Author name: CBCL

Due Process in Indian Antitrust Law: A Reform Long Overdue

Leave a Comment / Competition Law /

[By Samyak Deshpande and Vedika Kulkarni] The authors are students of Maharashtra National Law University Mumbai   Introduction Recently, the Hon’ble Supreme Court of India (SC), in  CCI v Schott Glass India, upheld the decision of the Competition Appellate Tribunal (COMPAT), dismissing the appeal filed by the Competition Commission of India (CCI). The Court held that the Director General’s (DG) report was lacking in evidentiary value. To be specific, it was the denial of cross-examination to the affected parties under Section 36 of the Competition Act, 2002 (the Act), a significant procedural lapse putting into question the DG’s entire findings. This shows how such procedural lapses can affect CCI’s decisions’ validity, urging an analysis of the procedure for Indian competition law enforcement. In 2015, the COMPAT had strongly opined that “the time has come for the Commission to lay down guidelines for conducting the investigation/inquiry in consonance with the rules of natural justice.” This came in the Builders Association of India v. Cement Manufacturers’ Association and Others, where the Chairperson of the CCI signed the order without physically attending hearings. The remark pushed for transparency and consistency in the procedure. Yet, nearly a decade later, CCI has issued no formal procedural rules or regulations in this regard. This article highlights the procedural failures of CCI through such cases and analyses the impact of procedural lapses and inconsistent adjudications on businesses. Further it argues that there is an urgent need to implement an enforceable mechanism for procedural fairness within the framework of CCI. The article first outlines the due process requirements under Indian competition law and their role in ensuring fairness. It then analyses key procedural deficiencies, including denial of cross-examination, reliance on incomplete evidence, and delays in adjudication. Thereafter, it subsequently assesses the financial and reputational impact of such lapses on businesses and investor confidence. The discussion concludes by examining international best practices and recommendations, and proposing reforms to embed enforceable due process safeguards within CCI’s framework. Understanding the Due Process Under the CCI (General) Regulations, 2009 (Regulations), the investigation process begins when the CCI forms a prima facie opinion under Regulation 16 of a possible contravention and directs the DG under Regulation 18 to investigate, who then collects evidence and prepares a report for the CCI. Upon receipt of the DG’s report, the CCI may under Regulation 20 invite objections or suggestions from the concerned parties and, if deemed necessary, may direct further investigation. Thereafter, the CCI considers all submissions and evidence on record before passing a final order. The parties are generally afforded an opportunity to be heard in accordance with the procedure established by law. This is the general process followed by CCI. Due process, on the other hand, is the backbone of fair law enforcement, requiring the state to respect principles of natural justice. It goes beyond mere rule-following to ensure that the procedure itself is fair and just. With this foundation in mind, it becomes important to explore how lapses in procedural standards undermine fairness and lead to significant financial and operational consequences for businesses. The Need for Due Process? 1.Lapses in Procedural Standards Despite nominal procedural safeguards under the Act and the Regulations, the CCI’s investigative process suffers from serious procedural flaws that seriously undermine fairness and due process. For example, Regulation 41 allows evidence from informants or 3rd parties to be recorded without the enterprise’s presence, causing concerns of bias. Further, the DG is vested with discretionary authority to permit or deny cross examination of witnesses. When there is no mandatory right to cross-examine, it becomes harder to test the veracity of evidence and ensure a fair trial. In the recent Schott Glass case, the SC noted that despite a clear request for cross-examination, the CCI refused it on the technical ground that no “separate application” had been filed. It made no attempt to assess whether cross-examination was necessary or if its denial would cause prejudice. It was evident that the request was rejected on procedural formality rather than substantive fairness. The Court referred to several precedents that contradicted the CCI’s approach. In Raymond Woollen Mills Ltd. v. Director General (Investigation and Registration) and State of Kerala v. K.T. Shaduli Grocery Dealer, the courts upheld the right to cross-examination as a fundamental aspect of fair procedure. Similarly, in Andaman Timber Industries v. Commissioner of Central Excise, Kolkata, the SC held that denying cross-examination undermined the entire proceeding and vitiated the decision. The Delhi High Court, in Cadila Healthcare Ltd., reinforced this view by holding that when findings rely substantially on oral statements, refusal to permit cross-examination invalidates the decision. It emphasized that discretion to allow or deny cross-examination must be exercised judicially, as was followed by the Schott Glass ruling. Also, the procedural lapses are not limited to just cross-examination but extend beyond the broader rules of fairness and principles of natural justice. There are plenty of matters where the appellate stage revealed such various procedural lapses. To highlight a few, in Google v CCI, the SC held that non-disclosure of key documents violated due process. In Balrampur Chini Mills Ltd. v. CCI, the CCI’s order was overturned primarily due to violations of the principles of natural justice where only three members signed and pronounced the final order despite six members having heard the matter. Further, the parties were not provided an opportunity to be heard after receiving the Supplementary Investigation Report or regarding the quantum of penalty before its imposition. There was also an inordinate delay of 13 months between the conclusion of hearings and the pronouncement of the order, during which the bench composition changed, all of which cumulatively amounted to a breach of the principles of natural justice and procedural fairness. In BCCI v. CCI, CCI was found to have relied on information from the internet public domain materials without giving BCCI an opportunity to respond to that material, thereby violating principles of natural justice. Such procedural lapses in adjudication not only undermine the integrity of the regulatory process

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Sebi’s Scale-Based Rpt Threshold: A Step Forward, but Not Far Enough

