Enterprise Value Enters the Picture: IBBI’s Valuation Reforms

In a significant development, the Insolvency and Bankruptcy Board of India (IBBI) has notified a series of amendment regulations aimed at strengthening the valuation framework under the Insolvency and Bankruptcy Code, 2016 (IBC).[1]

The amendments, which came into force on February 25, 2026, introduce structural changes to the valuation framework under the Code. In particular, the changes: (i) revise the definition of fair value, (ii) introduce a coordinating valuer framework for enterprise-level valuation, (iii) provide for uniform valuation standards, and (iv) standardise the format of valuation reports and supporting documentation.

Together, these reforms seek to improve the consistency, transparency, and credibility of valuations conducted under the Code.

A. Fair value revised to reflect enterprise value

One of the key changes introduced by the amendments is the substitution of the definition of “fair value”.

Under the earlier framework, fair value was defined as the estimated realisable value of the assets of the corporate debtor, if exchanged between a willing buyer and a willing seller in an arm’s length transaction on the insolvency commencement date. This formulation effectively centred the valuation exercise on the value of individual assets.

The revised definition broadens this approach. Fair value is now defined as the estimated realisable value of the corporate debtor or its assets, as the case may be, in an arm’s length transaction after proper marketing. Importantly, the accompanying explanation clarifies that the estimated realisable value of the corporate debtor must be computed by taking into account the total estimated realisable value of all its assets, including both tangible and intangible assets, together with their underlying synergies.

B. New framework for determining fair value and liquidation value

The amendments also substantially revise the framework for determining fair value and liquidation value.

Under the revised approach, the resolution professional is required to appoint two sets of registered valuers. Each set comprises one valuer for each asset class of the corporate debtor, and one valuer within the set is designated as the coordinating valuer in consultation with the committee of creditors.

Each registered valuer first determines the fair value of the assets within their respective asset class and the liquidation value. The coordinating valuer then computes the fair value of the corporate debtor after considering the fair value of the assets as determined by the valuers within that set, along with their underlying synergies.

Where the estimates of fair value or liquidation value differ significantly (i.e., by 25 per cent or more), or where the committee of creditors recommends, the resolution professional may appoint a third set of valuers.

The final values are determined as follows:

  • the fair value is the average of the two closest estimates submitted by the coordinating valuers; and
  • the liquidation value is the average of the two closest estimates submitted by the registered valuers in each asset class.

Illustrative example:

Under the revised framework, the resolution professional appoints two sets of valuers, each comprising one valuer per asset class. One valuer in each set acts as the coordinating valuer.

Set

Asset Class

Valuer

Fair Value

(₹ crore)

Liquidation Value

(₹ crore)

Set 1

Land & Building

Valuer A

100

70

 

Plant & Machinery

Valuer B

80

50

 

Financial Assets

Valuer C

40

30

Set 2

Land & Building

Valuer D

110

75

 

Plant & Machinery

Valuer E

85

55

 

Financial Assets

Valuer F

45

35

The coordinating valuer in each set then determines the fair value of the corporate debtor after considering the individual asset valuations and the synergies between such assets.

Set

Fair Value (₹ crore)

Liquidation Value (₹ crore)

Set 1

225

150

Set 2

240

165

The final values of the corporate debtor are determined as the average of the estimates submitted by the two coordinating valuers.

Metric

Calculation

Final Value

Fair Value

(225 + 240) / 2

₹232.5 crore

Liquidation Value

(150 + 165) / 2

₹157.5 crore

C. Uniform valuation standards across insolvency processes

The amendments also harmonise the valuation standards applicable across insolvency stages. Earlier, valuers followed internationally accepted valuation standards during the corporate insolvency resolution process, while relying on the Companies (Registered Valuers and Valuation) Rules, 2017, during the liquidation process, resulting in different methodologies.

To address this, the amendments empower the Board to notify the valuation standards through circulars.

D. Standardisation of valuation reports

Registered valuers are now required to prepare valuation reports and maintain supporting documentation in accordance with formats and requirements notified by IBBI through circulars.

Concluding thoughts

The amendments mark an important evolution in the valuation framework under the IBC by emphasising enterprise-level assessment and introducing a coordinating valuer structure to integrate asset-level valuations and potential synergies. At the same time, certain operational aspects—including the valuation standards and the format of valuation reports and supporting documentation—are yet to be specified through IBBI circulars, and further clarity on the practical implementation of the revised framework is therefore awaited.

References:

[1] IBBI (Insolvency Resolution Process for Corporate Persons) (Amendment) Regulations, 2026; IBBI (Pre-Packaged Insolvency Resolution Process) (Amendment) Regulations, 2026; IBBI (Liquidation Process) (Second Amendment) Regulations, 2026; IBBI (Voluntary Liquidation Process) (Amendment) Regulations, 2026; and IBBI (Bankruptcy Process for Personal Guarantors to Corporate Debtors) (Amendment) Regulations, 2026.

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Photo by Natee Meepian on Canva

The amendments also harmonise the valuation standards applicable across insolvency stages. Earlier, valuers followed internationally accepted valuation standards during the corporate insolvency resolution process, while relying on the Companies (Registered Valuers and Valuation) Rules, 2017, during the liquidation process, resulting in different methodologies.

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India’s Legal Vulnerability in Light of Strait of Hormuz Closure

The unfolding crisis in the Strait of Hormuz is not merely a geopolitical flashpoint; it is a stress test for the international law of the sea — and by extension, for India’s energy security architecture. As shipping through the Strait slows amid military escalation, the core issue for India is not simply rising oil prices. It is the fragility of ‘transit passage’ under the United Nations Convention on the Law of the Sea (UNCLOS), and what happens when that legal regime collides with hard power. For India, which reportedly imports roughly 80% of its crude oil through the Strait, the legal stability of maritime chokepoints is a matter of macroeconomic concern.

The Legal Regime: Transit Passage under UNCLOS

The Strait of Hormuz qualifies as a strait used for international navigation connecting one part of the Exclusive Economic Zone (EEZ) to another. Under Part III of UNCLOS, vessels and aircraft enjoy the right of transit passage, which is broader than innocent passage. Transit passage cannot be suspended by coastal states, even in situations of heightened tension.

