
Mandatory reasoned approval by CoC.
Resolution plans may be implemented first, distribution approved later (within 30 days).
Post-approval, all prior claims extinguished, no fresh proceedings allowed against corporate debtor, and government licences and approvals to continue post-resolution if conditions are met.
Major Changes in Liquidation Process
Introduction of restoration of CIRP before liquidation (Section 33):
CoC (66%) can seek revival within 120 days.
Mandatory 30-day timeline for liquidation orders.
Liquidator must be appointed on recommendation of the Board.
Secured creditors must declare intent within 14 days, failing which security is deemed relinquished.
Revised Waterfall & Government Dues (Section 53)
Clarifies treatment of secured vs unsecured portions of debt.
Government dues split between secured and unsecured categories depending on nature of security.
Time-Bound Dissolution Process (Section 54)
Liquidation to be completed within 180 days (extendable by 90 days).
NCLT to pass dissolution order within 30 days.
CoC empowered to decide handling of pending litigations and proceeds.
Introduction of Creditor-Initiated Insolvency Process (New Chapter IV-A): The amendment introduces a creditor-led insolvency mechanism:
Financial creditors (with 51% approval) can initiate process without NCLT admission stage.
Corporate debtor given 30 days to respond.
Process deemed to commence upon public announcement.
Completion timeline: 150 days (extendable by 45 days).
Allows conversion into CIRP or closure depending on outcomes.
Management remains with board, but RP has oversight powers.
Lower Thresholds in Pre-Pack Insolvency: Approval thresholds reduced from 66% to 51% for certain decisions in pre-pack processes.
SEBI Framework for net settlement of funds for transactions done by FPI in cash market
The Securities and Exchange Board of India (SEBI) vide its Circular No. HO/(1)2026-AFD-POD2//10157/2026 dated April 24, 2026, has allowed net settlement of funds for transactions undertaken by Foreign Portfolio Investors in the cash market to improve operational efficiency and reduce funding costs. Under the existing system, FPIs are required to settle transactions on a gross basis. This results in separate fund flows for purchases and sales within the same settlement cycle, leading to higher liquidity requirements and additional costs, including those arising from forex movements.
SEBI has permitted net settlement of funds for “outright transactions,” defined as either a purchase or a sale transaction, but not both, in a security within a settlement cycle. Only such outright purchase or sale transactions will be eligible for netting. Transactions involving both buy and sell in the same security during the same settlement cycle will continue to be settled on a gross basis. The regulator clarified that settlement of securities will continue on a gross basis between the FPI and its custodian.
Statutory levies such as Securities Transaction Tax and stamp duty will continue to be charged on a delivery basis. Custodians, FPIs, and other stakeholders have been directed to make necessary system changes. The framework is to be implemented on or before December 31, 2026.
SEBI has revised framework for Not-for-Profit Organization
The Securities and Exchange Board of India (SEBI) vide its Circular No. HO/49/14/(10)2026-CFD-POD1//9380/2026 dated April 15, 2026, has issued a circular revising the framework for Not-for-Profit Organisations (“NPO”) on the Social Stock Exchange (“SSE”), easing registration and fund-raising requirements. SEBI has extended the period of registration for NPOs on SSE from two years to three years without the requirement to raise funds.
The regulator has also reduced the minimum subscription requirement for the issuance of Zero Coupon Zero Principal instruments from 75% to 50%, subject to due diligence by the SSE. The circular further mandates disclosures in cases of under-subscription, including details on the manner of raising balance capital and the impact on achieving the social objectives, while providing that funds shall be refunded if the minimum subscription is not achieved.
SEBI introduces key changes to regulatory framework governing Infrastructure Investment Trusts
The Securities and Exchange Board of India (SEBI) vide its Gazette Notification No. CG-MH-E-17042026-271878 dated April 16, 2026, has notified the Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2026, introducing key changes to the regulatory framework governing Infrastructure Investment Trusts (InvITs).
A significant change has been made to the definition of “liquid assets”, with SEBI refining the eligibility criteria for investments in liquid mutual fund schemes. The amendment now permits investment in units of liquid mutual funds having a credit risk value of at least 10 and falling under Class A-I or Class B-I under the prescribed risk matrix, thereby aligning the framework with updated risk classification norms.
The regulations also introduce important clarifications regarding Special Purpose Vehicles (SPVs). In the context of Public-Private Partnership (PPP) projects, SEBI has provided that where acquisition or holding structures are restricted by government or concession agreements, the usual SPV requirements may not apply, subject to specified conditions.
Further, the amendments clarify that an SPV holding an infrastructure project will retain its SPV status even after termination or conclusion of the concession agreement, provided it continues to meet conditions specified by SEBI. This change is aimed at providing continuity and regulatory certainty in infrastructure investments.
In addition, SEBI has expanded the permissible investment avenues by allowing InvITs to invest in such SPVs and has aligned corresponding provisions under Regulation 18. The threshold for credit risk value in certain investment instruments has also been reduced from 12 to 10, along with inclusion of Class B-I instruments, thereby widening the investment universe for InvITs.
The amendments further provide flexibility in utilisation of funds by allowing deployment not only for development of infrastructure projects but also for other purposes as may be specified by SEBI.
SEBI signs MoU with Financial Intelligence Unit India
The Securities and Exchange Board of India (SEBI) vide its Press Release No.26/2026 dated April 16, 2026, has signed a memorandum of understanding with the Financial Intelligence Unit (FIU-India) to step up action against fraud and money laundering in the securities market.
The agreement, inked on April 15, 2026, will enable regular sharing of data and intelligence between the regulator and FIU-India to strengthen enforcement under the Prevention of Money Laundering Act, 2002 and the rules framed under it.
The two agencies will collaborate based on the Egmont principles of information exchange, as part of efforts to improve coordination in tackling financial crimes. The MoU was signed by FIU-India Director Amit Mohan Govil and SEBI Whole Time Member Sandip Pradhan.