Leave a Comment / Company Law /

[By Dewansh Raj] The author is a student of National Law University Odisha (NLUO)   Introduction The Security and Exchange Board of India (“SEBI”) as a significant move,introduced a new consultation paper which provides for bringing substantial change to the Related Party Transaction (RPT) framework. Related-party transactions encompass commercial arrangements between a company and connected entities, including subsidiaries, entities controlled by directors or significant shareholders, and businesses associated with board members or senior management. Although such transactions are not necessarily improper, they present risks of conflict of interest and misuse. Their permissibility depends on compliance with the arm’s length and ordinary course of business criteria; otherwise, prior approval of the Board or shareholders is required as per statutory thresholds under Section 188 of Companies Act 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“LODR”). The main objective of RPT is to prevent conflicts of interest, protect minority shareholders, ensure transparency, and strengthen corporate governance through mandatory disclosures, approval requirements, and restrictions on voting by interested parties. While the present paper addresses various aspects of related party transactions, the most notable is the proposal for a scale-based threshold. This blog examines the recommendations in detail and evaluates whether the scale-based approach is likely to achieve its intended benefits. Proposed changes The consultation paper aims to bring the following changes- The flat materiality threshold for related party transactions (₹1,000 crore or 10% of turnover) will be replaced with a scale-based system linked to the listed entity’s turnover, with an upper cap of ₹5,000 crore. For subsidiaries, audit committee approval will be required for transactions above ₹1 crore that exceed the lower of the parent’s new materiality threshold or 10% of the subsidiary’s turnover if it has at least one year of audited financials, or 10% of its net worth or share capital plus securities premium if the net worth is negative and it does not have one year of audited financials.. The threshold for providing reduced “minimum information” for RPT approvals will rise to the lower of 1% of turnover or ₹10 crore, while retaining the ₹1 crore exemption for very small transactions. Omnibus shareholder approvals for material RPTs will be valid until the next AGM which can be for a maximum period of 15 months or for one year if approved in other general meetings. The retail purchase exemption will apply only to directors, key managerial personnel, and their relatives, removing employees from its scope. The holding–subsidiary exemption will be clarified to apply only when the holding company is listed and the subsidiary’s accounts are consolidated. The Scale based approach is a step in the right direction The new proposed threshold creates three brackets according to the annual consolidated turnover of the company and accordingly creates different thresholds for each bracket. The primary and most apparent benefit is the significant reduction in compliance burden, particularly for larger entities. Under the current framework, these organizations were mandated to obtain shareholder approval for all transactions meeting the threshold, regardless of their materiality or strategic significance. The paper demonstrates this impact quantitatively, highlighting that over 60% of transactions currently requiring shareholder approval would be exempt under the revised framework, thereby streamlining corporate governance processes while maintaining appropriate oversight for truly consequential matters. However, a more crucial impact of this change is the enhanced flexibility it provides SEBI to adjust RPT thresholds for specific entity categories without requiring a comprehensive overhaul of the entire regulatory framework. This modular approach enables targeted regulatory refinements based on market conditions, entity size, or sector-specific requirements, allowing for more responsive and nuanced governance without disrupting the broader system architecture. The Indian economy, particularly the stock market, has experienced tremendous growth over the past decade, necessitating continuous evolution of the RPT framework. This regulatory dynamism is evidenced by the frequency of modifications the current consultation paper represents the third major revision this year alone. Such regulatory volatility creates market uncertainty and escalates compliance costs for companies, who must continuously adapt their governance structures and processes to meet changing requirements. The SEBI could now bring a change in the RPT framework for the companies falling in one particular bracket without altering the same for other companies ensuring consistency and in turn improving the ease of doing business. Over reliance on the turnover Although the consultation paper offers promising improvements, the proposed framework continues to depend exclusively on company turnover as the criterion for classifying transactions as related party transactions, which presents significant limitations. A turnover-based threshold for determining material related party transactions has two key problems. Firstly, it opens the door to manipulation. Companies can artificially inflate their turnover often through low-margin, high-volume sales, premature revenue booking, or circular transactions so that the numerical threshold for requiring shareholder approval rises. For example, a company with a turnover of ₹9,000 crore would face a 10% threshold of ₹900 crore, meaning any RPT above that amount would need approval. If it boosts turnover to ₹11,000 crore, the threshold becomes ₹1,100 crore, allowing a ₹1,000 crore transaction that was previously “material” to slip under the limit and avoid scrutiny. Secondly, this approach is disadvantageous to low-turnover but high-value businesses, such as infrastructure or real estate firms, whose balance sheets are large but annual sales are relatively modest. For such companies, even routine, proportionate transactions can easily exceed the turnover-based limit. For instance, an infrastructure company with ₹300 crore turnover but assets worth ₹2,000 crore would have a materiality threshold of just ₹30 crore under the turnover rule, so a ₹200 crore land purchase normal for its scale would require shareholder approval, causing unnecessary delays and compliance costs. In both scenarios, turnover alone fails to reflect the true economic significance or risk of a transaction. A need for more holistic framework While the introduction of the scale-based framework is definitely a step in right direction there is a need to look beyond threshold. This is where models like the UK’s multi-test approach offer valuable lessons in creating a more comprehensive framework. In

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From Barriers to Bridges: Sebi’s Investment Advisory Modernization Initiative