This distinction matters. Unlike innocent passage (under Articles 17–19), which is subject to certain regulatory controls and can be temporarily suspended for security reasons, transit passage (Articles 37–44) guarantees continuous and expeditious navigation. Coastal states may regulate safety, pollution control, and traffic separation schemes, but they cannot impede or suspend passage.

Iran has historically taken the position that transit passage rights do not apply absent ratification by relevant states and has at times signalled that it could close the Strait in response to external military pressure. While Iran is a signatory but not a ratifier of UNCLOS, the transit passage regime is widely regarded as reflecting customary international law. The United States, though not a party to UNCLOS, recognises transit passage as customary and conducts Freedom of Navigation Operations (FONOPs) accordingly.

This legal asymmetry, where key actors rely on customary norms while disputing formal treaty obligations, creates ambiguity in enforcement. What makes this asymmetry particularly destabilising is that it no longer appears exceptional. The contemporary international system is witnessing a broader thinning of constraint, where adherence to legal frameworks is increasingly calibrated to strategic convenience. Across domains such as maritime navigation, sanctions regimes, territorial assertions, trade controls, states have shown a growing willingness to reinterpret, stretch, or sidestep institutional rules when core interests are implicated. The architecture of international law remains formally intact, but its authority is unevenly internalised. The result is not overt legal collapse, but gradual erosion through selective practice. In such a climate, even entrenched doctrines like transit passage derive their stability less from treaty text and more from power equilibrium — an equilibrium that is far from guaranteed.

The Enforcement Vacuum

UNCLOS provides dispute resolution mechanisms under Part XV, including arbitration and recourse to the International Tribunal for the Law of the Sea (ITLOS). In theory, interference with transit passage could be litigated. In practice, much like many other international treaty obligations, enforcement is political. There is no supranational maritime police force. Compliance with transit passage norms depends on deterrence and coalition naval presence. If a coastal state effectively restricts passage through military signalling, harassment, or denial-of-access tactics short of a formal blockade, the injured state’s remedy is rarely judicial. It is strategic.

For India, this enforcement gap is the real vulnerability. India is a party to UNCLOS and a consistent advocate for freedom of navigation. Yet, unlike the United States, it does not maintain a permanent blue-water presence in the Persian Gulf capable of independently guaranteeing uninterrupted energy flows. Indian naval deployments under operations such as anti-piracy patrols have been significant but occasional. In a high-intensity conflict environment such as this, energy security becomes contingent on great-power naval dynamics.

India thus finds itself dependent on a legal regime whose enforcement is externalised.

Economic Transmission: Legal Instability as Price Risk

Market prices plummet before physical disruption occurs. A mere perception that transit passage may be impeded raises insurance premiums, freight rates, and forward oil contracts. The legal question — “Can the Strait be closed?” — becomes embedded in the performance of fiscal markets within hours.

For India, every sustained increase in crude prices translates into fiscal strain, current account pressure, and inflationary spillovers. The Reserve Bank of India must then recalibrate monetary policy and supply side policy. Refiners will face margin volatility. The rupee absorbs speculative pressure. None of this requires an actual naval blockade. It is merely dependent on legal uncertainty.

This is where the law of the sea intersects with financial markets. When transit passage appears fragile, sovereign risk assessments change. India’s vulnerability is not merely physical supply disruption; it is the financialisation of maritime insecurity.

Strategic Petroleum Reserves: A Temporal Buffer, Not Structural Immunity

India’s Strategic Petroleum Reserves (SPR) provide limited cushioning capacity. They are designed to mitigate short-term disruptions, not prolonged legal instability. An SPR can address weeks of disruption; it cannot stabilise multi-quarter price spikes driven by legal and geopolitical uncertainty. Moreover, SPR deployment is reactive. It does not reduce dependence on the Strait’s legal regime. It merely buys time. The deeper structural issue remains: India’s hydrocarbon import architecture is geographically concentrated through a chokepoint whose legal status, though formally robust under UNCLOS, is practically contingent on power politics.

The Technology and Infrastructure Dimension

For a technology-driven economy, energy security is foundational. Data centres, semiconductor fabrication, logistics networks, AI compute clusters, and manufacturing hubs are energy-intensive. Price volatility feeds directly into operational expenditure models and long-term power purchase agreements.

Indian hyperscale data centres rely on grid stability supported by thermal generation inputs linked to imported fuels and LNG. If LNG shipments through Hormuz are disrupted or repriced upward, downstream electricity tariffs may reflect that shock.

Thus, a maritime legal dispute in the Gulf can recalibrate India’s digital infrastructure economics. This is not a rhetorical chain but a contractual consequence. Energy procurement contracts often include force majeure clauses tied to geopolitical disruptions. Insurance contracts incorporate war-risk riders. Hedging instruments respond to perceived supply threats. A weakening of transit passage norms ripples through layered contractual ecosystems.

The Balancing Act

India has historically balanced relations among Iran, the Gulf Cooperation Council (GCC) states, and Western powers. It has invested in the Chabahar port in Iran while deepening energy and defence ties with Saudi Arabia and the UAE.

In a Hormuz crisis, India must simultaneously uphold freedom of navigation as a principle and maintain strategic partnerships with the United States and Gulf states without alienating Iran. This balancing act constrains India’s ability to overtly challenge any coastal assertion of restrictive control over the Strait. In effect, India relies on the stability of transit passage while having a limited appetite to militarise its defence. The most consequential risk is not a temporary disruption. It is the normalisation of “conditional transit passage” — where coastal states leverage geopolitical crises to test the elasticity of maritime norms.

If repeated episodes demonstrate that transit passage can be effectively throttled without sustained international consequences, customary law erodes. The rule becomes power-contingent rather than rule-based. For a trade-dependent state like India, whose economic model is export-oriented and energy-import reliant, the erosion of navigational freedoms is structurally risky.

Transit passage under UNCLOS is the invisible backbone of India’s energy supply chain. Its enforceability depends less on treaty text and more on geopolitical equilibrium. That equilibrium is increasingly volatile.

