Legalaxy – Monthly Newsletter Series – Vol XXVIII – September, 2025

In the September edition of our monthly newsletter “Legalaxy”, our team analyses some of the key developments in securities market, banking and finance, corporate affairs, environment, sports, gaming, and maritime sectors.

Below are the key highlights of the newsletter:

SEBI UPDATES
  • SEBI revises framework for conversion of private listed InvIT into public InvIT
RBI & IFSC UPDATES
  • IFSCA notifies the regulatory framework for global access in IFSC
  • RBI transitions cheque truncation system to “continuous clearing and settlement on realisation”
  • RBI notifies Know Your Customer (KYC) Amendment Directions, 2025
  • RBI issues Non-Fund Based Credit Facilities Directions, 2025
CORPORATE UPDATES
  • MCA substitutes Web Form RD-1
ENVIRONMENTAL UPDATES
  • MoEFCC’S revised methodology for calculating green credits under the Green Credit Rules, 2023
  • MoEFCC notifies Environment Audit Rules, 2025
  • Van (Sanrakshan Evam Samvardhan) Amendment Rules, 2025 – Notified
OTHER UPDATES
  • The Online Gaming Act, 2025: Regulation, recognition and the blanket ban on money gaming
  • National Sports Governance Act, 2025: Integrity and accountability in sports
  • India updates maritime framework – 4 critical legislations enacted

We hope you like our publication. We look forward to your suggestions.

Please feel free to contact us at [email protected]

Supreme Court Affirms Complainant’s Right to Appeal Under Section 138 NI Act

The Supreme Court’s recent judgment in Celestium Financial v. A. Gnanasekaran (2025 INSC 804) marks a watershed moment in the jurisprudence surrounding Section 138 of the Negotiable Instruments Act, 1881. This landmark decision addresses a critical procedural question that has long plagued complainants seeking redress for dishonoured cheques: whether they can file appeals against acquittal orders as victims under Section 372 of the Criminal Procedure Code, 1973, without requiring special leave from higher courts.

The case is particularly relevant in light of the current commercial climate, where acknowledgement of the cheque as an accepted means of business exchange continues despite the rapid adoption of a cashless economy. Even with thousands of Section 138 actions pending in numerous courtrooms, and complainants frequently embroiled in a lengthy litigation process where adequate appellate opportunities are rare or lacking, this case provides clarification concerning victims’ entitlements. The decision not only resolved a significant area of contention in the law but reinforced the legislative purpose of formulating severe remedies for cheque dishonour offences, whereby the economic victims of cheque defaults (dishonour) are not left without viable and effective legal recourse where the trial court’s decision(s) are wrong.

A two-judge Supreme Court panel comprising Justices B.V. Nagarathna and Satish Chandra Sharma noted expressly that the complainant is the ‘primary victim’ of the offence, properly, since in all cases, the complainant sustains financial loss. The latter reasoning is consistent with the definition of the victim under Section 2(wa) of the CrPC, which defines a victim as someone who suffers financial, psychological or physical harm as a consequence of an offence.

The two-Judge Bench observed,

“In the context of offences under the Act, particularly under Section 138 of the said Act, the complainant is the aggrieved party who has suffered economic loss and injury due to the default in payment by the accused owing to the dishonour of the cheque, which is deemed to be an offence under that provision. In such circumstances, it would be just, reasonable and in consonance with the spirit of the CrPC to hold that the complainant under the Act also qualifies as a victim within the meaning of Section 2(wa) of the CrPC. Consequently, such a complainant ought to be extended the benefit of the proviso to Section 372, thereby enabling him to maintain an appeal against an order of acquittal in his own right without having to seek special leave under Section 378(4) of the CrPC.”

The Court held that complainants under Section 138 of the NI Act qualify as victims within the statutory definition under Section 2(wa) CrPC. The Court reasoned that

“in the context of offences under the Act, particularly under Section 138, the complainant is clearly the aggrieved party who has suffered economic loss and injury due to the default in payment by the accused owing to the dishonour of the cheque.”