Leave a Comment / Capital Markets and Securities Law /

[ By Anikait Chawla and Chinmaya Saraswat] The authors are students of Gujarat National Law University On 7 August 2025, the Securities and Exchange Board of India released a consultation paper called, “Proposals for Ease of Doing Business for Investment Advisers and Research Analysts” (the Paper). The Paper aims to lower procedural barriers for advisers and analysts while keeping investor protections in place. It builds on changes from December 2024 that gave advisers more fee flexibility and cleared up onboarding steps. The Paper addresses six persistent market concerns: the limited ability to share past performance, unclear rules on second-opinion services, short corporatization timelines, narrow qualification criteria, and repetitive documentary checks. SEBI tied these easing measures to safeguards such as certification, disclaimers and time limits. The regulator wants to make life easier for advisers while keeping verification where it matters. Regulatory backdrop and principal proposals The Investment Advisers Regulations, 2013 (IA) and the Research Analysts Regulations, 2014 (RA) set rules for who may advise, how research should be published, and what disclosures advisers must make. Those rules helped professionalise a market that had relied on informal practice. As advisory work evolved, the rules showed strain. Firms and solo advisers report repeated documentary checks, academic thresholds that block experienced practitioners, and disruption when individuals convert to a corporate form. Small advisers feel these burdens most because they lack in-house compliance teams. SEBI responds with a significant change aimed at broadening eligibility. Any graduate could register if they pass the relevant NISM exam. That keeps a baseline of competence while allowing more professionals to enter the market. The Paper would permit one-to-one sharing of certified past-performance data when a prospective client requests it. Advisers may present certified results to interested clients, with mandatory disclaimers and a time-limited allowance. The approach lets advisers show a genuine track record without enabling mass-market promotion of unverified returns. The Paper also formalises second-opinion services. Advisers often give informal second opinions on products distributed by others. SEBI would let advisers charge for those services within capped arrangements and with clear disclosure. The Paper references a 2.5 percent ceiling as a guardrail. It also proposes annual consent for ongoing fee arrangements so clients stay informed about layered charges. On corporatization, SEBI proposes a longer transition window and limited client onboarding during conversion. The current short period often forces advisers to pause or alter services. Extending the window, while requiring continued professional-liability cover and client notice, aims to smooth the process without reducing accountability. Additionally, the Paper aims to prune redundant documentary checks. Repeated proofs of address, multiple credit reports and duplicate tax submissions add time and cost without improving oversight. SEBI suggests replacing many routine checks with digital verification, sworn declarations and targeted spot checks. That approach redirects supervisory effort toward risks that matter for investors. Taken together, these measures show SEBI trying to reduce admin friction while keeping guardrails. Certification, templates and sunset clauses serve as those guardrails. The outcome depends on how precise and operable the implementing rules become. Implementation challenges and standardisation requirements The reforms will succeed only if SEBI provides clear technical guidance and reasonable timelines, beginning with standardisation, since past-performance disclosures help clients only when advisers calculate and report returns uniformly.. SEBI should mandate a template that shows one-, three- and five-year gross returns, the corresponding net returns after fees, the benchmark used for each period, start and end dates, and a short note on the calculation method. The template should explain how to treat cash flows and whether to use time-weighted or money-weighted returns. It should also describe how to present multi-asset strategies. Without that clarity, numbers will be hard to compare and easy to manipulate. Verification should remain proportionate, and while chartered-accountant certification provides a strong safeguard, its costs weigh most heavily on small advisers. . SEBI should provide tiered options wherein larger firms can use full certification, mid-sized firms can rely on accredited third-party verifiers or audited internal reports and the small advisers can face random audits or accept higher liability if they self-certify. These alternatives keep oversight while avoiding a one-size-fits-all burden. Record-keeping and consent require fundamental digital systems. To track consent renewals, provide client-specific performance, and maintain auditable records, advisers will require secure solutions. SEBI ought to establish minimal technical requirements and permit gradual adherence. In order to prevent smaller firms from falling behind, the regulator can also promote open-source toolkits and low-cost vendors. Supervisory inspections will be sped up and conflicts will be decreased with the explicit guidelines on encryption, retention periods, and access limits. Digital verification can reduce documentation without compromising oversight. By connecting checks to trustworthy databases like PAN and verified tax records, SEBI can implement a verify-once paradigm. This lessens the need for duplicate checks, but it also necessitates privacy protections, backup plans in case of system failures, and a clear understanding of who is responsible for automated checks that go wrong. Efficiency and safety would be balanced by a hybrid architecture that automates regular inspections and saves manual review for outliers. The chartered-accountant requirement raises timing and cost questions such as who bears the charge and when must certification occur? SEBI could allow phased certification, for example a short self-certification period followed by formal attestation within a defined window, or it could permit accredited data providers to give standard attestations. Both options would maintain verification while easing the burden on small firms. Surveillance and enforcement must match a lighter prescriptive approach. A disclosure-led model needs better detection tools such as sample audits, anomaly detection and proportionate penalties that deter misuse. SEBI should build risk-scoring systems that flag outliers and support those systems with periodic manual checks. Targeted enforcement will keep the regime credible without reverting to blanket paperwork requirements. Finally, continuing competence matters. NISM exams can remain the baseline, but advisers should complete modest annual training and face occasional competency checks. Regular education and random assessments will keep standards current and reduce the risk of persistent low-quality advice. These measures, precise templates, tiered

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Pre- And Post-Importation Services: Doctrinal Challenges in Customs Valuation

