Legal Updates (July 13 – July 18, 2026)

Section 452 of the Companies Act, 2013 has not been decriminalised by Amendment Act 29 of 2020, and the amendment only introduced a proviso protecting former employees from imprisonment in cases where the company has defaulted on statutory dues  

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The Kerala High Court in the case of Tata Coffee Limited vs Ramla [CRL.REV.PET No. 346 of 2026] dated July 01, 2026, has clarified that Section 452 of the Companies Act, 2013 has not been decriminalised by Amendment Act 29 of 2020. The amendment only introduced a proviso protecting former employees from imprisonment in cases where the company has defaulted on statutory dues. The Court held that the jurisdiction to try an offence under Section 452 vests exclusively with the competent Judicial Magistrate (not below the rank of Chief Judicial Magistrate), and not with the Adjudicating Officer under Section 454. 

The Court emphasised that the Adjudicating Officer’s powers are confined to administrative penalties for statutory non-compliance and do not extend to criminal punishments. The express exclusion of Section 452 from the Special Courts under Section 435 further reinforces that criminal courts retain full cognizance over such offences. 

The Court after examining Section 452 of the Companies Act, 2013, observed that the only change introduced by Amendment Act 29 of 2020 (effective 22.01.2021) was the insertion of a proviso to Sub-Section (2), which restricts the court from ordering imprisonment of a former employee in wrongful possession of a dwelling unit if the company has not paid dues such as provident fund, pension fund, gratuity, or workmen’s compensation to that employee. No other change was made to Section 452 by the 2020 amendment. 

The Court drew a sharp and critical distinction between “penalties” and “punishments” under the Companies Act. It held that Section 454, which empowers the Adjudicating Officer, deals only with penalties for non-compliance of statutory requirements, which are administrative, civil, or contractual in nature, and has no bearing on penal offences under the Act. The Court further noted that Section 452 expressly provides for a fine of not less than Rs. 1 lakh and extending to Rs. 5 lakhs, and Sub-Section (2) additionally empowers the Court trying the offence to order delivery of property and, in default, imprisonment extending up to two years. 

Crucially, the Court pointed to Sections 435 and 436 of the Companies Act, which establish Special Courts for speedy trial of offences under the Act, and noted that Section 452 is expressly excluded from the jurisdiction of those Special Courts. This express exclusion, the Court held, makes it abundantly clear that it is the competent Judicial Magistrate, and not any Adjudicating Officer or Special Court, who is empowered to try the offence under Section 452.  

Where a cheque is allegedly issued in the name of a company after the company has already been struck off and dissolved, the cheque is not a legally enforceable instrument and prosecution under Section 138 of the NI Act is not maintainable against the former director  

The Karnataka High Court in the case of Rakesh Ramakanth vs Somashekara Gowda R.G [Criminal Petition No.3024 of 2024] dated July 01, 2026, has held that where a cheque is allegedly issued in the name of a company after the company has already been struck off and dissolved, the cheque is not a legally enforceable instrument and prosecution under Section 138 of the NI Act is not maintainable against the former director. The Court clarified that this is different from a case where the cheque was validly issued while the company existed and only later, during the pendency of proceedings, the company goes into liquidation, winding up, or faces some other legal impediment. In such later-event cases, proceedings may continue against the persons covered by Section 141, but not where the very cheque itself post-dates the dissolution. 

The Court found that the company on whose account the cheque was drawn had already been struck off and dissolved long before the cheque was allegedly issued. The Court observed that once a company is struck off and dissolved, it loses its juristic personality and cannot validly operate as a legal entity unless restored in accordance with law. A cheque allegedly issued in the name of such a dissolved company after its dissolution cannot become a legally enforceable instrument and would be void ab initio. Therefore, proceedings under Section 138 of the NI Act cannot be sustained on the basis of such a cheque. 

The Court drew support from decisions dealing with moratorium, liquidation and winding up, and explained that where a person no longer has legal control over the company or its bank account, the statutory ingredients of Section 138 are not satisfied. It emphasized that Section 138 requires the cheque to be drawn on an account “maintained” by the drawer, and this presupposes legal authority and control over the account at the relevant time. In the present case, the company had ceased to exist in 2011 itself, so the former director could not be made criminally liable for a cheque allegedly issued in 2017 in the company’s name.   

