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RA ShahManaging Partner

Niranjan parekhSenior Partner

Bhushan ShahPartner

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Shreya DalalAssociate Partner

Meeta kadhiAssociate Partner

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Sanjana SaddyOf-Counsel

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News and Articles
News & Articles
Corporate Update: Penalty for Not Appointing a Whole- Time Company Secretary After Crossing the Threshold
Background:
The Registrar of Companies, NCT of Delhi & Haryana, acting as the Adjudicating Officer, has issued a penalty order under Section 203 of the Companies Act, 2013 (“the Act”) against United Technologies Corporation India Private Limited ("the Company") and its officers. This action follows an application by the Company for adjudication of penalties related to a default in appointing a whole-time Company Secretary as required by Section 203 of the Act.
Facts of the Case:
The Company's paid-up capital increased to INR 10,56,99,990 effective 28 July 2022, triggering the requirement to appoint a whole-time Company Secretary under Section 203(1) of the Companies Act, 2013, read with Rule 8A of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. However, the Company appointed a whole-time Company Secretary only on October 30, 2023, resulting in a default period of 458 days (from July 28, 2022, to October 29, 2023). The delay being attributed to a lack of suitable candidates for the position. In view of the same the Company filed an application for adjudication before the Registrar of Companies, NCT of Delhi and Haryana.
Relevant Provisions:
Section 203 of the Companies Act, 2013: Deals with the appointment of Key Managerial Personnel (KMP), including the requirement for certain classes of companies to have a whole-time Company Secretary.
Rule 8A of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014: Specifies that every private company with a paid-up share capital of ten crore rupees or more shall have a whole-time company secretary.
Section 203(5) of the Companies Act, 2013: Prescribes penalties for non-compliance with Section 203, including a penalty on the company and every director and KMP in default.
Adjudication of Penalty:
The Adjudicating Officer, upon due consideration, determined that the paid-up share capital of the Company exceeded ₹10 crores with effect from 28 July 2022. Consequently, the Company became statutorily obligated to appoint a Whole-Time Company Secretary in accordance with the provisions of Section 203 of the Act.
Furthermore, the Adjudicating Officer held that the Company remained in continuous default for a period of 458 days for failing to comply with the aforesaid statutory requirement. In view of the said non-compliance, penalties were imposed upon the Company as well as its officers in default, pursuant to the provisions of Section 203(5) of the Act.
Penalties Imposed:
Party
Period of Default
Penalty (INR)
United Technologies Corporation India Private Limited
458 days
5,00,000
Ashmita Sethi (Whole Time Director)
458 days
5,00,000
Rajiv Thapar (Director)
458 days
5,00,000
Paruthippara Ravindran Rema (Director)
396 days
4,45,000
Kurt Andrew Percy (Director)
458 days
5,00,000
Surinder Singh Kainth (Director)
458 days
5,00,000
Sandeep Sharma (Director)
394 days
4,43,000
Amit Pathak (Director)
110 days
1,59,000
Pankaj Anand (Director)
343 days
3,92,000
Divyesh Jamnadas Dalal (Director)
201 days
2,50,000
MHCO Comment:
This penalty order highlights the importance of timely compliance with the provisions of the Companies Act, 2013, regarding the appointment of key managerial personnel. Companies must ensure adherence to these requirements to avoid penalties and maintain regulatory compliance. Such penalties are extremely important to ensure corporate governance and to ensure due compliance with the provisions of the companies act and its accompanying rules.
This article was released on 7 March 2025.
The views expressed in this update are personal and should not be construed as any legal advice. Please contact us for any assistance.
News & Articles
IPR Update: Delhi High Court Holds Amazon Technologies Liable for Trademark Infringement
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.
This article was released on 28 February 2025.
The views expressed in this update are personal and should not be construed as any legal advice. Please contact us for any assistance.
News & Articles
RERA UPDATE | MAHA RERA TRIBUNAL ORDERS FULL REFUND, INCLUDING OTHER COSTS
In a significant ruling, the Maharashtra Real Estate Appellate Tribunal (“Tribunal”) has upheld the rights of homebuyers under Section 18 of the Real Estate (Regulation and Development) Act, 2016 (“RERA”), directing the promoter of the Ekta Parksville project in Vasai to refund the entire amount paid by the complainants, including stamp duty, registration fees, MVAT, pre- EMI payments, and loan settlement costs. The appeal was filed against the Maharashtra Real Estate Regulatory Authority (“MahaRERA”) order seeking a full refund due to delays in possession beyond the agreed timeline.