India’s long-term response cannot be limited to strategic reserves or diversified sourcing. It must include sustained blue-water naval capacity aligned with sea lane protection; actively participate in multilateral maritime security coalitions; diplomatically reinforce the right of transit passage as customary law; and accelerate diversification into non-Hormuz supply routes and renewable infrastructure.

Energy security in the twenty-first century is inseparable from maritime legal resilience. The Strait of Hormuz is a reminder that the stability of global trade is not guaranteed by markets alone — it is underwritten by norms, and those norms must be defended.

Disclaimer:

The information provided herein is for general informational purposes and does not intend to constitute legal advice. The views expressed are personal to the author and do not represent the views of the firm or its clients. The analysis is based on publicly available information as of the date of publication, and readers are advised to seek specific legal advice before acting on any matter discussed herein.

Image Credits:

Photo by metamorworks on Canva

Market prices plummet before physical disruption occurs. A mere perception that transit passage may be impeded raises insurance premiums, freight rates, and forward oil contracts. The legal question — “Can the Strait be closed?” — becomes embedded in the performance of fiscal markets within hours. For India, every sustained increase in crude prices translates into fiscal strain, current account pressure, and inflationary spillovers. The Reserve Bank of India must then recalibrate monetary policy and supply side policy. Refiners will face margin volatility. The rupee absorbs speculative pressure. None of this requires an actual naval blockade. It is merely dependent on legal uncertainty. This is where the law of the sea intersects with financial markets.

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India’s Design Law to Get a Makeover: Key Proposals Explained

With a view to aligning India’s design law with global best practices, a set of amendments to the Designs Act, 2000, has been proposed, as outlined in a concept note dated January 23, 2026, issued by the Department for Promotion of Industry and Internal Trade (DPIIT).

The proposed amendments seek to expand the scope of protection to cover virtual designs, ease procedural requirements, and facilitate India’s accession to the Riyadh Design Law Treaty and the Hague Agreement.

Public comments on the proposed amendments have been invited until February 22, 2026.

Here’s a snapshot of the proposed amendments:

Area

Current Framework

Proposed Amendment

Virtual Designs

Definitions of “article” and “design” under Sections 2(a) and 2(d) of the Designs Act, 2000, traditionally interpreted with reference to tangible objects and visual features applied to such objects.

These definitions are sought to be amended to extend design protection to virtual designs.

Design-Copyright Overlap

Section 15(2) of the Copyright Act, 1957, states that copyright in any design, which is capable of being registered under the Designs Act, 2000, but which has not been so registered, shall cease as soon as any article to which the design has been applied has been reproduced more than fifty times by an industrial process.

Copyright in designs that are registrable under the Designs Act, 2000, but remain unregistered, to subsist for a limited term of 15 years.

Grace Period

Section 21 of the Designs Act allows a six-month grace period in cases where the disclosure is made at exhibitions notified by the Central Government.

A blanket 12-month grace period to apply regardless of the manner of disclosure.

Deferred Publication

Designs are published immediately upon registration, with no option for deferment.

Applicants to be permitted to defer publication for up to 30 months.

Statutory Damages

The Designs Act does not provide for statutory damages for infringement.

Statutory damages up to INR 50 lakhs for the first instance of infringement to be introduced, in cases where it is difficult or impractical to prove actual damages.

Term of Protection

Under Section 11 of the Designs Act, design protection is granted for 10 years, which can be renewed for a further period of 5 years.

Protection term to be restructured as 5+5+5 years. Under this system, an initial term of 5 years will be granted for both national and Hague applications, with the option of two successive renewals of 5 years each.

Single Application Covering Multiple Designs

Separate applications required for each design variant.

Multiple designs falling in the same class to be allowed in a single application.

Divisional Applications

The Act does not provide for divisional applications.

Divisional applications to be introduced, preventing entire applications from being rejected due to defects in individual designs.

Enabling Filings under the Hague system

No statutory framework exists for international design registrations.

A dedicated chapter to implement the provisions of the Hague Agreement to be introduced, enabling businesses to secure design protection in multiple jurisdictions through a single international application.

Accession to Riyadh Design Law Treaty

No mechanism exists to restore rights lost due to procedural non-compliance.

Time relief and reinstatement provisions to be introduced, in line with the Riyadh Design Law Treaty, to restore design rights lost due to non-compliance with procedural time limits, provided the failure occurred despite due care or was unintentional.

Key Points to Note:

 

  • Design-Trademark Overlap: Given that trademarks are expressly excluded from the definition of a design, registration of proposed overlapping subject matters, such as icons and symbols, is bound to be challenging and would require definitions/guidelines to bring clarity.
  • Protection for GUIs and Other Virtual Elements/Intersection with Copyright: GUIs have been a topic of debate through the years, and despite India’s adoption of the Locarno classification through the 2021 Design Amendment Rules, the conservative definitions of ‘design’ and ‘article’ under the Designs Act has led to uncertainty as to whether GUIs are eligible for protection as a design (a detailed analysis is available here). The proposed amendment would bring clarity by explicitly allowing the registration of GUIs under design law.
  • Section 15(2) of the Copyright Act is proposed to be amended by incorporating a restricted term of 15 years under copyright as opposed to the standard term of copyright [author’s lifetime + 60 years]. This may lead to more strategic, intentional design filings rather than exploiting copyright, which may not be the most appropriate form of protection in all cases.
  • Grace Period: Currently, Section 4 of the Designs Act mandates absolute non-disclosure of the design in India or anywhere in the world prior to the filing date to be eligible for design protection. The only permitted exception is disclosure through notified Government exhibitions; even then, the applicant must file a form disclosing the anticipated publication. The proposed amendment to this archaic provision, providing a 12-month grace period, will increase strategic design filings.
  • Deferred Publication: As per the proposed amendment, the request for deferment must be filed at the time of filing the application. This requirement may be revised to provide the option to defer publication until the design application is accepted at examination, allowing greater flexibility for applicants by permitting them to defer publication for the necessary period.