The Court emphasised the unity of the complainant and the victim in NI Act proceedings, observing that

“under Section 138 of the Act both the complainant as well as the victim are one and the same person.” The judges noted that only a victim of cheque dishonour can file a complaint under Section 138, making the procedural distinction between complainant and victim meaningless in this context.

Addressing the constitutional dimension, the Court held that the victim’s right to appeal cannot be circumscribed by the same statutory rigours applicable to State or complainant appeals, as it potentially involves fundamental rights under Articles 14 and 21 of the Constitution.

In this particular judgement, the Court held that complainants can choose whether to appeal (1) as victims under Section 372 proviso, or (2) as complainants under Section 378, providing them with a contestable process for relief. This judgement reflects a fashionably progressive approach to criminal law prosecutorial processes and can be described as a victim-centric decision that aligns with modern conceptions of individual victim roles in the criminal justice system.

The Court’s reasoning demonstrates a sophisticated understanding of the economic nature of Section 138 offences and the unique position of complainants in such proceedings. By recognising that complainants are victims who suffer tangible economic harm, the judgment acknowledges the reality that cheque dishonour primarily affects the payee rather than society at large. This approach is consistent with the legislative intent behind creating special remedies for negotiable instrument offences.

The decision also promotes procedural efficiency by providing complainants with an additional avenue for seeking redress without requiring special leave. This is particularly significant given the high pendency of NI Act cases and the need for expeditious resolution of commercial disputes.

By addressing the complainant as a candid victim with independent appellate rights, the Supreme Court ensures that the remedial infrastructure constructed under the Negotiable Instruments Act is applied effectively.

The ramifications of this judgment will be manifestly substantial for commercial litigation, and it will encourage more victims of economic offences to pursue restitution because they have access to relevant appellate remedies.

The judgment can be accessed from: (https://api.sci.gov.in/supremecourt/2024/49668/49668_2024_6_10_60765_Judgement_08-Apr-2025.pdf )

Authored By:

Vijay Pal Dalmia, Advocate
Supreme Court of India & Delhi High Court

Email id: [email protected]
Mobile No.: +91 9810081079

LinkedIn: https://www.linkedin.com/in/vpdalmia/
Facebook: https://www.facebook.com/vpdalmia
X (Twitter): @vpdalmia

Steps for Quashing of FIR – Supreme Court of India

Recently, the Hon’ble Supreme Court of India in a Criminal Appeal bearing no. 3831 of 2025 decided on 2nd September 2025, dealt with an order passed by the Hon’ble High Court of Judicature at Allahabad in application under Section 482 of Cr.P.C. bearing No. 12607 of 2016 by which the petition filed by the appellant seeking to quash the summoning order passed by the Ld. Additional Chief Judicial Magistrate, Allahabad was dismissed. In the said case titled Pradeep Kumar Kesarwani vs. The State of Uttar Pradesh & Anr. the Apex Court laid down the following steps which should ordinarily determine the veracity of a prayer for quashing, raised by an accused by invoking the power vested in the High Court under Section 482 of the Cr.P.C./ Section 528 of BNSS:

Step One: Whether the material relied upon by the accused is sound, reasonable, and indubitable, i.e., the materials is of sterling and impeccable quality?

Step Two: Whether the material relied upon by the accused, would rule out the assertions contained in the charges levelled against the accused, i.e., the material is sufficient to reject and overrule the factual assertions contained in the complaint, i.e., the material is such, as would persuade a reasonable person to dismiss and condemn the factual basis of the accusations as false.

Step Three: Whether the material relied upon by the accused, has not been refuted by the prosecution/complainant; and/or the material is such, that it cannot be justifiably refuted by the prosecution/complainant ?

Step Four: Whether proceeding with the trial would result in an abuse of process of the court, and would not serve the ends of justice?

The Hon’ble Supreme Court further held that if the answer to all the steps is in the affirmative, judicial conscience of the High Court should persuade it to quash such criminal – proceedings, in exercise of power vested in it under Section 482 of the Cr.P.C.