Brief Facts:
The complainants booked a flat in the Promoter's Project, Ekta Parksville, for ₹32,17,400/- and executed an Agreement for Sale on 2 December 2014, with possession promised by December 2016. The complainants made payments amounting to ₹11,00,298, while HDFC disbursed ₹23,80,876 as a housing loan directly to the promoter. However, possession was delayed beyond the agreed timeline, prompting the complainants to file a refund claim before MahaRERA.
MahaRERA directed the promoter to refund the paid amount with interest from 1 January 2017, but the complainants appealed the decision, seeking a full refund, including stamp duty, registration fees, MVAT, brokerage, and pre-EMIs paid to HDFC.
Tribunal's Findings:
Absolute Right to Refund Under Section 18: The Tribunal held that homebuyers have an unconditional right to withdraw if possession is delayed. The promoter's justifications, including regulatory delays and the pandemic, were rejected.
Interest from Payment Dates: Interest at 2% above SBI's highest Marginal Cost of Funds based Lending Rate (“MCLR”) was awarded from the respective payment dates until full realization, modifying MahaRERA's previous order.
Refund of Additional Payments: The Tribunal directed a refund of stamp duty, registration fees, MVAT, brokerage, and pre-EMIs paid to HDFC, rejecting the argument that statutory charges paid to third parties are non-refundable.
Penalty for Non-Compliance: The promoter must refund the amount within 41 days or face additional interest from 1 April 2025. The complainants were also awarded ₹15,000 as costs.
MHCO Comment:
This ruling strengthens homebuyer protections under RERA, reinforcing their absolute right to a refund with compensatory interest. The Tribunal's decision to expand the scope of refundable amounts underscores that delays will not go unpunished. This judgment is a strong deterrent against developers failing to meet contractual commitments. However, the judgment has come out after 8 years under appeal. Justice delayed is justice denied. Accordingly, it is important for the tribunals implement these orders and use this caselaw in a time bound manner.
This article was released on 21 February 2025.
The views expressed in this update are personal and should not be construed as any legal advice. Please contact us for any assistance.
News & Articles
SEBI UPDATE | SEBI BANS FAMOUS FINFLUENCER FOR BEING UNREGISTERED INVESTMENT ADVISOR
The Securities and Exchange Board of India (SEBI), vide an ex-parte interim order (Order) dated 6 February 2025, has barred Ms Asmita Patel, a prominent financial influencers (FinFluencer) on Instagram and YouTube, along with her company, Asmita Patel Global School of Trading Private Limited (AGSTPL), and four other entities, from participating in the securities market. This order stems from complaints by 42 individuals who alleged that Ms Asmita Patel and AGSTPL misled them into investing in overpriced educational courses that falsely guaranteed financial success.
Brief Background and Facts:
Business Activity: AGSTPL provided stock buy/sell recommendations through Telegram channels, Zoom meetings, and emails in addition to offering educational courses.
Courses Offered: AGSTPL’s course offerings included Masters in Price Action Trading (MPAT), Let’s Make India Trade (LMIT), Options Multiplier (OM), Trend Following Income System (TFIS), The Freedom Project (TFP), OneLife, and Unleash The Trader Within (UTW).
Complainant Allegations: The 42 complainants had enrolled in AGSTPL courses, including MPAT, for which they were charged up to INR 8,26,000/. As per the Order Asmita Patel allegedly used Telegram channels and Zoom meetings to disseminate trade recommendations and course details, urging complainants to liquidate existing investments and borrow funds to cover course fees. Patel, who referred to herself as the ‘She Wolf of the stock market’ and the ‘options queen,’ claimed to have mentored over hundred thousand students/investors/participants worldwide and managed assets of INR 1.4/2.83 billions using her proprietary system; however, investigations revealed that she was managing assets of only INR 152.7 millions. The Noticees received a total sum of approximately INR 1.04 billion as fees for unregistered investment advisory services.