All in all, the concept note signals a new era in design protection in India – one that is more robust and globally aligned, while remaining conscious of applicants’ practical business concerns.

Image Credits:

Photo by James Yarema on Unsplash

Currently, Section 4 of the Designs Act mandates absolute non-disclosure of the design in India or anywhere in the world prior to the filing date to be eligible for design protection. The only permitted exception is disclosure through notified Government exhibitions; even then, the applicant must file a form disclosing the anticipated publication. The proposed amendment to this archaic provision, providing a 12-month grace period, will increase strategic design filings.

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India’s New Digital Privacy Law: The DPDP Act and Rules Explained

India’s Digital Personal Data Protection Act, 2023 (“DPDP Act”) and the Digital Personal Data Protection Rules, 2025 (“DPDP Rules”) together create a new, self-contained regime for how digital personal data is collected, processed and protected in India. The framework is designed to balance two interests: the individual’s right to privacy and the legitimate need of the State and private entities to process data for lawful purposes.

Scope and Key Concepts

The DPDP Act applies to the processing of “digital personal data” within the territory of India, whether such data is collected directly in digital form or is digitised from non-digital form. It also applies extraterritorially where processing outside India is in connection with any activity related to offering goods or services to Data Principals within India (Section 3). At the same time, it carves out clear exclusions: personal or domestic use of data by an individual, and personal data made publicly available by the Data Principal herself or by another person under a legal obligation, fall outside its scope (Section 3(c)).

The Act defines its main actors in Section 2. A “Data Principal” is the individual to whom the personal data relates; in the case of a child, the term includes parents or lawful guardians, and in the case of a person with disability, it includes the lawful guardian acting on her behalf (Section 2(j)). A “Data Fiduciary” is any person who alone or with others determines the purpose and means of processing personal data (Section 2(i)), and a “Data Processor” is any person who processes personal data on behalf of a Data Fiduciary (Section 2(k)). “Personal data” is any data about an individual who is identifiable by or in relation to such data, while “digital personal data” is personal data in digital form (Section 2(t), 2(n)). The Act also establishes the “Data Protection Board of India” (“Board”) as an independent body to enforce the law (Section 18). The DPDP Rules adopt the Act’s definitions and add a few of their own, such as “user account”, “techno‑legal measures” and “verifiable consent” (Rule 2).

Consent, Legitimate Uses and Notice

Processing of personal data is lawful only if it satisfies the substantive conditions in Chapter II. Section 4 provides that a person may process the personal data of a Data Principal only in accordance with the Act and for a lawful purpose, either with the Data Principal’s consent or for certain legitimate uses. “Lawful purpose” is defined broadly as any purpose not expressly forbidden by law (Section 4(2)).

Consent is dealt with in Sections 5 and 6. A request for consent must be preceded or accompanied by a notice from the Data Fiduciary, informing the Data Principal of the personal data and purposes of processing, how she may exercise her rights under Sections 6 and 13, and how she may make a complaint to the Board (Section 5(1)). Where consent has been given before the commencement of the Act, the Data Fiduciary must issue a fresh notice “as soon as reasonably practicable” setting out the same information (Section 5(2)). The Act requires that consent be free, specific, informed, unconditional and unambiguous, indicated by a clear affirmative action, and limited to such personal data as is necessary for the specified purpose (Section 6(1)). Any portion of a consent request that infringes the Act or any other law is invalid to that extent (Section 6(2)). The Act grants the Data Principal a right to withdraw consent at any time, and requires that the ease of withdrawal be comparable to the ease of giving consent (Section 6(4)). Upon withdrawal, the Data Fiduciary and its Data Processors must cease processing unless such processing without consent is required or authorised under another provision of law (Section 6(5)–(6)).

Recognising that consent alone cannot support all processing, Section 7 lists “certain legitimate uses” for which personal data may be processed without consent. These include: where the Data Principal has voluntarily provided personal data for a specified purpose and has not indicated non‑consent; where the State or its instrumentalities process data to provide or issue subsidies, benefits, services, certificates, licences or permits as prescribed; performance of any function by the State or its instrumentalities under law or in the interests of sovereignty and security; disclosure obligations under law; compliance with judgments or decrees; responses to medical emergencies; public health measures; disaster and public order measures; and specific employment‑related purposes such as preventing corporate espionage or maintaining confidentiality of trade secrets (Section 7).

The DPDP Rules flesh out the content and presentation of notices and the mechanics of consent. Rule 3 requires that notices be presented in a way that is understandable on their own, use clear and plain language, give at minimum an itemised description of the personal data and the specified purposes, and include a specific communication link to the Data Fiduciary’s website or app along with a description of other means by which the Data Principal can withdraw consent, exercise her rights and make complaints to the Board.

Obligations of Data Fiduciaries and Processors

Section 8 sets out the general obligations of Data Fiduciaries. It provides that a Data Fiduciary is responsible for complying with the Act and rules for any processing undertaken by it or on its behalf, regardless of any agreement to the contrary or of the Data Principal’s failure to perform her duties (Section 8(1)). A Data Processor may only process personal data on a Data Fiduciary’s behalf under a valid contract and only for activities related to offering goods or services to Data Principals (Section 8(2)). Where personal data is likely to be used to make decisions affecting the Data Principal or to be disclosed to another Data Fiduciary, the processing Data Fiduciary must ensure completeness, accuracy and consistency of the data (Section 8(3)).

Section 8(4) requires implementing appropriate technical and organisational measures to ensure effective observance of the Act and rules. Section 8(5) obliges the Data Fiduciary to protect personal data in its possession or under its control, including in respect of processing by a Data Processor, by taking reasonable security safeguards to prevent personal data breach. In case of a breach, Section 8(6) requires the Data Fiduciary to intimate the Board, and each affected Data Principal in the prescribed form and manner. Section 8(7) mandates erasure of personal data on withdrawal of consent or as soon as it is reasonable to assume that the specified purpose is no longer being served, whichever is earlier, subject to retention necessary for compliance with law; Section 8(8) deems the specified purpose to be no longer served where the Data Principal has not approached the Data Fiduciary for performance of the purpose and has not exercised her rights for a prescribed period. Section 8(9) requires publication of the business contact information of a Data Protection Officer, where applicable, or another person able to answer questions about the processing of personal data. Section 8(10) requires that the Data Fiduciary establish an effective mechanism to redress grievances of Data Principals.