Leave a Comment / Trade Law /

[By Manav Chakraborty and Manya Singh] The authors are students of Jindal Global Law school The computation of proper customs is a matter of vital importance for both Government and importers alike as it forms the backbone of revenue collection and compliance in cross-border trade. In a recent decision, titled Coal India Limited Vs. Commissioner Of Customs (Port) (Coal India) the Supreme Court of India confronted a contentious and commercially significant issue in this field: whether “product service fees” paid to a third party which is separate from the price paid to the foreign exporter should be included in the assessable value of imported goods under Rule 9(1)(a) and (e) of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988. (Valuation Rules) While the judgment establishes an important precedent with far-reaching consequences for transactions involving complex import arrangements, it also raises several interpretive and doctrinal issues that need to be resolved. In particular, the ruling raises questions about the scope of “condition of sale”, the distinction between pre- and post-import services, and the extent to which form can be disregarded in favour of commercial substance. This article critically analyses the decision, examining its reasoning, statutory context, and potential consequences for future customs valuation disputes. Factual Matrix and Supreme Court’s Ruling The case arose out of a contract for the supply of spare parts for P&H Shovels entered into between Central Coalfields Ltd. (a subsidiary of Coal India Ltd., the appellant) and Harnischfeger Corporation, USA (the foreign supplier). The contract was routed through the latter’s Indian distributor, M/s Voltas Ltd., which was to be paid 8% of the Free On-Board (FOB) value of the contract in Indian rupees towards “engineering and technical service fees.” This payment was not deducted from the FOB value and was made directly to Voltas. Following provisional assessments, the Assistant Commissioner of Customs included the 8% fee paid to Voltas in the assessable value of the goods under Rule 9(1)(a) and (e) of the Valuation Rules, read with Section 14(1) of the Customs Act, 1962. The short levy of duty was quantified at Rs. 64,47,244 and the appellant was directed to furnish this amount within 15 days. The Court first began by scrutinizing the pertinent contractual documents and its clauses specifically focusing on Clause 5 of the Purchase Order. It observed that the 8% payment to Voltas Ltd. was not a collateral arrangement but an integral term of the sale contract and the obligation to pay this amount was inextricably linked to the act of importation. The Court therefore held that the foreign supplier’s quotation made it clear that the payment to Voltas Ltd. was to be made in addition to the FOB price, and not deducted from it, reinforcing the viewpoint reached by different authorities before that this payment was a condition of sale and not a separate post-importation service. The Court’s main reasoning as to why the 8% payment obligation under the Purchase order was rightfully included in the assessable value of the imported goods under Rule 9(1)(a) and Rule 9(1)(e) of the Valuation Rules read with Section 14(1)(a) of the Customs Act, 1962 lied in the nature of the services rendered by Voltas Ltd. While the appellant characterized these services as post-importation maintenance and technical assistance, the Court essentially found them to be fundamentally tied to the import transaction activities to ensure smooth execution of the sale and importation of goods and hence includable in the assessable value. In addressing the appellant’s reliance on the Note to Rule 4 of the Valuation Rules and previous Supreme Court decisions such as Commissioner of Customs (Ports), Kolkata Vs. J.K. Corpn. Ltd (J.K Corporation) and Commissioner of Customs Vs. Ferodo India (P) Ltd. the Court drew a clear distinction between the cases on the basis of their factual matrix. In J.K Corporation, the Court held that payments for post-importation activities (such as technical know-how or license fees for plant operation after import) were not a precondition for the sale of goods and hence would not come within the purview of assessable value of the imported goods so as to enable the authorities to levy customs duty in view of the Note to Rule 4. In contrast, the services in the present case were pre-importation or contemporaneous with importation and thus includible in the assessable value under Rule 9(1)(e). Substance Over Form: Doctrinal Application and Limitations One of the central takeaways from the judgement rendered by the Court is the reaffirmation of the principle of “substance over form” adopted by judicial bodies in the context of customs valuation. Despite the contractual clause classifying the services rendered by Voltas Ltd. as engineering and technical service, the Court based on a granular and detailed reading of the clause and all the other surrounding documents, termed these “product service” charges as nothing but commission being paid to Voltas Limited for procurement of spare parts and making the sale as effective as possible. This principle has long held a foundational role in the jurisprudence of indirect taxation, with courts repeatedly cautioning that mere contractual form or nomenclature cannot immunize a transaction from scrutiny when the economic substance suggests otherwise. In CCE v. Acer India Ltd., the Supreme Court underscored that the artificial division of prices into dutiable and non-dutiable components, without justification, is impermissible. The Court emphasized that the true character of consideration must be evaluated in substance and not in structure. While the Court’s reliance on this principle in Coal India Ltd. is consistent with its past jurisprudence, its broad classification of the services provided by Voltas as having a direct nexus to the value of imported goods—and hence dutiable—raises concerns. If interpreted expansively, this reasoning could enable customs authorities to include a wide range of third-party services within the assessable value, even where such services are tangential to the transaction. The Court’s conclusion that Voltas’ services were merely facilitative of the sale was primarily grounded in Clause 5 of the Purchase Order, which outlined Voltas’ role in

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Digitisation’s Dark Side: Anti-Competitive Practices in India’s Film Exhibition Industry Post-Ufo Movies

