The Securities and Exchange Board of India (SEBI), vide an adjudication order (Order) dated 21 February 2025 penalised Axis Securities Limited (Axis Securities) for several non-compliances with various regulatory circulars applicable to them.  Brief Background and Facts: The SEBI inspection revealed several non-compliances related to enhanced supervision reporting, stock reconciliation, client fund settlements, passing on exchange penalties, improper handling of client securities, inadequate grievance redressal, discrepancies in PEP reporting, and excessive exposure in margin trading. Alleged Violations: The Show Cause Notice (“SCN”) outlined various violations thereafter confirmed in the Order. These alleged violations were: 1.    Discrepancies in Enhanced Supervision Reporting: Axis Securities had allegedly reported incorrect information in their enhanced supervision reports to the exchanges. Specifically: ⦁    An amount of ₹50 Lakhs was reported as collateral, when it was actually a deposit towards Base Minimum Capital (BMC) in NCDEX. ⦁    A Bank Guarantee of ₹1 Crore was reportedly double-reported in October 2022. 2.    Discrepancies in Stock Reconciliation: Reconciliation of weekly holding statements (WHS) submitted by Axis Securities to the Stock Exchanges with the actual stock lying in DP accounts as on 30 November 2022, revealed mismatches: ⦁    Stocks (ISIN – 13, Quantity – 11,174, Value – ₹0.37 Crores) were reported in the WHS but were not found in DP holdings. ⦁    Stocks (ISIN – 122, Quantity – 3,38,388, Value – ₹3.09 Crores) were not reported in the WHS but were present in DP holdings. ⦁    Investment of Axis Securities in Max Life Insurance Company Ltd. (Quantity – 1,91,88,128, Value – ₹242.21 Crores) in its proprietary account was not reported in the WHS. 3.    Improper Client Fund Settlement: Axis Securities had failed to settle clients’ funds and securities on a monthly/quarterly basis according to the preferences obtained from clients. Furthermore, the retention statements were not sent to the clients along with the statement of accounts. 4.    Passing on Exchange Penalties to Clients: Axis Securities purportedly passed on penalties imposed by Stock Exchanges for short collection of upfront/non-upfront margin to its clients. 5.    Transfer of Securities to "Client Unpaid Securities Account": Axis Securities is alleged to have transferred securities of clients having a credit balance of funds with the Axis Securities to a "client unpaid securities account,". 6.    Inadequate Grievance Redressal: Axis Securities allegedly failed to properly redress the complaints and grievances of its clients, that shows inadequate customer service and grievance resolution mechanisms. 7.    Discrepancies in PEP Reporting: The count of Politically Exposed Persons (PEP) reported under the Risk Based Supervision data submitted by Axis Securities to the Stock Exchange did not align with the clients marked as PEP in the Unique Client Code (UCC), indicating inaccurate reporting of PEP clients under Risk Based Supervision data. 8.    Excessive Exposure in Margin Trading: The exposure of Axis Securities towards Margin Trading funding exceeded the allowable threshold. Additional exposure of ₹17.40 Crores was given to clients in six instances. Moreover, there was a shortfall in the margin collected from one client. Mitigating Factors Considered: The Adjudicating Officer considered the following mitigating factors for computing the quantum of penalty: ⦁    Axis Securities engaged Shah Kapadia & Associates, an external audit firm, for verification of data before reporting of WHS to the exchanges and to review and verify the process of settlement of client funds. ⦁    Axis Securities took corrective action and immediately started including the investment in Max Life Insurance Company Limited in its WHS reporting. ⦁    NSE had already penalized Axis Securities for the discrepancy in WHS reporting. SEBI's Decision: After considering the inspection report, the SCN, and Axis Securities' reply, SEBI passed an order finding that Axis Securities have violated various circulars of SEBI, MCX, NCDEX, etc. Accordingly, SEBI imposed a penalty of ₹10,00,000/- (Rupees Ten Lakhs Only) on Axis Securities Limited under Section 15HB of the SEBI Act.  This order against Axis Securities underscores SEBI's focus on maintaining the integrity of the securities market and protecting investors' interests. By addressing discrepancies in reporting, client fund handling, and adherence to margin requirements, SEBI aims to ensure that stock brokers uphold the highest standards of regulatory compliance and prioritize investor protection.