The DPDP Rules give these obligations practical content. Rule 6 specifies that “reasonable security safeguards” must include, at a minimum, measures such as encrypting or tokenising personal data; implementing access controls on computer resources; maintaining logs and visibility of access to enable detection, investigation and remediation of unauthorised access; ensuring data backups and other measures for continued processing in case of compromise; requiring Data Processors to implement equivalent safeguards via contract; and taking appropriate technical and organisational measures to ensure effective observance of these safeguards. Rule 7 sets out breach‑notification obligations. On becoming aware of a personal data breach, the Data Fiduciary must inform each affected Data Principal, without delay, in clear and plain language via the user account or registered communication channel, and must describe the breach, likely consequences, mitigation measures taken, safety steps the Data Principal can take, and contact details for queries. It must also intimate the Board without delay, and then within 72 hours (or such longer period as the Board may allow) provide detailed information on the nature, extent, timing and location of the breach, facts and reasons leading to it, mitigation measures, findings regarding the person who caused it, remedial measures and a report of notifications to Data Principals.

Rule 8 connects with Sections 8(7) and 8(8). It requires certain classes of Data Fiduciaries processing personal data for purposes specified in the Third Schedule to erase personal data after the corresponding time periods if the Data Principal neither approaches the Data Fiduciary for the specified purpose nor exercises her rights, unless retention is necessary for compliance with law. In addition, all Data Fiduciaries must retain personal data, associated traffic data and other logs of processing for at least one year from the date of processing for purposes listed in the Seventh Schedule, after which they must erase them unless longer retention is required by law or notified by the Government.

Children, Persons with Disabilities and Verifiable Consent

The Act adopts a stricter approach to processing personal data of children and persons with disabilities who have lawful guardians. Section 9(1) requires that, before processing such data, the Data Fiduciary must obtain verifiable consent of the parent of the child or the lawful guardian, in the manner prescribed. Section 9(2) prohibits the processing of personal data likely to cause any detrimental effect on the well-being of a child. Section 9(3) prohibits tracking, behavioural monitoring or targeted advertising directed at children. Section 9(4) and 9(5) allow the Central Government to prescribe exemptions from these obligations for specified classes of Data Fiduciaries or purposes and to notify, in respect of a Data Fiduciary that processes children’s data in a verifiably safe manner, the age above which the obligations under Section 9(1) and (3) will not apply.

The DPDP Rules define “verifiable consent” in this context. Rule 10 states that for processing a child’s personal data, the Data Fiduciary must adopt appropriate technical and organisational measures to ensure that the verifiable consent comes from a parent, and must verify that the person identifying as a parent is an identifiable adult. This can be done by reference to reliable identity and age details already available with the Data Fiduciary, or details (or virtual tokens mapped to such details) voluntarily provided by the parent or through a Digital Locker service provider or other authorised entity. Rule 11 provides that, for persons with disabilities with lawful guardians, the Data Fiduciary must observe due diligence to verify that the guardian is appointed under applicable guardianship law by a court of law, designated authority or local level committee.

Rule 12 and the Fourth Schedule then identify classes of Data Fiduciaries and purposes for which the prohibitions in Section 9(1) and 9(3) do not apply, subject to conditions. This allows, for example, certain educational platforms or child‑centric services to operate under modified obligations where the risk profile and safeguards justify it.

Significant Data Fiduciaries and Enhanced Obligations

Section 10 introduces the concept of “Significant Data Fiduciary”. The Central Government may notify any Data Fiduciary or class of Data Fiduciaries as Significant Data Fiduciary based on an assessment of factors such as the volume and sensitivity of personal data processed, risk to Data Principal rights, potential impact on the sovereignty and integrity of India, risk to electoral democracy, security of the State and public order (Section 10(1)). Once so notified, a Significant Data Fiduciary must appoint a Data Protection Officer based in India, who represents it under the Act, is responsible to its Board of Directors or similar governing body and is the point of contact for the grievance‑redress mechanism (Section 10(2)(a)). It must also appoint an independent data auditor to evaluate its compliance with the Act (Section 10(2)(b)), and undertake periodic Data Protection Impact Assessments, audits and such other measures as may be prescribed (Section 10(2)(c)).

Rule 13 builds on these obligations by requiring every Significant Data Fiduciary to conduct a Data Protection Impact Assessment and an audit at least once every twelve months from the date on which it is notified as such, and to cause the person carrying out the assessment and audit to furnish to the Board a report containing significant observations. Rule 13 also requires Significant Data Fiduciaries to verify that technical measures, including algorithms and software used for hosting, displaying, uploading, storing, updating or sharing personal data, are not likely to pose a risk to Data Principal rights, and to ensure that specified categories of personal data and associated traffic data are processed under localisation‑type restrictions, including a prohibition on transfers outside India, where so specified by the Government on the recommendation of a committee.

Rights and Duties of Data Principals

Chapter III, comprising Sections 11 to 15, deals with the rights and duties of Data Principals. Section 11 gives the Data Principal a right, upon request, to obtain from a Data Fiduciary a summary of the personal data being processed and the processing activities, the identities of all other Data Fiduciaries and Data Processors with whom the data has been shared and a description of the personal data shared, and any other information related to her data and its processing as may be prescribed. Section 12 grants the right to correction, completion, updating and erasure of personal data for which she has previously given consent. Data Fiduciaries must correct inaccurate or misleading personal data, complete incomplete data and update data on request, and must erase personal data when requested unless retention is necessary for the specified purpose or to comply with law.