Leave a Comment / Competition Law /

[By Pathmanabhan Sooraj and Mahadev Krishnan] The authors are students of  National University of Advanced Legal Studies, Kochi and National Law University, Odisha, respectively Keywords: Digital Cinema Equipment, Virtual Print Fee, Anti-Competitive Practices Introduction Over the years, India’s film exhibition industry has moved from the age of physical film reels to a fully digitised world driven by high-tech Digital Cinema Equipment (“DCE”). Although this change has led to the development of technology and has improved the viewing experiences for audiences, it has also created a new dimension of anti-competitive behaviour. The delivery of films to theatres might be different, but the underlying issues are still the same, which include market foreclosure and limiting access to essential infrastructure. DCE encompasses digital projectors, servers, software, and security systems, which are required to screen films in theatres as well as to ensure quality and standardisation. Digital Cinema Initiatives (“DCI”) sets common technical standards to make DCE systems interoperable and fair for all market players. Recently, in Qube Cinema Technologies Pvt Ltd v. CCI, the National Company Law Appellate Tribunal (“NCLAT”) has clearly held that these standards set by the Competition Commission of India (“CCI”) cannot be tampered with by any private entity to block access or favour affiliates. The entrance of digital infrastructure in the market of film distribution has allowed powerful and dominant players to employ exclusive software controls, firmware locks, and restrictive-lease contracts to bar and distort the competition. What previously used to occur as physical supply rejections or price cartels has now become technological gatekeeping. The authors, through this blog, firstly delve into how cartelisation started to emerge in the film distribution and exhibition market, and secondly how the introduction of Virtual Print Fee (“VPF”) has concentrated the market. Lastly, the authors analyse the impact of the UFO decision, and how DCE, while it was meant to enable access, has, in some cases, created digital bottlenecks that isolated rival players from the market, leading to limited market access and foreclosure. The FICCI Saga: An Impetus for Concert Action in the Film Exhibition & Distribution Market During the period from 2001 onwards, the development of multiplexes revived the cinema theatre market; however, this led to the vertical integration of the film production and distribution sector. In FICCI  Multiplex Association v. United Producers, producers and distribution associations came together to bargain with multiplexes for a larger revenue-sharing model, where exclusionary measures, including collective boycotts by producer associations, led to Multiplexes not being able to screen films for a period until their demands were met. Subsequently, the Director General (“DG”) came to the conclusion that there was an onset of cartelisation to limit the supply of films to multiplex owners in order to gain higher revenue. This was further affirmed by the CCI, which held such conduct to be a cartel and in violation of §3(3) of the Competition Act (“Act”) and had caused Appreciable Adverse Impact on Competition (“AAEC”). Further, the CCI’s latest market study on the film distribution chain  in India also acknowledges the fact that there is a need for self regulation by the film industry itself to prevent such anti-competitive practices. The market study also brings out the fact that an average DCE per screen is about 30 lakhs, therefore, DCE providers enter into a lease with Cinema Theatre Operators (“CTO”) and agreements with the lessee cinemas for advertising and VPF, where they retain a majority of the revenues, which ultimately has resulted in a barrier for small CTOs. The Price of Projection: How Virtual Print Fee Entrenches Entry to the Market With the emergence of DCE, India’s film exhibition industry saw a complete technological transformation. Physical reels were replaced by digital projectors, servers, and software-based delivery systems. While this brought better quality and efficiency, it also created new ways to control the market, most notably through the VPF. VPF is a fee paid by producers or distributors to exhibitors, whether large multiplex chains or standalone theatres, to help recover the cost of DCE. This fee was at the heart of the controversy in Unilazer v. PVR, Inox & Cinepolis. Here, the multiplex giants were demanding payments to film producers to screen movies in their digital systems. Although the charge was initially designed to pay back initial DCE expenses, it quickly turned into a regular fee, which persisted even after the investments had been recouped. Further, it was alleged that the dominant players were exerting uniform VPFs through coordination. This made it harder for producers, especially small or independent ones, to access digital screens without paying a premium. The VPF model had started as a short-term solution with a sunset clause (a specified date or time when the VPF would no longer be charged) to substitute the cost of physical film prints, reduce piracy, and increase quality. However, the revenue sharing mechanism became a burden in the long run, especially for the smaller exhibitors in the relevant market of DCE. This shift from collaboration to control was the worst on the smaller multiplexes. Smaller exhibitors had no capital to invest in the DCE of their own or had any bargaining power to negotiate fair terms, and were left with no choice but to accept the terms of the dominant players. Many were forced to rely on digital infrastructure bundled with restrictive software or firmware locks, making interoperability nearly impossible and switching service providers prohibitively expensive. As a result, smaller exhibitors were embroiled in a technological trap of paying higher, receiving less, and falling behind in competitiveness. What was once a physical barrier to entry has now transformed into a digital bottleneck. Digital Domination: Anti-Competitive Leasing Practices in UFO Moviez Following the FICCI-Multiplex cartel case, the CCI has shifted its attention to a more modern form of anti-competitive behaviour where contractual design and digital infrastructure became a medium for exclusion. In PF Digital Media Services Ltd. & Anr. v. UFO Moviez & Ors., the CCI ordered a detailed probe into how control over DCE is being used to limit

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Substance Over Form Prevails: Supreme Court’s Landmark Ruling in Hyatt International

Leave a Comment / Taxation Law /

[By Runit Rathore and Lakshita Goyal] The authors are students of Hidayatullah National Law University, Raipur On 24th July 2025, the Supreme Court (SC) delivered a landmark judgment in Hyatt International Southwest Asia Ltd v. Additional Director of Income Tax (Hyatt Ruling), wherein it was confronted with a seemingly straightforward question: whether Hyatt International (Hyatt) had a permanent establishment (PE) in India under the provisions of the Indo-UAE Double Tax Avoidance Agreement (DTAA) or not. To set the stage, DTAA is a bilateral treaty that allocates taxing rights between the source country and the country of residence, thereby ensuring that income is not taxed twice. Typically, Article 5 of the DTAA defines the concept of a PE as a “fixed place of business” through which the business of an enterprise is wholly or partly carried on thereby enabling the source country to tax the profits attributable to such PE. Article 7 of the DTAA permits India to tax so much of the profits of the enterprise as are attributable to the PE. Importantly, once a PE is established, the source country is entitled to independently attribute profits to it, irrespective of whether the parent entity is incurring losses. The primary issue in the Hyatt Ruling pertained to the permissibility of India taxing the profits earned by Hyatt from rendering services to Indian hotels. This piece examines the reasoning adopted by the Court and how it gave precedence to substance over form. It also explores the potential influence the judgment may have on the development of Indian tax jurisprudence. FACTUAL BACKGROUND Hyatt was incorporated in Dubai and managed Hyatt brand across the Asia. It entered into long-term Strategic Oversight Services Agreements (SOSAs) with Asian Hotels Limited (AHL), according to which it provided branding, managerial oversight, training, procurement advice and other hotel-management services. Hyatt dispatched executives and staff to India periodically, but it had no office or lease in India. The operations were coordinated remotely from Dubai and the service fees linked to the revenues of AHL were remitted to the UAE. The dispute arose when the Assessing Officer treated Hyatt’s presence as constituting a PE in India. The tax authorities argued that its continuous involvement in, and control over, the hotel operations satisfied the conditions for a PE under the applicable DTAA. On the contrary, Hyatt argued that it neither maintained an exclusive or permanent office in India nor did any of its employees exceed the 183-day threshold under Article 5(2)(i) of the DTAA, as all visits were intermittent in nature. However, both the Tribunal and the Delhi High Court rejected Hyatt’s contentions, leading the matter to be escalated before the Hon’ble SC. SUPREME COURT’S RULING The SC held that the Hyatt had a fixed place PE in India and that its income was therefore taxable in India. The court’s reasoning relied on the twin conditions set out in Article 5(1) of the DTAA: first, whether there was a fixed place of business at Hyatt’s disposal in India and second, whether its business was carried on through that place. Firstly, court ruled that a fixed place need not be exclusively owned or leased by the enterprise. It observed that it is sufficient if a certain space is made available at the disposal of the enterprise, even if such space is shared and no formal lease exists. It found that the Indian hotel premises, where Hyatt’s personnel were continuously present and performed core functions, were effectively in control of it. In practical terms, it did not have its own office but the hotel premises functioned as its de-facto office for core management tasks. The second condition was met by looking at its aggregated activities. The court observed that Hyatt’s executives made frequent and substantial visits under the SOSAs. Although no single employee exceeded the 183-day threshold under Article 5(2)(i), the combined presence of multiple personnel over the duration of the contract demonstrated a continuous business presence. The court held that the relevant consideration is continuity of business presence in aggregate, rather than the individual duration of stay of each employee. These facts satisfied the classic PE tests of stability, productivity and independence. The court carefully distinguished the present case from the Assistant Director of Income Tax v. E-Funds IT Solutions Inc. (E-Funds), where no PE was found. In this case, the SC held that the operation of Indian subsidiary was purely auxiliary in nature and conducted at arm’s length and thus did not constitute the foreign parent carrying on business through that location. In the present case, the court noted that E-Funds is factually different, the foreign parent did not perform any core business in India; here, the hotel itself was the situs of Hyatt’s primary business activities. Thus, what mattered was that in present case, the foreign company’s main work (hotel management) was literally going on in India, whereas in E-Funds it was only simple support work. The court emphasized that the key distinction lay in the nature of the functions performed, Hyatt involved the conduct of core operational activities in India, while E-Funds involved only back-end, support functions. SUBSTANCE OVER FORM: A SHIFT IN JUDICIAL APPROACH One of the most noteworthy aspects of the Hyatt Ruling is the SC’s clear emphasis on economic substance over legal form. It rejected the argument that the absence of a formal office or lease in India would shield Hyatt from taxation.It held that the functional reality of its business presence was determinative. The court emphasized on the reality of who did what, where and how often within Hyatt’s business model. As observed, the SC undertook a detailed factual inquiry by examining travel records, revenue sharing provisions and the scope of contractual duties to determine the degree of control exercised by Hyatt over hotel operations. The judgment reflects a clear shift away from a purely formalistic approach thus favoring a more substantive and fact-driven analysis. The court held that the disposal test for determining a fixed place PE must be used with flexibility and