SEBI’s Ex-Parte Decision
The Adjudicating Officer (AO) of SEBI determined that Ms Patel, along with AGSTPL and other entities, had misled investors by inducing them to exit investments like mutual funds and invest in the options market with promises of assured returns upon purchasing their courses. The Learned AO noted that the courses were not merely educational but involved providing specific stock entry/exit points and monitoring live market investments to ensure compliance with recommendations, thus falling under the purview of unregistered investment advisory services.
The Learned AO also deemed it necessary to impound INR 536.7 million to prevent its dissipation. Consequently, interim orders were issued to cease and desist unregistered investment advisory services, bar the entities from the securities market, and impound a sum of INR 536.7 million jointly and severally. Furthermore, the entities were directed to explain why the direction for disgorgement of INR 1.04 billion and other directions should not be enforced against them.
MHCO Comment
SEBI with the recent orders and crackdown on FinFluencers shows its intent to complying stricter regulations to curb misleading financial advice disseminated through social media platforms. SEBI has also removed contents of 15000 unregulated entities from social media platforms with the objective to protect general public, emphasizing the importance of accurate financial information and the potential consequences of unchecked financial advice online.
The cease and desist Order and the impounding of INR 536.7 million are warranted, given the substantial fees collected and the numerous complaints received, highlighting the regulator's need for immediate action. We believe this crackdown by SEBI on FinFluencers will hold them accountable in near future and benefit the small investors.
This article was released on 17 February 2025.
The views expressed in this update are personal and should not be construed as any legal advice. Please contact us for any assistance.
MHCO Updates
News & Articles
Company Law Update
Company Law Update: Share Transfer Compliance
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COMPANY LAW UPDATE: ADDITIONAL COMPLIANCE REQUIREMENT FOR SHARE TRANSFER IN PRIVATE LIMITED COMPANIES
The National Securities Depository Limited (NSDL), vide Circular No. NSDL/POLICY/2025/0071 dated 3 June 2025
, has brought about a significant procedural shift in the transfer of shares of private limited companies through the depository mode. The circular outlines the procedure and introduces a compliance step essential to fulfil the prohibitive conditions of private company shareholding under the Companies Act, 2013 (“Companies Act”).
Tighter Rules on Transfer of Shares in Private Companies
According to Section 2(68) of the Companies Act, a private company must have its share transfer restrictions as laid down in its Articles of Association (AoA). Considering the above requirement, NSDL recently inserted a mandate on Depository Participants (DPs) to obtain an additional confirmation from the concerned company before processing any off-market share transfer instructions.
Apart from the regular Delivery Instruction Slip (DIS) furnished by the demat account owner, the DPs must also obtain a letter from the private limited company stating that the transfer is valid, authorized, and under the Companies Act and its AoA. NSDL also has a prescribed format for the confirmation letter.
Such a procedural safeguard guarantees that any dematerialized transfer of private company shares beyond the market is only accomplished with the explicit agreement of the issuing company, thereby aligning the dematerialization process with the company's internal rules of transfer. It ensures against unauthorized or contentious transfers and preserves the integrity of private ownership arrangements.
Dematerialization of shares has made the transfer of securities easy; however, restrictions on the transfer of shares are still a characteristic of privately held companies. The new development ensures that such statutory and contractual restrictions continue to apply, even in a virtual setup, and is likely to reduce conflict, promote better governance, and provide compliance integrity, ultimately making the whole process easier.
MHCO Comments
NSDL's new circular is a firm reminder that compliance, governance, and systemic integrity are the same. By strengthening the process of off-market transfer in private companies and introducing tighter timelines for significant audits and disclosures, NSDL is raising regulatory compliance and reiterating market confidence. For participants, the message is no less clear: stay aligned, stay on time, and give each process the same gravitas as the financial system itself.
LITIGATION UPDATE
LITIGATION UPDATE | STRIKE-OFF OF DEFENCE ON NON-PAYMENT OF RENT
Litigation Update - Strike-Off of Defence on Non-Payment of Rent
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LITIGATION UPDATE | STRIKE-OFF OF DEFENCE ON NON-PAYMENT OF RENT
The High Court of Karnataka at Bengaluru (Court), vide an Order dated 8 July 2025 (Order) in Venugopal Krishnamurthy & Anr. Versus M Tejaswini, has quashed an order of the subordinate court, and allowed the petitioners’ application to strike off the respondent’s defense in the original eviction suit due to persistent non-compliance with the subordinate court’s orders mandating the deposit of rental arrears.