Dealership termination, even if commercially harsh, does not by itself become a competition law violation unless there is material showing an anti-competitive agreement causing appreciable adverse effect on competition under Section 3(4), or dominance and abuse under Section 4 of the Competition Act, 2002 

The Competition Commission of India (CCI) in the case of Rajeev Bakshi vs Nissan Motor India [Case No. 09 of 2026] dated July 07, 2026, has held that a dealership termination, even if commercially harsh, does not by itself become a competition law violation unless there is material showing an anti-competitive agreement causing appreciable adverse effect on competition under Section 3(4), or dominance and abuse under Section 4 of the Competition Act, 2002. Where the dealer is free in practice to take another competing dealership, where the agreement permits discounting below Maximum Recommended Retail Price (MRRP), and where the manufacturer holds less than 1% market share in the relevant market for sale and distribution of passenger cars in India, no prima facie case arises under Sections 3(4) or 4 of the Competition Act. 

The Commission noted that for Section 3(4) of the Competition Act, 2002 to apply, there must be an agreement, and here the relationship was governed by the dealership agreement. It examined the allegation that the agreement had imposed exclusivity, which restricted the dealer from dealing in other new motor vehicles or spare parts without Nissan’s written consent. 

On facts, the Commission found that the informant had not produced evidence to show that Nissan actually prevented it from acquiring competing dealerships. On the contrary, material in the public domain showed that the informant had acquired another dealership with VinFast while the Nissan dealership was still subsisting. On that basis, the Commission held that the allegation of exclusive dealership or unlawful restriction under Section 3(4) lacked substance. 

Since the dealership agreement expressly allowed the dealer to sell at a price lower than the MRRP, and there was no restriction on minimum resale price or discounting, the Commission held that the allegation of resale price maintenance was not made out. On refusal to deal, the Commission held that the dealership had been terminated under Clause 16 of the agreement, which allowed either party to terminate the agreement during its subsistence by giving 90 days’ notice, without assigning reasons. The Commission treated the cancellation of the dealership as a standard commercial dispute and observed that freedom of contract and selection of trading partners are normal business practices and not, by themselves, anti-competitive conduct. 

A power of attorney holder can act only within the authority expressly or necessarily conferred by the instrument, and a power to sell, manage, deal with, or transact affairs does not include a power to execute a gift deed unless such authority is specifically granted

The Gujarat High Court in the case of Purshotam Ranchhodbhai Pankhania vs Harihar Ambalal Patel [R/First Appeal No. 259 of 2020] dated July 15, 2026, has held that a power of attorney holder can act only within the authority expressly or necessarily conferred by the instrument, and a power to sell, manage, deal with, or transact affairs does not include a power to execute a gift deed unless such authority is specifically granted. Further, where the principal dies, the agency stands terminated by operation of Section 201 of the Contract Act, and any act done thereafter on behalf of the deceased principal is without authority and legally invalid. 

The Court also held that Section 208 of the Contract Act and Section 3 of the Powers-of-Attorney Act cannot save a transaction where the attorney had no authority in the first place to execute a gift deed, and where the act of presenting such deed after the principal’s death is itself void and lacking in bona fides. In such a situation, the transferee acquires no title. 

The Court framed the core issue as whether an act done by a power of attorney holder, despite there being no such authority in the instrument, and particularly after the death of one of the principals, could be treated as legal and binding. The Court reiterated that a power of attorney creates a principal-agent relationship, and the holder can do only those acts which are specified and authorised by the executant. 

The Court rejected the respondent’s attempt to take shelter under Section 208 of the Contract Act. It observed that termination by death operates automatically in law, and once the agency comes to an end, the agent has no authority to act further. The Court made it clear that a dead person cannot be represented in a contract through an agent after death, and therefore the plea of ignorance of death could not validate the execution or presentation of the gift deed for registration. 

The Court also examined Section 3 of the Powers-of-Attorney Act, 1882, which protects acts done in good faith without knowledge of death. Even then, the Court held that the protection did not help the defendants. It observed that the very presentation of a conveyance deed for registration after the principal’s death, particularly when the attorney claimed to enjoy a family-like relationship with the principal, lacked bona fides. The Court said such conduct reflected a fraudulent act and could not convey title to immovable property. 