On 25 February 2025, the Delhi High Court ruled in favour of Lifestyle Equities CV & Anr. in their trademark infringement suit, Lifestyle Equities CV & ANR.  v. Amazon Technologies, INC. & ORS. The Court held that Amazon’s private label ‘Symbol’ used a horse-rider logo deceptively similar to the Beverly Hills Polo Club (BHPC) mark, leading to consumer confusion and brand dilution. Facts of the case The Plaintiffs, owners of the BHPC trademark, alleged that Amazon Technologies (Defendant No.1) was selling apparel under its private label Symbol, using a horse-rider logo nearly identical to their mark. These products were distributed by Cloudtail (Defendant No.2) and sold on Amazon India (Defendant No.3). The Plaintiffs discovered the infringement in May 2020, but the Defendants had been selling the infringing products since 2015. The suit sought a permanent injunction and damages, citing economic losses, brand dilution, and unfair competition. Contentions of the Parties Plaintiffs' Arguments The Plaintiffs asserted that the BHPC mark is well-known, and its horse-rider logo enjoys global recognition. They also emphasized that there is a striking similarity between the Symbol logo and BHPC, which was a deliberate attempt to mislead consumers. Defendants’ Arguments Cloudtail admitted liability and agreed to a permanent injunction and damages of ₹4,78,484. However, it argued that Amazon Technologies had no direct role in the infringement. Amazon Technologies did not appear and was proceeded ex parte, effectively conceding the claims. Amazon Seller Services (Defendant No.3) contended that it was merely an intermediary and had removed all listings containing the infringing mark. Findings of the Court The Court applied the ‘Triple Identity Test’ to assess trademark infringement, concluding that the marks, goods, and trade channels were identical, thereby establishing a clear case of infringement. It held that Amazon Technologies, as the owner of the Symbol brand, was responsible for the infringing conduct of Cloudtail on Amazon India and could not disclaim liability. The Court noted that Amazon Technologies did not appear before the Hon’ble Court despite having knowledge of the suit. The Court observed that this approach indicated an intent to withhold crucial information rather than participate fully in the proceedings. The Court observed that Amazon Technologies' significant presence in the e-commerce sector and noted that its market position allows it to influence pricing and competition. It further observed that the substantial discounts applied to products featuring a similar mark or logo could affect the BHPC brand’s positioning. The Court also took into account that the infringing products were being sold at just 10% of BHPC’s retail price, which could have implications for the brand’s value and consumer perception. Given these factors, the Court imposed damages on Amazon Technologies to the tune of $38.78 million.  MHCO Comments This judgment marks a significant milestone in e-commerce trademark enforcement, reaffirming that brand owners cannot evade liability by structuring their business through licensing arrangements. It provides much-needed clarity on the multi-faceted roles of e-commerce platforms, which often operate as intermediaries, retailers, and brand owners simultaneously. By addressing how these overlapping roles are used to shift responsibility, the ruling strengthens accountability in trademark infringement cases, ensuring that e-commerce platforms cannot use complex business models to circumvent trademark infringement.

The Delhi High Court’s recent ruling in Rakesh Kumar vs. Central Public Information Officer & Anr. reaffirms the privacy rights of individuals by restricting the disclosure of passport details to third parties. This case highlights the limitations of the Right to Information (RTI) Act, 2005, in relation to personal data and strengthens legal safeguards against unauthorized access to sensitive information. Background of the Case The case originated when Rakesh Kumar filed an RTI application requesting passport details of certain individuals from the Regional Passport Office, Mumbai. The authorities denied the request, citing Section 8(1)(j) of the RTI Act, which exempts personal information from disclosure. Dissatisfied with this response, Kumar pursued legal action, arguing that the information should be made available in the interest of transparency. Key Legal Issues The case revolved around two primary questions: Whether passport details qualify as “personal information” under the RTI Act and can be withheld from disclosure. Whether the government is obligated to retain and provide historical passport records beyond a specified period.   