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Beyond the Fine: The Hidden Cost of Delayed Sebi Penalty Payment

Leave a Comment / Capital Markets and Securities Law, Employment Law, Technology Law /

[By Qazi Ahmad Masood] The author is a student of Rajiv Gandhi National University of Law, Patiala Introduction To regulate and supervise the Indian securities markets, the Securities and Exchange Board of India (SEBI) is imperative.  SEBI has a sound regulatory framework that encourages openness, equity, and investor confidence. It was established to protect investors’ interests and ensure the orderly development of the capital markets. One of the main tools SEBI has to maintain market integrity is imposing fines on individuals and organizations that are in contravention of securities law, for example, insider trading or non-compliance with disclosure obligations. Besides encouraging compliance and safeguarding investors’ as well as the overall financial system’s interests, penalties serve as a necessary deterrent to aberration. But the question of interest—more particularly, when interest on unpaid SEBI penalties begins to accrue—is an important and widely debated element of these fines.  This issue impacts the effectiveness of SEBI’s enforcement mechanism and has significant monetary implications for defaulters. This issue has now been settled by the Supreme Court of India in a landmark judgement  Jaykishor Chaturvedi & Ors. v. SEBI, which shed light on the timing and calculation of interest on delinquent fines under the SEBI Act. Apart from settling long-pending legal questions, this ruling highlights how important it is to comply immediately with SEBI’s order of adjudication. The author in this article will discuss the nuances of this judgment and its implications for businesses, investors, and market participants. Overview of SEBI’s Penalty Framework and Recovery Mechanism SEBI can under the Securities and Exchange Board of India (SEBI) Act impose fines on individuals and entities who violate securities laws. The fines are an important deterrent to illegal activity such as insider trading, fraud, not disclosing information, and other regulatory breaches. Chapter VIA of the SEBI Act, consisting of Sections 15A to 15HB, is substantially prescribing the legal framework governing these penalties.  By stipulating various types of violations and demarcating the corresponding penalties, these sections ensure adherence to regulatory norms and safeguard the interests of investors.  These penalties are leveled after an adjudication process overseen by SEBI’s Adjudicating Officer. The Adjudicating Officer issues an adjudication order that specifies the penalty charge to be paid after investigations and a determination that there has been a violation.  Notably, this order also specifies a payment date, which is usually 45 days from the date of purchase. Transparency and fairness in enforcement are ensured by providing the accused offender a clear and fair opportunity to pay the penalty in this specified period.  SEBI can initiate collection procedures under Section 28A of the SEBI Act, in the event that the penalty is not paid within the specified time. This provision empowers the SEBI Recovery Officer to recover the amount of unpaid penalty in the same manner in which land revenue arrears can be recovered. The Recovery Officer may attach the bank accounts, demat accounts, and immovable as well as movable properties of the defaulter for recovery. In addition, relevant provisions of the Income Tax Act of 1961, like those that refer to interest on delayed payment and collection procedures, are incorporated into Section 28A.  The deterrent and penalizing impact of regulatory sanctions is augmented by this incorporation, providing SEBI a complete and effective mechanism to recover fines along with interest. Impact of Timing of Interest Accrual on Legal Certainty and SEBI Penalty Enforcement  The exact moment when interest on delayed payment of the fine begins to accrue is a very important legal issue in relation to SEBI penalties, and there are two contrasting perspectives. Impact of Interest Accrual Timing on SEBI Penalty Enforcement and Legal Certainty One perspective believes that interest begins as soon as the payment due date for the penalty has expired without making the payment, normally after 45 days from the date of order. This is the reason interest begins when the payment date specified in the adjudication order itself lapses. In accordance with the other perspective, interest must only be charged from the date on which SEBI, by its Recovery Officer, issues a formal demand notice under Section 28A.  Such a demand notice can be issued much after the adjudication order. For defaulters, this is important as it makes a considerable difference in finances; the longer period of interest accrual, the higher the overall debt.  In addition, since early interest accrual encourages compliance early on, the timing affects the regulatory effectiveness and deterrent capability of SEBI’s penalty system. Finally, it impacts adjudication orders’ finality and legal certainty; if interest begins only after a subsequent demand notice, it may create uncertainty and extend penalty recovery disputes. The Supreme Court has discussed and interpreted this complex issue, providing much-needed guidance on when interest should accrue on SEBI penalties.   The character of compensation and the regime of enforcement Careful examination of the law, specifically the incorporation of Income Tax Act provisions into the SEBI Act, was involved in the Supreme Court’s deliberation over interest accrual on SEBI penalties. The Court drew a distinction between “legislation by reference,” which simply refers to another enactment without adopting its provisions in full, and “legislation by incorporation,” where the provisions of one statute apply forthwith with the necessary modifications. Compensatory Nature and Enforcement Framework It clarified that collection of SEBI penalties is within the purview of Sections 220 to 227 of the Income Tax Act, which are absorbed in the SEBI Act under Section 28A. Section 220 of the Income Tax Act, which mandates payments within 30 days following a demand notice and provides for interest on late payments at the rate of 1% monthly (12% a year), was the key to the Court’s argument. Most importantly, the Court held that SEBI’s own adjudication order was a valid and enforceable “notice of demand.”  That means that the order of adjudication, being the statutory demand for payment, specifies the amount of penalty and due date (usually 45 days).  Consequently, the running of interest can be triggered without the SEBI Recovery Officer sending out a new demand