Brief Background and Facts
The Petitioners, Mr. Venugopal Krishnamurthy and Mrs. Poorna Venugopal, are the owners of a property leased to the Respondent, Smt. M. Tejaswini, for operating a pre-school. The Petitioners had thereafter instituted an eviction suit on 30 August 2022, following the respondent’s default in rental payments. The petitioners also filed certain applications seeking a temporary injunction to restrain the respondent from continuing possession and directions for the deposit of rental arrears from March 1, 2020, to August 30, 2022, at Rs 82,431 per month.
On 15 July 2023, the trial court partly allowed the application, directing the respondent to deposit the arrears within two months. The respondent challenged this order, which was dismissed by the Court on 9 February 2024, noting the respondent’s continued failure to deposit any rent since 2020. Despite these orders, the respondent failed to comply, prompting the petitioners to file an application under Order VI Rule 16 read with Section 151 of the Code of Civil Procedure (CPC) to strike off the respondent’s defense. The trial court rejected this application on July 5, 2024, leading to the present writ petition before the Court.
Contentions of the Parties
The petitioners contended that the respondent had defaulted on rent payments for five years, accumulating arrears of approximately Rs 50 lakhs, and failed to comply with court orders dated 15 July 2023, and 9 February 2024, mandating the deposit of rental arrears. They further contended that this wilful non-compliance justified striking off the respondent’s defense under Order VI Rule 16 CPC. Conversely, the respondent claimed a rent waiver for 2020–2022 due to the COVID-19 pandemic, asserting that her preschool was non-operational during this period. She further requested two years to clear the arrears, contingent on continued possession, and proposed vacating the premises by 30 April 2025, provided the petitioners waived the arrears. However, the petitioners provided evidence, obtained through a Right to Information (RTI) application, that the school’s license was canceled on 2 March 2023, and no educational activities were being conducted.
Court’s Findings
The Court, after reviewing the submissions and material on record, made the following key observations:
Non-Compliance with Court Orders: The Court observed that the respondent had not paid any rent for five years, accumulating arrears of approximately Rs 50 lakhs. Despite explicit orders from the trial court and the High Court to deposit the arrears, the respondent’s failure to comply was deemed a willful and contumacious defiance of judicial directives.
Application of Order VI Rule 16 CPC: The Court held that Order VI Rule 16 CPC empowers courts to strike off pleadings that are unnecessary, scandalous, frivolous, vexatious, or an abuse of the judicial process. The respondent’s persistent non-compliance was found to fall within these categories, justifying the striking off of her defense.
Rejection of Respondent’s Plea: The respondent’s claim for a rent waiver due to the COVID-19 pandemic (2020–2022) was dismissed, as the pre-school’s license had been canceled in 2023, and no evidence supported continued operations. The respondent’s proposal to vacate the premises by 30 April 2025, contingent on waiving the arrears, was deemed audacious and lacking remorse. Order VI Rule 16 of the CPC, read with Section 151, empowers the court to strike off pleadings that are frivolous, vexatious, or an abuse of process, particularly when interim orders are defied.
MHCO Comment
This ruling emphasizes the Court’s firm stance against tenants who willfully defy court orders, particularly in cases of non-payment of rent. By relying on established precedents, the Court has reinforced the principle that contumacious conduct, such as non-compliance with interim orders, disentitles a party from being heard on the merits.
This judgment serves as a strong deterrent to those who attempt to prolong litigation while flouting court directives. It also highlights the importance of timely compliance with judicial orders to maintain the integrity of legal proceedings and protect the rights of property owners. The ruling is likely to bolster landlord confidence in seeking judicial remedies and may prompt stricter enforcement of tenancy agreements.
News & Articles
INTERIM ORDER AGAINST JANE STREET GROUP FOR ALLEGED INDEX MANIPULATION
SEBI Interim Order Against Jane Street Group
SEBI UPDATE | INTERIM ORDER AGAINST JANE STREET GROUP FOR ALLEGED INDEX MANIPULATION
The Securities and Exchange Board of India (SEBI), vide an ex-parte interim order dated 3 July 2025 (Order), issued under Sections 11(1), 11(4), 11B(1), and 11D of the SEBI Act, 1992, has restrained entities of the Jane Street Group, LLC (JS Group) from participating in the Indian securities market and directed the impounding of alleged unlawful gains amounting to INR 4,843.57 crore. This action follows SEBI’s investigation into prima facie manipulative trading practices by JS Group entities in the BANKNIFTY and NIFTY indices, particularly on derivative expiry days, spanning from 1 January 2023 to 31 May 2025.