Privacy Protection Under the RTI Act The RTI Act, 2005, allows citizens to request information from public authorities, promoting transparency and accountability. However, Section 8(1)(j) protects personal information from disclosure if it has no relation to public activity or interest. Courts have consistently ruled that passport details fall under this exemption, as sharing such information could lead to identity theft, fraud, or misuse. In Union of India vs. R. Jayachandran (2014), the Delhi High Court held that passport numbers and related details cannot be disclosed, as they contain sensitive personal data. Similar rulings in Ministry of External Affairs vs. Asmita Sachin Waman (2020) and Ministry of External Affairs vs. Soma Pandey (2020) reaffirmed that such information is protected under privacy laws. Court’s Ruling and Observations The Delhi High Court upheld the decision to deny access to the requested passport data, emphasizing the following points: Passport details are strictly personal and do not serve a public interest when disclosed. Releasing such data can lead to security risks and potential misuse by unauthorized individuals. Government agencies are not required to retain old passport records indefinitely, as per official data retention policies. The Court also noted that records from 1984-1990 had been destroyed in accordance with government regulations, making it impossible to provide the requested information. Implications of the Judgment This ruling has significant implications for data privacy and governance, reinforcing the principle that personal identification details should remain confidential. Key takeaways include: The judgment upholds the right to privacy, preventing unauthorized access to personal records. Public authorities are not obligated to share personal information unless there is a compelling public interest. Authorities are not required to store passport records indefinitely, ensuring efficient data management. This ruling sets a benchmark for similar cases involving personal data protection under the RTI Act. MHCO Comment The Delhi High Court’s decision reinforces the privacy and protection of passport data, ensuring that such information cannot be disclosed to third parties under the RTI Act. By upholding Section 8(1)(j), the ruling safeguards individuals from potential misuse of their personal details. Additionally, the Court recognized the government’s data retention policies, confirming that old records may not always be available. This judgment serves as a significant precedent for balancing transparency with privacy rights, ensuring that personal identity remains secure and protected. This legal protection upholds individual privacy rights while ensuring government agencies comply with data protection laws.

Background: The Hon’ble High Court of Bombay in the matter Wonderchef Home Appliances Pvt. Ltd. v. Shree Swaminarayan Pty Ltd. held that a gag order under Section 9 of the Arbitration and Conciliation Act, 1996 (“the Act”) can be granted, pending resolution of disputes between the parties, if the contractual obligation between the parties stipulates to protect the party’s reputation and not otherwise. Facts: The Respondent is a distributor of the Petitioner in Australia. The Respondent has been sending out e-mails to various parties, including other distributors of the Petitioner in other jurisdictions and various statutory addressees such as Government Officers and prospective financial investors, complaining about the Petitioner's product having demonstrated defects, the poor treatment of the Respondent by the Petitioner, and the manner in which the relationship is being handled. Accordingly, in light of the Distribution Agreement dated 26 December 2017 (“Agreement”) executed between the Petitioner and Respondent, the Petitioner sought the present petition to injunct the Respondent from making disparaging statements or taking any actions that may harm or damage, malign or disparage the Petitioner's reputation and its brand name “Wonderchef”. Issue for consideration: Whether a gag order to injunct commercial speech can be passed under the ambit of Section 9 of the Act. Held: The Hon’ble High Court of Bombay stated that the scope of powers of this Hon’ble Court under Section 9 of the Act is essentially to make interim measures of protection with respect to the preservation of the subject matter of the agreement between the parties, which is subject to resolution by arbitration. To be able to seek a gag order, the Petitioner would need to show that the remarks of the Respondent are proscribed by the agreement that contains the arbitration agreement and that, pending resolution of disputes, such remarks cannot be made. The Hon’ble Court, considered clause 12.2(c) of the Agreement, which required the distributor to conduct business in a manner that reflected favorably on the Petitioner and its products. Given the contractual obligation and the potential harm alleged by the Petitioner, the Hon'ble Court granted an interim injunction against the Respondent for 90 days following clause 12.2(c) of the Agreement, restraining them from making statements that could harm the Petitioner’s reputation and also stated that the Respondent shall not vitiate the atmosphere for the arbitration by sending out e-mails attacking the Petitioner’s reputation. MHCO Comment: The Hon’ble High Court of Bombay clarified that a gag order under Section 9 of the Act can only be granted if there is a contractual obligation to protect a party’s reputation. While the Hon’ble Court rejected the Petitioner’s claim of confidentiality breach, it recognized the contractual duty under clause 12.2(c) of the Agreement to maintain the Petitioner’s reputation. We believe that this judgment is a welcome step by the Hon’ble Court to protect a Petitioner’s reputation, by injuncting the Respondent from spreading derogatory information about the Petitioner, pending arbitration proceedings.