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Hidden Charges in Delivery Apps: Legal or Deceptive?

Leave a Comment / Contemporary Issues, Foreign Direct Investment Regulations /

[By Souvick Saha]  The student is a student of National Law Institute Odisha 1.Introduction When you order a meal through an online delivery application, you may notice that the final amount you pay is often more than the listed price of the items. A closer look at the bill reveals the layers that compose this sum, other than the price of the meal: i) delivery fees and platform charges, collected by the app itself, ii) packaging costs imposed by the restaurant and iii) the ever-present GST, collected by the restaurant on behalf of the government. In essence, the customer is paying for the costs of the meal, the delivery of the meal, and the convenience of ordering a meal through the platform. However, there is another thing that the customer is made to pay for – the packaging of the meal, which is somewhat perplexing. This is just one example of drip pricing in the quick commerce sector, which has seen rapid growth through the entrance of the daily deliverables market. Besides the restaurants, the delivery platforms are also responsible for various additional charges added to the final price of the daily deliverables, which increases the cost of these deliverables to a much higher rate than the maximum retail price (MRP). 2.Legal Framework Restaurants are charging a fee on the packaging of the deliverable food item to the consumer, in addition to the full price of the items. However, the seller is responsible for the expenses incurred in or incidental to the preparation of the goods into a deliverable state, unless the buyer and seller have agreed otherwise, according to Section 36(5) of the Sale of Goods Act 1930 (Sale of Goods Act). Yet most restaurants get away with putting these charges on the consumer through the employment of dark patterns on the online delivery platforms. It is clear that the provision is only applicable to sellers who deal in goods. Hence, it is essential first to establish whether the food items offered by restaurants on online platforms qualify as a ‘good’ under the Act. Additionally, it is important to investigate whether hiding this charge is a dark pattern, and if so, who bears responsibility for its use – the restaurants themselves or the intermediary platforms. 3.Is food a good? Consumers would place reliance on the Sale of Goods Act to hold sellers liable for the cost of preparing goods for delivery. However, a possible argument is that the restaurants do not sell goods but offer a service for transactions on online platforms. Goods include every kind of movable property in the Sale of Goods Act, while food is explicitly included in the expansive definition provided in the Consumer Protection Act 2019 (Consumer Protection Act). Service has also been defined in inclusive terms as a service of any description which is made available to potential users. Restaurants provide dining as a service, which includes elements such as preparation, ambience, hygiene, and waiting on customers. The transaction is composite and contains elements of both goods and services. However, the serviceable aspects are generally absent in an online delivery since the food items are merely bought for consumption, and the dining service provided by restaurants is not available in this form of transaction. The element of service is minimal as food delivery is analogous to takeaway and is primarily a sale of goods. 4.Are the hidden charges a dark pattern? Dark Patterns are deceptive design practices in user interface or user experience that mislead or trick users into actions they did not intend, by subverting or impairing consumer autonomy, decision-making, or choice, amounting to misleading advertisement, unfair trade practice, or violation of consumer rights. Drip Pricing has been recognised as a dark pattern in the Guidelines for Prevention and Regulation of Dark Patterns 2023 (Guidelines). These guidelines are applicable to both the platforms and the sellers. It is considered ‘drip pricing’ when the elements of the full price are not revealed upfront or are revealed surreptitiously within the user experience. Most online delivery companies employ drip pricing to showcase the items in their application. After selecting an item, these applications show a different and often larger final price for the selected article. This is because the application adds various elements such as platform fees, packaging fees, processing fees, handling fees, delivery fees and taxes to the base price of the selected item, and these charges remain hidden in the final price. The breakdown of the full price is only revealed after the amount to be paid button is expanded. Since these guidelines are applicable to sellers and platforms, both the restaurants and delivery applications shall be liable for violations of these guidelines. 5.What do the courts say? Restaurants cannot use any unfair trade practices to sell their goods or services on an online platform or elsewhere. An unfair trade practice is defined as a trade practice that adopts any unfair method or unfair or deceptive practice, including the adoption of such practices in the provision of services. Moreover, those contracts between a service provider and a consumer having such terms which cause a significant change in the rights of such consumer are also barred as unfair contracts. Any contract that imposes any unreasonable charge, obligation, or condition on the consumer that puts them at a disadvantage would fall under the ambit of an unfair contract in the Consumer Protection Act. Consumer courts have consistently held that sellers on online platforms cannot charge for the packaging of food articles. The Government has also notified that the price of the product or the service at restaurants must include all operating costs involved in the making and delivery of the product or service. However, this was challenged in a recent case where the Delhi High Court affirmed the notification as constitutionally valid. It was held that the collection of mandatory service charges constitutes an unfair trade practice under the Consumer Protection Act. Likewise, packaging charges are also added by default in addition to the