Section 13 provides a right to have readily available means of grievance redressal provided by the Data Fiduciary or Consent Manager in respect of any act or omission relating to the performance of obligations or the exercise of rights under the Act. The Data Fiduciary or Consent Manager must respond to grievances within a prescribed period, and the Data Principal must exhaust this mechanism before approaching the Board. Section 14 allows the Data Principal to nominate another individual, in a prescribed manner, who will exercise her rights in the event of death or incapacity. Section 15 lists duties of Data Principals, including complying with applicable laws when exercising rights, not impersonating others when providing personal data, not suppressing material information while providing data for identity documents, not registering false or frivolous grievances or complaints, and furnishing only verifiably authentic information when seeking correction or erasure.

Rule 14 supports these rights by requiring Data Fiduciaries and Consent Managers to prominently publish, on their websites or apps, details of the means by which Data Principals can make rights‑requests and any identifiers (such as customer IDs, application numbers, email addresses or phone numbers) required to identify them. It also obliges them to publish, within a reasonable period not exceeding ninety days, their internal timeframe for responding to grievances and to implement appropriate measures to meet that timeframe. Rule 14 further clarifies that nomination under Section 14 can be exercised using the means and particulars required by the Data Fiduciary, consistent with its terms of service and applicable law.

Exemptions and State Processing

Chapter IV (Sections 16 and 17) contains special provisions, including cross‑border transfer and exemptions. Section 16 empowers the Central Government, by notification, to restrict the transfer of personal data by a Data Fiduciary to specified countries or territories outside India. It clarifies that nothing in Section 16 overrides any stricter restriction or higher protection under other laws.

Section 17 provides a carefully layered set of exemptions. Section 17(1) disapplies almost all of Chapter II (except Sections 8(1) and 8(5)), Chapter III and Section 16 in certain situations. These include: processing necessary to enforce legal rights or claims; processing by courts, tribunals or other bodies entrusted with judicial, quasi‑judicial, regulatory or supervisory functions, where necessary for those functions; processing in the interest of prevention, detection, investigation or prosecution of offences or contraventions; processing of data of Data Principals outside India pursuant to a contract with a person outside India by a person based in India; processing necessary for schemes of compromise, arrangement, mergers, demergers or similar corporate restructurings approved by a competent authority; and processing to ascertain the financial information, assets and liabilities of loan defaulters by financial institutions, subject to relevant laws.

Section 17(2) disapplies the Act in respect of processing by such State instrumentalities as the Central Government may notify, in the interests of sovereignty and integrity of India, security of the State, friendly relations with foreign States, maintenance of public order or preventing incitement to related cognisable offences, and in respect of processing necessary for research, archiving or statistical purposes where data is not used to take decisions specific to a Data Principal and where prescribed standards are followed. Section 17(3) allows the Government, having regard to the volume and nature of personal data processed, to notify certain Data Fiduciaries or classes, including startups, to whom Section 5, Sections 8(3) and 8(7), and Sections 10 and 11 shall not apply. Section 17(4) relaxes Sections 8(7) and 12(2)–(3) where processing is by the State and either is for a purpose that does not include making decisions affecting the Data Principal or falls within specified categories. Section 17(5) allows the Government, within five years of the commencement of the Act, to declare that any provision will not apply to certain Data Fiduciaries or classes for a specified period.

Rule 5, together with the Second Schedule, sets standards for State processing of personal data when providing or issuing subsidies, benefits, services, certificates, licences or permits, requiring lawful, necessary, proportionate and secure processing, limited retention and accuracy. Rule 16 implements the research exemption under Section 17(2)(b) by prescribing standards, also in the Second Schedule, for processing personal data for research, archiving or statistical purposes. Rule 23 allows the Central Government, acting through authorised officers, to require any Data Fiduciary or intermediary to furnish information for purposes listed in the Seventh Schedule (which include enforcing the Act and protecting sovereignty and security), and allows the Government to direct that such requirements not be disclosed to affected Data Principals where disclosure would prejudice these interests.

Data Protection Board of India and Appellate Mechanism

The institutional core of the enforcement framework is the Data Protection Board of India, established under Section 18. The Board is a body corporate with perpetual succession and a common seal, with power to acquire, hold and dispose of property, and to sue or be sued. Its headquarters are notified by the Central Government. Section 19 provides that the Board consists of a Chairperson and such other Members as may be notified, all appointed in the manner prescribed, and requires that the Chairperson and Members be persons of ability, integrity and standing with special knowledge or practical experience in fields such as data governance, social or consumer protection, dispute resolution, ICT, digital economy, law, regulation or techno‑regulation, with at least one legal expert. Section 20 provides that the Chairperson and Members hold office for a term of two years and are eligible for re‑appointment, and that their salary, allowances and terms of service will be as prescribed and cannot be varied to their disadvantage after appointment.

Sections 21 and 22 set out disqualifications and removal, as well as resignation, filling of vacancies and a one‑year cooling‑off period before accepting employment with a Data Fiduciary against whom proceedings were initiated by or before the Chairperson or Member, unless the Government approves earlier employment. Section 23 addresses the procedure for meetings and authentication of Board instruments, and protects Board proceedings from invalidation due to vacancies, appointment defects or procedural irregularities not affecting merits. Section 24 allows the Board, with Government approval, to appoint officers and employees.

Sections 25 to 27 deal with functions, powers and procedure. The Board’s functions include examining intimations of personal data breaches, directing urgent remedial or mitigation measures, inquiring into breaches or contraventions based on intimation, complaints, Government references or court directions, and imposing monetary penalties. The Board has powers similar to those of a civil court in respect of summoning and enforcing attendance, requiring discovery and production of documents, receiving evidence on affidavits and issuing commissions for the examination of witnesses or documents. It must be guided by the principles of natural justice, provide the person concerned with an opportunity of being heard, and record reasons in writing for its decisions.

The DPDP Rules complete the institutional picture. Rule 17 provides for two Search‑cum‑Selection Committees for recommending appointments to the Board: one chaired by the Cabinet Secretary for the Chairperson, and another chaired by the Secretary, Ministry of Electronics and Information Technology, for Members. Rule 18 and the Fifth Schedule specify the salaries and service conditions of the Chairperson and Members. Rule 19 addresses meeting procedures, quorum, voting, conflict‑of‑interest recusal and emergency decision‑making by circulation or by the Chairperson acting alone, subject to subsequent ratification. Rule 20 mandates that the Board function as a “digital office”, adopting techno‑legal measures to conduct proceedings without requiring physical presence, while preserving its power to summon individuals and examine them on oath. Rule 21 provides that the Board may, with Government approval, appoint officers and employees, with their service conditions set out in the Sixth Schedule.