Brief Background and Facts
1. Entities Involved
The JS Group entities named in the order are JSI Investments Private Limited, JSI2 Investments Private Limited, Jane Street Singapore Pte Ltd, and Jane Street Asia Trading Limited, all wholly owned subsidiaries of JS Group, a US-based global trading firm. These entities were identified as acting in concert, with their activities viewed as a single economic group for the purpose of the order.
2. Alleged Manipulative Strategy
Intra-day Index Manipulation (BANKNIFTY): SEBI identified 15 instances of alleged manipulation in BANKNIFTY index options on expiry days. On 17 January 2024, for example, during Patch I (09:15 AM to 11:46:59 AM), JS Group aggressively accumulated long positions worth INR 4,370.03 crore in BANKNIFTY constituent stocks and futures, inflating the index level. Simultaneously, they built short positions in BANKNIFTY index options, with a delta exposure rising from negative INR 7,311.19 crore to negative INR 39,426.15 crore. In Patch II, JS Group sold off INR 5,372 crore worth of these securities, exerting downward pressure on the index, aligning with their short options positions, yielding a profit of INR 734.93 crore on that day.
Extended Marking the Close (BANKNIFTY): On three days, including 10 July 2024, JS Group engaged in aggressive selling in the final 60 minutes of trading, notably from 14:30:00 onwards, in BANKNIFTY constituent stocks and index futures, to depress the index closing level, generating INR 560 crore in profits from options.
Bullish Strategy (NIFTY): On 15 May 2025, JS Group executed a bullish strategy, aggressively buying NIFTY constituent stocks and futures in the final hours (13:00 to 14:00), pushing the index upward to benefit their bullish options positions.
3. Trading Patterns and Impact
On January 17, 2024, JS Group’s net traded value in the cash segment was INR 1,851.57 Crores and INR 2,518.46 Crores in the futures segment for BANKNIFTY constituents. Their trading significantly influenced the index, with buy orders placed at or above the Last Traded Price (LTP) in Patch I and sell orders at or below LTP in Patch II, distorting price discovery.
Across 15 BANKNIFTY expiry days, JS Group earned INR 3,914 crore in index options profits. The total illegal gains across 18 identified days (15 BANKNIFTY and 3 NIFTY) were computed at INR 4,843.57 crore. The total profit from index options during the examination period was INR 43,289 crore, offset by losses of INR 7,208 crore in stock futures, INR 191 crore in index futures, and INR 288 crore in cash equities, resulting in a net profit of INR 36,502 crore.
4. Prior Warnings
In February 2025, the National Stock Exchange (NSE), on SEBI’s instructions, cautioned JS Group against large cash-equivalent positions and questionable trading patterns. Despite responses on 6 February 2025 and 21 February 2025, JS Group continued similar practices, notably on 15 May 2025.
5. Regulatory Violations
SEBI found that JS Group’s actions contravened Sections 12A(a) and (b) of the SEBI Act, 1992, and Regulations 3(a), (c), (d), and 4(1) of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 (PFUTP Regulations). Additionally, the netting of trades in the cash market violated Regulation 20(4) of the SEBI (Foreign Portfolio Investors) Regulations, 2019.
SEBI’s Ex-Parte Order
The Whole Time Member (WTM) of SEBI determined that JS Group’s trading activities constituted a prima facie case of market manipulation. The Order highlights the following key findings:
JS Group’s aggressive buying in the cash and futures markets of BANKNIFTY and NIFTY constituents, followed by rapid reversals, was designed to artificially influence index levels to benefit their larger positions in index options.
The trading patterns, particularly on expiry days, demonstrated intent to manipulate closing prices, impacting the settlement value of index-based contracts and misleading other market participants.
The scale of intervention, with significant traded volumes and a high concentration of orders at or above/below the Last Traded Price (LTP), indicated a deliberate strategy to distort price discovery.