Before laying down the above steps, the Apex Court discussed the duty of the court in cases where an accused seeks quashing of an FIR or proceedings on the ground that such proceedings are manifestly frivolous, or vexatious, or instituted with an ulterior motive for wreaking vengeance which was delineated by the Apex Court in the case of Mohammad Wajid v. State of U.P., reported as 2023 SCC OnLine SC 951. In the said case, it was observed that

“34. At this stage, we would like to observe something important. Whenever an accused comes before the Court invoking either the inherent powers under Section 482 of the Code of Criminal Procedure (CrPC) or extraordinary jurisdiction under Article 226 of the Constitution to get the FIR or the criminal proceedings quashed essentially on the ground that such proceedings are manifestly frivolous or vexatious or instituted with the ulterior motive for wreaking vengeance, then in such circumstances the Court owes a duty to look into the FIR with care and a little more closely. We say so because once the complainant decides to proceed against the accused with an ulterior motive for wreaking personal vengeance, etc., then he would ensure that the FIR/complaint is very well drafted with all the necessary pleadings. The complainant would ensure that the averments made in the FIR/complaint are such that they disclose the necessary ingredients to constitute the alleged offence. Therefore, it will not be just enough for the Court to look into the averments made in the FIR/complaint alone for the purpose of ascertaining whether the necessary ingredients to constitute the alleged offence are disclosed or not. In frivolous or vexatious proceedings, the Court owes a duty to look into many other attending circumstances emerging from the record of the case over and above the averments and, if need be, with due care and circumspection try to read in between the lines. The Court while exercising its jurisdiction under Section 482 of the CrPC or Article 226 of the Constitution need not restrict itself only to the stage of a case but is empowered to take into account the overall circumstances leading to the initiation/registration of the case as well as the materials collected in the course of investigation. Take for instance the case on hand. Multiple FIRs have been registered over a period of time. It is in the background of such circumstances the registration of multiple FIRs assumes importance, thereby attracting the issue of wreaking vengeance out of private or personal grudge as alleged.”

(Emphasis supplied)”\

Resultantly, the Appeal came to be allowed, the impugned order was set aside and the complaint was quashed.

Judgment can be accessed from the following link:

https://api.sci.gov.in/supremecourt/2019/36607/36607_2019_6_36_63887_Order_02-Sep-2025.pdf

 

Authored By:

Vijay Pal Dalmia, Advocate
Supreme Court of India & Delhi High Court

Email id: [email protected]
Mobile No.: +91 9810081079

LinkedIn: https://www.linkedin.com/in/vpdalmia/
Facebook: https://www.facebook.com/vpdalmia
X (Twitter): @vpdalmia

Trademarking Numerals – Under Indian Trademark Law

The order of Hon’ble High Court of Delhi in the case of Vineet Kapur v. Registrar of Trade Marks passed on April 25, 2025, is a noteworthy progress in Indian trademark law, specifically with regard to the registrability of number marks. The case involved the appeal made by the appellant for registration of the mark ‘2929’ under Class 3, covering goods like cosmetics, nail enamel, soaps, and shampoos. The application had been refused by the Registrar of Trade Marks, mainly on the basis that the mark was a common combination of numbers and did not have any distinctive character. The Registrar also contended that the mark had not gained distinctiveness by use, and that combinations of common numerals in the absence of creativity could not be monopolized by anyone. The appellant, however, argued that ‘2929’ was a distinctive, arbitrary, and inherently distinctive mark, which could identify his goods from others in the marketplace.

The Court began its analysis by examining the statutory framework under the Trade Marks Act, 1999. Section 2(1)(m) of the Act defines a “mark” to include numerals and any combination thereof, making it clear that numerals are eligible for registration as trademarks, provided they meet the requirements for registration. The Court emphasized that a mark cannot be refused registration merely because it consists of a combination of numbers. Instead, the critical question is whether the numeral mark is devoid of any distinctive character. The Court noted that the appellant already had several numerical trademarks registered in his favour, both as device marks and word marks, such as ‘2929’, ‘9292’, ‘1111’, and ‘1010’. These prior registrations demonstrated a consistent pattern of using numerical marks in relation to the goods in question and provided a context for evaluating the distinctiveness of ‘2929’1.