Appeals from Board orders or directions lie to the Appellate Tribunal under Section 29. The Telecom Disputes Settlement and Appellate Tribunal, established under the Telecom Regulatory Authority of India Act, 1997, is designated as the Appellate Tribunal for DPDP purposes. Appeals must be filed within sixty days, with the Tribunal having discretion to condone delay, and the Tribunal is not bound by the Civil Procedure Code but guided by the principles of natural justice. Rule 22 requires that appeals be filed in digital form and accompanied by a fee equivalent to that applicable for appeals under the TRAI Act, payable through digital payment systems such as UPI, unless reduced or waived by the Tribunal Chairperson. It also provides that the Tribunal itself functions as a digital office.

Penalties and Blocking Powers

Section 33 and the Schedule create a detailed penalty framework. The Schedule prescribes maximum penalties for specified contraventions. For serious failures such as non-compliance with Section 8(5) on reasonable security safeguards, penalties can go up to Rs. 250 crore. Breaches of Section 8(6) (failure to notify personal data breaches) and of obligations in respect of children under Section 9 may attract penalties up to Rs. 200 crore. Non‑compliance by Significant Data Fiduciaries with additional obligations under Section 10 may draw penalties up to Rs. 150 crore. Other contraventions of the Act and rules may attract penalties up to Rs. 50 crore. A Data Principal who breaches her duties under Section 15 may be penalised up to Rs. 10,000.

When deciding the quantum of penalty, Section 33(2) requires the Board to consider factors such as the nature, gravity and duration of the breach, the type and nature of personal data affected, the repetitive nature of the breach, undue advantage gained or loss avoided, mitigation efforts, proportionality and effectiveness of the penalty, and the likely impact of the penalty on the person. Section 34 states that all sums realised by way of penalties must be credited to the Consolidated Fund of India.

In cases of repeated and serious non‑compliance, the Act also allows the Central Government, on the Board’s reference, to direct blocking of access by the public to the services of a non-compliant Data Fiduciary, by directing intermediaries to block access to its services, thereby acting as an ultimate deterrent in addition to monetary penalties.

Conclusion

The DPDP Act and the Rules together mark a structural change in India’s data governance landscape. They codify a rights‑based model that gives Data Principals clear, enforceable rights over their digital personal data, impose layered and risk‑based obligations on Data Fiduciaries and Significant Data Fiduciaries, and create a specialised, digital‑first regulator with strong investigative and penalty powers. For organisations, the framework demands careful re‑design of consent and notice flows, data security controls, retention practices, vendor contracts and governance structures. For individuals, it offers a more transparent and accountable environment in which their data is collected and used, anchoring digital commerce and public service delivery in a more robust privacy regime.

Image Credits:

Photo by Storm on Canva

The DPDP Act and the Rules together mark a structural change in India’s data governance landscape. They codify a rights‑based model that gives Data Principals clear, enforceable rights over their digital personal data, impose layered and risk‑based obligations on Data Fiduciaries and Significant Data Fiduciaries, and create a specialised, digital‑first regulator with strong investigative and penalty powers. For organisations, the framework demands careful re‑design of consent and notice flows, data security controls, retention practices, vendor contracts and governance structures. For individuals, it offers a more transparent and accountable environment in which their data is collected and used, anchoring digital commerce and public service delivery in a more robust privacy regime.

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IP Battles in the Life of a Showgirl

Taylor Swift taught us all: better call a lawyer before you sign on the dotted line, or you’ll be left singing ‘Look What You Made Me Do’. 

As Taylor steps into her Showgirl era, buying back her original albums and rewriting the rules, this article dives into how she brought a knife to a gunfight… and still stole the show.

In 2005, at the very outset of her music career, a 15-year-old Taylor entered into a contract with Big Machine Records (BMR) under which she recorded several singles and six albums. The contract the 15-year-old Taylor entered into required her to assign her master recording rights “in perpetuity” to BMR, effectively vesting ownership of the original sound recordings with the label for an unlimited duration. 

There are two different copyrights for musical works in the US. The first is for the musical work itself, which constitutes the underlying composition, and the second persists in the master, which is the final recorded version. The U.S. Copyright Act of 1976 states that, in terms of sound recording, the owner has the right to duplicate the sound recording in the form of “phonorecords or copies that directly or indirectly recapture the actual sounds fixed in the recording.”[1] However, the clause is silent on new recordings that independently recreate the same musical work.[2] For example, the direct sampling of an original sound recording constitutes infringement, but creating a new recording or re-performance of the same music does not.

Upon expiry of the contract, Taylor chose not to renew the agreement. Consequently, in 2019, record executive Scooter Braun acquired Big Machine Records, thereby owning the rights to Taylor’s original master recordings. Taylor was offered the opportunity to repurchase her albums upon signing a non-disclosure agreement, which she declined. As a result, she no longer retained any rights to her original masters. In 2020, the albums were subsequently sold again to Shamrock Holdings.

Re-recording was also restricted by the “re-recording clause,” which prevented her from re-recording her album for six years after the release of her masters. As the original music composition and the recorded version have separate rights, record labels customarily impose contractual restrictions on re-recording to safeguard the value of the sound recording rights they hold and to protect the investments they make in the development and promotion of the artist.

Therefore, upon the expiry of six years, Taylor took a bold decision to re-record four of her albums — Fearless, Speak Now, 1989, and Red — which led to the introduction of Taylor’s versions.   

In an interview, Taylor said that “when something says in parentheses Taylor’s Version next to it, that means I own it.”[3]

This move considerably shifted the paradigm of contracts for copyright composition in musical works. Pursuant to the re-recording, the release of Taylor’s versions achieved significant commercial success, thereby diminishing the market demand and commercial value of the original master recordings.