JS Group violated Regulation 20(4) of the SEBI (Foreign Portfolio Investors) Regulations, 2019, by netting trades in the cash market through simultaneous intra-day buying and selling of BANKNIFTY constituent stocks without actual delivery.
Directions
SEBI’s interim order issued the following directions to address the alleged manipulations and protect market integrity:
JS Group entities are directed to jointly and severally deposit INR 4,843.57 crore, identified as unlawful gains, into an escrow account with a scheduled commercial bank in India.
JS Group entities are restrained from accessing the Indian securities market and prohibited from buying, selling, or otherwise dealing in securities, directly or indirectly, until further orders.
Banks, depositories, and custodians are instructed to ensure no debits are made from JS Group’s accounts without SEBI’s permission, though credits are allowed.
Stock exchanges are instructed to monitor JS Group’s future dealings closely to prevent further manipulative activities.
JS Group entities are ordered to cease and desist from engaging in any fraudulent, manipulative, or unfair trade practices.
The directions stipulated in the clauses above will cease to apply upon compliance with directions for the disgorgement of INR 4,843.57 crore. Further, the entities have been directed to respond and explain why further directions should not be taken against the entities.
MHCO Comment
This is SEBI’s strongest-ever action against a trading firm, signalling that investor protection outweighs high-frequency or quantitative trading advantages. The impounding of INR 4,843.57 crores and the restraint on securities trading reflect SEBI’s proactive approach to prevent further market abuse and ensure investor confidence.
This crackdown signals SEBI’s heightened scrutiny of foreign portfolio investors and their trading practices, emphasizing compliance with regulatory frameworks. The directive to monitor JS Group’s activities closely indicates a broader effort to curb systemic risks in the securities market. We believe this action will deter similar manipulative strategies and reinforce the importance of transparent and fair trading practices, ultimately benefiting retail investors and the broader economy.
Disclaimer: This legal update is based on the interim order issued by SEBI and is intended for informational purposes only. It does not constitute legal advice or a definitive interpretation of the regulatory actions taken. The views expressed in this update are personal and should not be construed as any legal advice; please contact us for any assistance.
High Court Updates
Delhi High Court Upholds Voluntary Nature of Restaurant Service Charges
Background:
On 28 March 2025, the Delhi High Court delivered a significant judgment in the matter of National Restaurant Association of India & Ors. v. Union of India & Anr addressing the legality of mandatory service charges levied by restaurants and hotels. The case arose from widespread complaints about automatic service charge additions to bills, prompting the Central Consumer Protection Authority (CCPA) to issue guidelines in July 2022 prohibiting such practices.
Issues for Consideration:
The Court considered the following key questions:
Whether restaurants and hotels can lawfully add a mandatory service charge to customer bills.
Whether the CCPA guidelines, which prohibit automatic or compulsory service charges, are valid and enforceable under the Consumer Protection Act, 2019.
Held:
The Delhi High Court upheld the validity of the CCPA guidelines, affirming the following principles:
No Automatic or Compulsory Service Charge: Restaurants and hotels cannot add a service charge to bills by default. Service charges must be voluntary and at the consumer’s discretion.
Transparency and Consumer Choice: Establishments must clearly inform customers that any service charge is optional. Customers cannot be denied entry or service for refusing to pay a service charge.
No GST on Service Charge: GST cannot be levied on service charges.
Consumer Remedies: If a service charge is added against these rules, consumers have the right to request its removal and can seek redress through consumer helplines, commissions, or relevant authorities.
The Court emphasized that automatic or compulsory service charges constitute an unfair trade practice under the Consumer Protection Act, 2019. The judgment reinforces consumer rights and mandates that any service charge must be transparently communicated and entirely voluntary.
Implications:
This decision prioritizes consumer protection, requiring the hospitality industry to revise billing practices and ensure that service charges, if levied, are strictly optional. The ruling may impact revenue models for restaurants and hotels but provides clarity and legal backing to consumers’ right to choose.
MHCO Comments:
The judgment marks a crucial policy stance in the ongoing debate between industry practices and consumer rights. By upholding the CCPA’s guidelines, the Delhi High Court has effectively subordinated the interests of service providers to the statutory rights of consumers, ensuring that voluntary consent is central to any additional charges levied in the hospitality sector.
This article was released on 30 June 2025.
The views expressed in this update are personal and should not be construed as any legal advice. Please contact us for any assistance
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