On the construction of the powers of attorney, the Court held that such instruments must be strictly construed. General words cannot be used to enlarge specifically conferred powers. After extracting the clauses of both powers of attorney, the Court found that neither document contained any authority to make a gift of the property. At best, the powers related to management, sale, purchase, leasing, banking, litigation and general affairs, but not gifting. The Court expressly held that the documents did not authorise making of a gift and that any transfer contemplated under them had to be for consideration.  

Under the SEBI (Mutual Funds) Regulations, 1996, a close-ended mutual fund scheme must be fully redeemed and wound up on its maturity date unless it is validly rolled over in the manner prescribed under Regulation 33(4), including necessary disclosures and written consent of unitholders 

The Supreme Court in the case of Nilesh Shah vs SEBI [Civil Appeal No.6529 of 2026] dated July 13, 2026, has held that under the SEBI (Mutual Funds) Regulations, 1996, a close-ended mutual fund scheme must be fully redeemed and wound up on its maturity date unless it is validly rolled over in the manner prescribed under Regulation 33(4), including necessary disclosures and written consent of unitholders. An AMC/ Fund houses cannot, on grounds of commercial expediency or investor benefit, unilaterally extend the maturity of underlying securities and delay redemption of scheme proceeds. The Court held that securities regulation is compliance-driven and consequence-neutral, so absence of investor loss, presence of investor gain, bona fide intention, or absence of complaints does not excuse a proven regulatory breach. 

The Court further held that where contravention of the SEBI Act and the mutual fund regulations is established, penalty follows and mens rea is irrelevant unless the statute expressly requires otherwise. It reaffirmed that due diligence obligations under Regulation 25(16) and the Fifth Schedule must be strictly observed, and that trustees and senior executives are equally accountable where they fail to ensure regulatory compliance and act in breach of their fiduciary and statutory responsibilities. 

The Court made it clear at the outset that in an appeal under Section 15Z of the SEBI Act, its role is confined to substantial questions of law and not to judging the commercial wisdom of the decision taken by market participants. The Bench stressed that the statutory and regulatory framework under securities law is consequence-neutral: compliance is mandatory regardless of whether the impugned conduct ultimately caused gain or loss to investors. Once breach of the SEBI Act or the regulations is established, the only real defence is to show that no breach occurred at all or that the findings are manifestly perverse. 

The Court held that the core violation lay in the extension of the maturity dates of the debentures beyond the maturity dates of the close-ended schemes and the resulting delayed redemption of scheme proceeds. Referring to Regulation 33(4) and Regulation 39 of the SEBI (Mutual Funds) Regulations, 1996, the Court said the legal position was plain: a close-ended scheme must be fully redeemed at the end of its maturity period and wound up on expiry of its duration, unless it is rolled over in accordance with the prescribed process and with written consent of unitholders. Since no rollover had been undertaken, the delayed and partial redemption was directly contrary to the regulations. 

On disclosures, the Court held that SEBI and the unitholders had been kept in the dark. SEBI was informed of the course actually adopted only on 12 April 2019, after the first maturity dates had already passed and after SEBI itself sought information. The Court found this unacceptable, particularly because the action taken was not in consonance with the regulations and should have been disclosed to the regulator beforehand. It also observed that unitholders were not given any real choice, because the decision to extend the debenture maturity and withhold redemption amounts was imposed on them without the legally required rollover process. 

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A leave and licence dispute concerning office premises, where possession was never handed over and where actual exclusive commercial use at the time of the agreement is not shown, does not qualify as a commercial dispute merely because the licensee is a business entity and intended to use the premises for business purposes

The Bombay High Court in the case of Jayshree Jagdish Thakker vs Pragati Infra Interiors [Writ Petition No. 8129 of 2026] dated July 07, 2026, has held that under Section 2(1)(c)(vii) of the Commercial Courts Act, a dispute relating to immovable property becomes a commercial dispute only when the property is actually and exclusively used in trade or commerce at the relevant time. Mere intended, proposed, or future business use is not enough. A leave and licence dispute concerning office premises, where possession was never handed over and where actual exclusive commercial use at the time of the agreement is not shown, does not qualify as a commercial dispute merely because the licensee is a business entity and intended to use the premises for business purposes. 