In order to further establish its rationale, the Court referred to a chain of judicial precedents in which numeric marks were afforded protection.

  • The mark ‘501’ was protected as that for soap in Tata Oil Mills Company Ltd. v. Reward Soap Works (AIR 1983 Delhi 286)
  • ‘345’ for bidis in Samrat Bidi Works and others v. Dayalal Meghji and Company (AIR 1999 MP 10)
  • ’22’ for bidis in M/s. Vrajlal Manilal and Co. v. M/s N.S. Bidi Co. and another (AIR 1987 Delhi 312)
  • ‘1001’ for paints in Glossy Color & Paints Pvt. Ltd. and Anr. v. Mona Aggarwal & Ors. (MANU/DE/3850/2015)
  • ‘555’ for agarbattis in Jagan Nath Prem Nath v. Bharttya Dhoop Karyalaya (AIR 1975 Delhi 149) and
  • ’91’ for bicycles in Alphavector India Pvt. Ltd. v. Sach Industries and Others (MANU / DE / 0574 / 2023)

Collectively, these cases defined that groups of numbers have consistently been held to be able to function as a trademark and are eligible for protection when they are arbitrary and do not describe the goods themselves.

In the case at hand, the mark ‘2929’ was held to be an arbitrary and coined mark and did not connote any meaning or relation with cosmetics and skincare items. The Court noted that the mark was not normally employed in commerce on such products and did not in any way describe or point to the goods either literally or figuratively. According to this, ‘2929’ was considered capable of distinguishing the appellant’s products from others, satisfying the test of distinctiveness under law.

The decision also made use of authoritative international writing, notably McCarthy on Trademarks and Unfair Competition, which acknowledges that a single number, or multiple numbers, either separately or as part of other designations, may be accorded trademark status if they have the function to identify and differentiate the source of goods and services. The Court said that no producer can have exclusive rights over separate numerals for quality indication, but a distinctive sequence of numbers used regularly to mark commodities can gain distinctiveness and be considered a trademark.

Applying these principles to the facts in question, the Court held that ‘2929’ was an arbitrary and distinctive combination of the numerals ‘2’ and ‘9’, without reference to the nature or character of the goods. The mark was thus inherently distinctive and registrable upon application without proof of acquired distinctiveness or secondary meaning through use. The Court dismissed the Registrar’s argument that the mark lacked any distinctive character, holding that refusal to register was not supportable in law.

The Court also settled the question of the extent of exclusivity which could be asserted by the appellant. In permitting the application for ‘2929’ to go on advertisement in the Trademark Journal, the Court made it clear that the appellant would not be able to claim exclusive rights in the individual numerals ‘2’ and ‘9’. This clarification is important since it avoids monopoly of the common digits, which are often used in commerce for many different reasons, but without giving up the distinctive combination as a source identifier for the goods of the appellant. The Court also observed that the current order would not exclude any opposition proceedings which could be initiated by third parties after publication of the mark. The implications of the judgment for Indian trademark law are significant. The Delhi High Court, in its judgment in Vineet Kapur v. Registrar of Trade Marks, lays out a clear and forward-looking precedent for the registrability of numerical marks in India.

By acknowledging the inherent uniqueness of random series of numbers, the ruling offers useful guidance to applicants for trademark, practitioners, and the Registry as well. It emphasizes the flexibility of trademark law to accommodate changing commercial customs and upholding the integrity of the system while safeguarding both business interests and public domain.