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Reconciling the Overlap: Sarfaesi’s Sections 13(4) & 13(8) v. Ibc’s Moratorium Under Section 14

Leave a Comment / Banking Law /

[By Nimish Maheshwari] The author is a student of National Law Institute Jodhpur 1.Introduction One of the salient aspects that makes Insolvency and Bankruptcy Code (‘IBC’), 2016 stand out from the other debt recovery mechanisms is its overriding effect over any other law where there is overlap. For instance, the IBC takes precedence over The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (‘SARFAESI’). Consequently, where there are proceedings under the SARFAESI Act and a Corporate Insolvency Resolution Process (‘CIRP’) has commenced under Sections 7, 9, or 10 of the IBC, imposition of the moratorium would lead to suspension of proceedings under SARFAESI. In Rakesh Kumar Gupta v. Mahesh Bansal the court relied on Section 238 of IBC to hold that the pendency of proceedings under the Sarfaesi Act would not obstruct the courts from allowing an application under Section 7 of the IBC. This position has also been consistently upheld in relation to Section 13(4) of the SARFAESI also. It has been recognised that any action to foreclose, recover or enforce a security interest created by the corporate debtor in respect of its property including any action under the SARFAESI Act is prohibited due to the overriding power of Section 14(1)(c) of IBC. For example, even where a bank, in exercise of its power under Section 13(4) of the SARFAESI Act, read with Rule 8 of the Security Interest (Enforcement) Rules, 2002 (‘Rules’) has taken symbolic possession of secured assets mortgaged exclusively with it and proceeded to auction those assets and receive bid amounts, the commencement of CIRP and the resulting moratorium would lead to halting of such SARFAESI proceedings. In Indian Overseas Bank v. M/S R.C.M Infrastructure Ltd. and Anr., (‘Indian Overseas’) the Supreme Court (‘SC’) reaffirmed the settled legal position that once the CIRP is initiated under IBC, any parallel proceedings under the SARFAESI Act must be halted. In this case, a sale certificate has already been issued, and 25% of the bid amount has been paid by the auction purchaser under Section 13(8) of the SARFAESI Act. The court held that the moratorium imposed under Section 14 of the IBC would override such enforcement actions, thereby safeguarding the corporate debtor’s assets for the benefit of all creditors. However, this clarity has recently been disrupted by recent developments of the National Company Law Appellate Tribunal (‘NCLAT’) in Nagpur Nagrik Sahakari Bank Ltd. and Ors. v. Mohanlal Ayyapan Pillai and Ors (‘Nagpur Nagrik Sahakari Bank’) & Pratibha industries v. Yes Bank Ltd. and Anr. (‘Pratibha Industries’). These rulings have carved out exceptions to the SC’s interpretation, introducing a degree of uncertainty into an otherwise well-settled area of law. This article examines the conflicting judicial approaches to the interplay between Section 13(4) and 13(8) of the SARFAESI Act and Section 14 of the IBC. Part II explores what is the question of law that has arisen because of recent cases and what is the core contention. Part III is discussing the conflicting interpretations that have been employed by different cases and how that has led to an interpretative conundrum. It explores the underlying legal rationale for each position and identifies the specific points of divergence. Part IV concludes by providing with recommendation and way forward. Question of law – The Core Contention A significant legal conundrum has emerged at the intersection of the SARFAESI Act and IBC, particularly in cases where proceedings under both statutes appear to overlap. Recently, NCLAT have interpreted Section 13(8) of the SARFAESI Act, to conclude that an auction conducted by a bank under the SARFAESI cannot be set aside if the sale notice had been issued prior to commencement of the CIRP. It held that the relationship between the parties i.e., the mortgagor-mortgagee, for redemption, exists only till the date of issuance of notice of sale of property. The tribunal, relying on Celir LLP v Bafna Motors (Mumbai) Pvt. Ltd (‘Celir LLP’) decided that even if insolvency proceedings are initiated under the IBC and a moratorium is imposed, it would neither revive the mortgagor’s extinguished rights nor would the property form part of the corporate debtor’s asset pool. In Celir LLP, the SC undertook a detailed analysis of the pre- and post-amendment versions of Section 13(8) and concluded that after the 2016 amendment, once the auction notice in accordance with Rule 8(6) and 9(1) of the Security Interest (Enforcement) Rules, 2002, is published and dues remain unpaid, the borrower’s redemption rights are extinguished. On this basis court decided that the sale of an asset even if after the initiation of CIRP is not in violation of Section 14(1)(c) of IBC because there was no relationship between the mortgagor and mortgagee. And no right of redemption exists between them because notice under Section 13(8) was issued much prior to the commencement of CIRP. Court emphasised on the sanctity of public auctions, underscoring the judicial responsibility to protect such processes from unnecessary interference. It cautioned that any other interpretation of Section 13(8) would allow mischievous borrowers to disrupt the auction process. There would be multiple redemption offers from borrowers even after public auction notices, potentially frustrating the auction process and discouraging public participation, thereby defeating the purpose of the Act. In the Pratibha Industries, and the recent Nagpur Nagrik Sahakari Bank case, the tribunal, held that if the property is sold in accordance with Section 13(8), the borrower’s right to redeem the property is extinguished. In both decisions, the court relied heavily on the ratio of Celir, wherein the central question was “what is the impact of the amended Section 13(8) of the Act on the borrower’s right of redemption in an auction conducted under the Act.” Now the core issue that arises is that currently two interpretations are there on the same point of law. Putting simply, the question is that if an auction is conducted under Section 13(8) of SARFAESI & partial bid money has been received. But before the whole money is received, the insolvency proceedings have

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