The Court also clarified that where a Commercial Court lacks jurisdiction because the dispute is not a commercial dispute, the plaint should not be rejected outright on that ground. The proper course is to return the plaint under Order VII Rule 10 of the Code of Civil Procedure for presentation before the proper ordinary civil court. 

The Court explained the purpose of the Commercial Courts Act, and noted that the Act creates a special and speedier mechanism for resolution of commercial disputes, originally for high-value claims and later extended to lower-value claims as well. Because the Act provides a special procedure and stricter timelines, only disputes that clearly fall within the statutory definition of “commercial dispute” can be tried by Commercial Courts; ordinary civil disputes cannot be brought into that framework merely by broad interpretation. 

The Court identified the central issue as whether this dispute arose out of an agreement relating to immovable property “used exclusively in trade or commerce” under Section 2(1)(c)(vii) of the Act. The Court reproduced the statutory language and emphasized that the real controversy was the meaning of the words “used exclusively in trade or commerce”. 

The Court also held that the fact that the premises were described as “office premises” and were situated in a business park was not enough by itself to show that they were being used exclusively in trade or commerce. The agreement did not show that the defendants were themselves using the premises exclusively for trade or commerce when the agreement was entered into. The Court made it clear that use as an office does not automatically mean exclusive use in trade or commerce for the purpose of Section 2(1)(c)(vii).  

Under Section 11(2) of Trade Marks Act, the issue is not confined to consumer confusion, rather, the focus is on protection of the reputation and distinctiveness of the earlier well-known mark against dilution, unfair advantage and detriment, even where the later mark is sought to be registered for dissimilar goods  

The Delhi High Court in the case of Industria De Diseno Textil, S.A. vs Registrar of Trade Marks [C.A.(COMM.IPD-TM) 52/2024] dated July 06, 2026, has held that similarity between rival marks must be judged on an overall impression and not by dissecting the marks into separate syllables or components. Applying that test, “ZARA” and “ZORA” were held to be deceptively similar phonetically and visually. Additionally, the Court emphasised that under Section 11(2), the issue is not confined to consumer confusion in the classic Section 11(1) sense. The focus is on protection of the reputation and distinctiveness of the earlier well-known mark against dilution, unfair advantage and detriment, even where the later mark is sought to be registered for dissimilar goods. 

The Court first examined Section 11 of the Trade Marks Act and made an important distinction between Section 11(1) and Section 11(2). It observed that Section 11(1) is concerned with likelihood of confusion in cases involving similar or identical goods/services, whereas Section 11(2) protects an earlier well-known mark even against dissimilar goods if use of the later mark would take unfair advantage of, or be detrimental to, the distinctive character or repute of the earlier mark. 

On the issue whether a mark must be formally declared “well-known” before Section 11(2) can be invoked, the Court held that Section 11(2) does not require a prior formal declaration by a court or inclusion in the Registrar’s list of well-known marks. What is required is that the earlier mark should, on the evidence, be entitled to protection as a well-known mark in India under Section 2(1)(zg) read with Section 11(6) and Explanation (b) to Section 11. 

Applying that principle, the Court found that the evidence on record clearly showed that “ZARA” had immense reputation, substantial Indian and international presence, extensive sales, advertising, diversified product lines, and prior judicial recognition as a well-known mark. The Court therefore held that “ZARA” was entitled to protection as a well-known mark under Section 11(2), regardless of whether there had been a separate formal declaration process. 

The Court then held that the Registrar had applied the wrong legal test while comparing “ZARA” and “ZORA”. It said that rival marks must be compared as a whole and not by dissecting them into parts such as “ZA” and “ZO”. The Court found that both marks are four-letter word marks, begin with “Z”, end with “RA”, have the same consonant structure, and produce a similar overall phonetic impression. The difference of one vowel was held insufficient to avoid deceptive similarity, particularly from the perspective of a person of average intelligence and imperfect recollection. 

The Court further observed that once Section 11(2) is attracted, the respondent’s argument on dissimilarity of goods loses much of its force, because a well-known mark is protected even against dissimilar goods. Even otherwise, the Court noted that both marks were in Class 24 and there was a connection in the course of trade, as ZARA’s brand presence extended beyond end-consumers to manufacturers, traders and suppliers dealing in textiles, bags and related products. 