The judgment can be accessed from the following link:

https://delhihighcourt.nic.in/app/showFileJudgment/59225042025CAT222024_105820.pdf

Authored By:

Vijay Pal Dalmia, Advocate
Supreme Court of India & Delhi High Court

Email id: [email protected]
Mobile No.: +91 9810081079

Linkedin: https://www.linkedin.com/in/vpdalmia/
Facebook: https://www.facebook.com/vpdalmia
X (Twitter): @vpdalmia

AND

Aditya Dhar, Advocate
Associate Partner, Vaish Associates Advocates
Email: [email protected]
Mobile: +91 9971873110

SEBI Notifies the SEBI (Alternative Investment Funds) (Second Amendment) Regulations, 2025

Securities and Exchange Board of India (“SEBI”), vide its notification dated September 8, 2025, has notified the SEBI (Alternative Investment Funds) (Second Amendment) Regulations, 2025 (“AIF Amended Regulations”), thereby amending the SEBI (Alternative Investment Funds) Regulations, 2012 (“AIF Regulations”). The AIF Amended Regulations define and establish a framework for co-investment schemes by adding Regulation 17A which lays down the conditions for co-investment by category I and II Alternative Investment Funds (“AIFs”). A significant overhaul has also been made to the treatment of angel funds, which are now classified under category I AIFs. The angel funds are now permitted to raise capital exclusively from accredited investors.

In this regard, SEBI, vide its circular dated September 9, 2025 (“Co-investment Circular”), has laid down the framework for AIFs to make co-investment within the AIF structure under the AIF Regulations. This is in addition to the co-investment currently being facilitated to investors of AIFs through co-investment Portfolio Managers under the SEBI (Portfolio Managers) Regulations, 2020 (“PMS route”), with an aim to provide: (a) ease of doing business for AIFs; and (b) to permit category I and category II AIFs to offer co-investment facility to accredited investors by launching a separate co-investment scheme (“CIV scheme”).

Additionally, SEBI, vide its circular dated September 10, 2025 (“Revised Angel Fund Circular”), introduces comprehensive overhaul in the regulatory treatment of angel funds, with the objective of: (a) improving ease of doing business; (b) enhancing risk reduction; and (c) providing operational clarity to angel funds.

The AIF Amended Regulation read with the Co-investment Circular and Revised Angel Fund Circular lays down the following framework:

Conditions for co-investment by category I and II AIFs:

The AIF Amended Regulations have introduced a revised definition of ‘co-investment’, replacing the earlier “co-investment means investment made by a Manager or Sponsor or investor of a Category I or II Alternative Investment Fund in unlisted securities of investee companies where such a Category I or Category II Alternative Investment Fund makes investment.”

  • Co-investments by investors of category I or II AIFs are allowed only through 2 routes: either via a CIV scheme registered under the AIF Regulations or through a PMS route.
  • Prior to offering any co-investment opportunity, the AIF manager shall file a shelf placement memorandum with SEBI by paying a filing fee of INR 1 lakh through a merchant banker, in the format prescribed in the Annexure of the Co-investment Circular. This memorandum shall include the principal terms of the co-investment, governance structure and applicable regulatory framework.
  • For each co-investment opportunity, a separate CIV scheme shall be launched. Each CIV scheme is required to invest in only 1 investee company, cannot invest in units of other AIFs, and shall maintain distinct bank and demat accounts. Additionally, the assets of each CIV scheme shall be ring-fenced to ensure clear separation from other schemes.
  • Only accredited investors of category I or II AIFs are eligible to invest in a CIV scheme. An investor who is excused, excluded, or has defaulted in contributing to an AIF scheme’s investment in an investee company shall not be allowed to co-invest in that investee company.
  • Investors in CIV schemes are subject to a limit where their total co-investment in an investee company across all CIV schemes cannot exceed 3 times their commitment in the AIF scheme’s investment in that company. However, this limit does not apply to certain exempted investors including multilateral or bilateral development financial institutions, state industrial development corporations, and government-owned or controlled entities such as sovereign wealth funds and central banks.
  • Investors in a CIV scheme shall have pro-rata rights to both the investments made and the distribution of proceeds based on their contributions. However, a portion of the returns, such as carried interest or additional returns, may be allocated to the sponsor or manager of the AIF, or employees or directors, or partners of the manager of the AIF as an exception.
  • The timing of exit from the co-investment in an investee company shall be identical to the exit of the AIF scheme from the investment in the investee company.
  • The terms of co-investment in an investee company by the manager or sponsor, or co-investor or CIV scheme shall not be more favourable than the terms of investment by the AIF.
  • The manager shall ensure that the CIV scheme does not make any investment that would: (A) result in its investors indirectly acquiring or holding an interest or exposure in an investee company that they are not permitted to acquire or hold directly; (B) trigger additional regulatory disclosure requirements had the investors invested directly, or (C) where the investee company is not eligible to receive investments directly from such investors.
  • CIV schemes are prohibited from borrowing funds or engaging in any kind of leverage, either directly or indirectly.
  • Expenses related to the co-investment shall be shared proportionately between the AIF scheme and the CIV scheme in line with their respective investment ratios.

Revised regulatory framework for angel funds:

  • All existing angel funds shall be considered to be registered as category I AIF – Angel Funds, instead of being a sub-category under category I AIF – Venture Capital Funds.
  • Angel funds are permitted to raise capital exclusively from accredited investors through the issuance of units, without any minimum investment requirement, in the manner as may be specified by SEBI from time to time.
  • Angel funds are required to invest directly in the investee companies and are not permitted to launch co-investment schemes or any other schemes aimed at soliciting investments. Their investment focus shall remain on startups that are not promoted or sponsored by corporate groups with a turnover exceeding INR 300 crores. Each investment made by an angel fund shall include participation from at least 2 accredited investors. The primary focus of an angel funds is on startups, but they may make additional or follow-on investments in non-startup entities, provided they meet conditions specified by SEBI. The total investment by an angel fund in a single investee company shall not be less than INR 10 lakh and shall not exceed INR 25 crores.
  • Follow-on investments by angel funds are permitted only under specific conditions. These are allowed only if the post-issue shareholding of the fund in the investee company does not exceed its pre-issue shareholding. The total investment in an investee company including follow-on investments, shall not exceed INR 25 crores. Contributions towards follow-on investments can be accepted only from the original contributors on a pro-rata basis. If any portion of the rights remains unused, it may be offered to the remaining existing investors within the fund.
  • Angel fund investments are generally subject to a standard lock-in period of 1 year. However, this lock-in is reduced to 6 months in cases where the investment is sold to a third party, excluding transactions such as buy-backs or promoter buyouts. The applicability and enforcement of the lock-in period are also subject to the provisions in the articles of association of the investee company.
  • Angel fund investors are entitled to pro-rata rights in both investments and returns. However, exceptions to this principle are permitted in cases where there are carried interest or profit-sharing arrangements agreed upon between an investor and the fund manager or sponsor.
  • Angel funds are permitted to make overseas investments, provided they comply with applicable guidelines issued by the Reserve Bank of India (“RBI”) and SEBI. The limit for overseas investments is capped at 25% of the fund’s total investments, calculated at cost, as on the date of the application seeking approval for such investment.
  • Sponsors and managers of angel funds are required to maintain a continuing interest in the fund amounting to at least 0.5% of the amount invested or INR 50,000, whichever is higher. All investment opportunities shall be transparently disclosed to all investors in the fund, and investments can only be made from those investors who explicitly approve each deal. Additionally, any investments involving related parties or existing portfolio companies shall be fully disclosed to investors at the time of seeking their approval.
  • Filing of the term sheet with SEBI is no longer mandatory for angel funds; however, the fund shall be required to maintain the term sheet internally. Additionally, for each investment made, the fund shall include and maintain a detailed list of investors along with their respective contributions.

To read the AIF Amended Regulations click here, to read the Co-investment Circular click here & to read the Revised Angel Fund Circular click here.

For any clarification, please write to:

Mr. Yatin Narang
Partner
[email protected]

Customs and GST Alert – September 2025

We are delighted to share with you a special edition of our newsletter, which summarizes recommendations made by the 56th GST Council Meeting towards Next Generation GST reforms

We trust that you will find the same useful.

Looking forward to receiving your valuable feedback.

For any clarification, please write to:

Mr. Shammi Kapoor
Senior Partner
[email protected]

Mr. Arnab Roy
Partner
[email protected]