The High Court also held that the Registrar wrongly looked for proof of actual public confusion. It clarified that actual confusion is not the controlling test under Section 11(2). The proper enquiry under that provision is whether the later mark, used without due cause, would take unfair advantage of or harm the distinctive character or reputation of the earlier well-known mark. The Court found that use of “ZORA” would dilute and blur the distinctiveness of “ZARA” and would wrongly suggest a trade connection with the appellant’s brand. 

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A minor admitted to the benefits of a partnership firm cannot be treated as a defaulter for the firm’s loan liabilities during his minority. Where the firm stood dissolved under Section 42 of the Indian Partnership Act before such person attained majority, there is no question of requiring him to make an election under Section 30(5) to become or not become a partner   

The Kerala High Court in the case of Dhruv Hitesh Dattani vs Reserve Bank of India [WP(C) No. 35894 of 2025] dated July 07, 2026, has held that a person who was only a minor admitted to the benefits of a partnership firm cannot be treated as a defaulter for the firm’s loan liabilities during his minority. Where the firm stood dissolved under Section 42 of the Indian Partnership Act before such person attained majority, there is no question of requiring him to make an election under Section 30(5) to become or not become a partner. In such circumstances, the lending bank cannot validly report him to a credit information company as a defaulter or wilful defaulter, and any such adverse reporting is liable to be corrected. 

The Court observed that although disputes involving civil rights are ordinarily left to civil proceedings, this case could be decided in writ jurisdiction because the relevant facts were admitted and clear from the record. The Court found that the petitioner became major only in 2008 and that, before he attained majority, two of the firm’s partners had died. In the absence of any clause in the partnership deed for continuation of the firm despite the death of partners, Section 42 of the Partnership Act operated and the firm stood dissolved.

On that basis, the Court rejected the bank’s reliance on Section 30(5). It observed that there was no need for the petitioner to elect whether to become a partner on attaining majority because the firm itself was no longer subsisting by then. Therefore, the bank’s stand that he automatically continued as a partner was not accepted. 

The Court also attached significance to the bank’s conduct in the DRT proceedings. It noted that the bank had sought to implead the petitioner only as a legal heir of a deceased defendant, and not as a partner of the firm, and even that attempt was dropped. The Court further noted that the petitioner could not in fact be treated as the legal heir of the deceased defendant because he was only the grandson. Since the bank never pursued any case against him as a partner even after he became major, the Court held that he could not later be treated as a defaulter for the firm’s debt.  

Where landowners participate in Section 5A of the Land Acquisition Act, 1894 proceedings over several dates, receive replies, and then fail to appear, file rejoinders, seek adjournment, or otherwise pursue their objections, they may be treated as having abandoned the right of personal hearing  

The Supreme Court in the case of Alok Kothwala vs Jaipur Metro Rail Corporation [Civil Appeal No.8269 of 2026] dated July 13, 2026, has held that while Section 5A of the Land Acquisition Act, 1894 confers a mandatory and valuable right of objection and hearing, that right can be lost by the landowners’ own conduct where they fail to pursue the proceedings after participating on multiple dates; in such circumstances, substantial compliance with Section 5A is sufficient and the acquisition for the Jaipur Metro car depot could not be invalidated. 

Section 5A of the Land Acquisition Act, 1894 creates a mandatory right to file objections, receive a hearing, and obtain fair consideration of those objections, but the Collector’s role remains administrative and not judicial. Therefore, a detailed speaking order is not required and substantial compliance is enough if objections are considered, brief reasons are indicated, and the State Government applies its mind before issuing a Section 6 declaration, added the Court. 

The Court further held that where landowners participate in Section 5A proceedings over several dates, receive replies, and then fail to appear, file rejoinders, seek adjournment, or otherwise pursue their objections, they may be treated as having abandoned the right of personal hearing. In such circumstances, forwarding the recommendation without granting one more opportunity does not by itself amount to breach of Section 5A or invalidate the acquisition. 

The Supreme Court then independently examined the substance of the landowners’ objections and found none of them sufficient to invalidate the acquisition. It held that there was no legal requirement that newspaper publication must precede the Section 4 notification, especially when the landowners admittedly had notice and filed objections in time. It further held that acquisition for a metro rail depot clearly served a public purpose, and evolving project planning or later DPR changes did not negate that public purpose.  

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