Before Taylor, many artists like Bob Dylan, Prince, Def Leppard and JoJo[4] have all re-recorded in response to the well-publicised disputes with their record labels; however, by releasing Taylor’s versions, “she did more than delight a nation of Swifties. She also opened significant questions about the role of intellectual property in contract law, and possibly tipped the balance toward artists.”[5]

Consequently, on May 30, 2025, Taylor announced through her official website that she had acquired the masters of her first six albums, together with the associated videos, concert films, artwork, photography, unreleased content, and other related materials, pursuant to an offer extended by Shamrock on terms more favourable to her.  She attributed the sale’s success to the positive reception of her re-recordings and the Eras Tour.[6]

The U.S. Copyright Act of 1976 also provides reversion mechanisms under Sections 203 and 304,[7] which allow creators to terminate copyright grants after a substantial period of time. These provisions enable authors to reclaim rights to works that were previously assigned or licensed. However, a major drawback is that this right typically becomes exercisable only after 35 years, resulting in a lengthy, often impractical waiting period for many creators.[8]

Legal Framework Analysis: India

Although India has not had a “Taylor Swift moment” to spotlight this issue, it has certainly witnessed several disputes over sound recordings, their underlying works, and associated rights. While record labels often leverage their bargaining power to secure copyright assignments and compel artists to relinquish their rights in India, some safeguards protect artists against such exploitation.

Earlier, a Supreme Court decision in IPRS v. Eastern Indian Motion Pictures Association[9] restricted authors’ rights to the underlying works of a cinematograph film or to rights under an employment contract. In essence, the producer of the cinematograph film or sound recording acquires the copyright over the incorporated work, preventing the original author from claiming further rights or royalties when the film is publicly communicated.

This interpretation drew significant criticism for undermining the rights of composers and lyricists. Justice J Krishna Iyer, in his obiter dicta, stated that the music, which has merged through the soundtrack into the motion picture, is copyrighted by the producer. Still, on account of this monopoly, the music composer’s copyright does not perish. The twin rights can co-exist, each fulfilling itself in its delectable distinctiveness. It was further stated that authors of original works, including lyricists and music composers, often suffered on account of unequal bargaining power vis-à-vis the producers of cinematograph films and/or sound recordings.

To address these concerns, the Copyright (Amendment) Act, 2012,[10] introduced a proviso to Section 17, bringing about a crucial change. The proviso stated that the author of an original literary, dramatic, or musical work retains their rights in the underlying work, even where the employer owns the film or the work is created under a contract of employment.[11]

This position was reaffirmed in IPRS v. Rajasthan Patrika Pvt. Ltd.[12], where the Court held that the rights of authors of original compositions remain unaffected by the employer’s ownership of the film or any other work.

The decision inferred that the rights of both the owner and the author are independently protected. Likewise, in the context of sound recordings, both the sound recording rights and the composition rights relating to the underlying works continue to enjoy independent protection and the ability to claim royalties. However, the scope of re-recording rights in India remains uncertain and is primarily governed by the terms of contractual agreements entered into between the parties.

The Amendment Act also introduced the performer’s right under Section 38 of the Act, which states that any performer who appears or engages in any performance shall have a special right to be known as the “performer’s right” in relation to such performance. The performer’s right shall subsist for fifty years from the beginning of the calendar year next following the year in which the performance is made.[13] It confers on the performer the right of reproduction of the performance in any material form, including storing it in any medium by electronic means. 

In addition to the above, artists in India are also conferred the moral right under Section 57 of the Act. Moral rights are personal to the author/creator and utterly independent of the author’s economic rights.

Moral rights comprise two major rights: paternity (or attribution) and integrity. The right of paternity allows the author to claim authorship of a work, even after the copyright has been transferred. For instance, Javed Akhtar sent a legal notice to Armaan and Amaal Mallik stating the reprised version of “ghar se nikalte hi” had infringed his right of integrity, i.e. the right to prevent his work from being mutilated and distorted in a way that is prejudicial to his honour and reputation. He objected that the new version credited only Kunaal Verma as the lyricist, even though Akhtar wrote the original lyrics.[14] 

Moral rights depart from the conventional understanding that artists are divested of all rights once their economic rights are assigned to a publisher or any other person. Rather identifies the author’s special rights to claim authorship of the work, right to restrain or claim damages on any distortion, mutilation, or other modifications.

Even though record labels often exploit artists by compelling them to accept one-sided assignment terms, in India, the assignee cannot claim immunities inconsistent with Section 57 of the Act.[15] It reinforces the author’s superior rights and their entitlement to oppose any alteration of their work.

Final Thoughts

After analysing this Delicate situation, although a legal loophole in the U.S. allows artists to re-record their music, a more defensive approach may be necessary in the Indian context. Until a concrete law or judicial precedent emerges to address this issue directly, artists in India may need to rely on and exercise their existing rights, such as moral and performance rights, to protect their interests.

However, what’s better than revenge is Fearless moves like getting the contract Clean-ly vetted and conducting due diligence that’s All Too Well. After all, You Belong with a solid plan, not chaos!

References:

[1] 17 USC 114 –    Copyright law of the United States (title 17) and Related Laws Contained in Title 17 of the United States Code, Copyright Law of the United States | U.S. Copyright Office. Available at: https://www.copyright.gov/title17/.

[2] Bad blood© with Taylor Swift’s album re-recording (2021) Harvard Journal of Law & Technology. Available at: https://jolt.law.harvard.edu/digest/bad-blood-with-taylor-swifts-album-re-recording.

[3] Myers, S. (2021) Taylor Swift Explains Why She’s Re-Recording Her Albums. Available at: https://www.youtube.com/watch?v=pB1nyP_O7II

[4] Allison Rapp, Take Two: Artists Who Re-Recorded Their Music, (Sept. 28, 2023), https://ultimateclassicrock.com/artist-re-recorded-music/.

[5] Brett Milano, How Taylor Swift changed the copyright game by remaking her own music, Harvard Law School (Apr. 2, 2024), https://hls.harvard.edu/today/how-taylor-swift-changed-the-copyright-game-by-remaking-her-own-music/.

[6] https://www.taylorswift.com/read-my-letter/

[7]  17 USC §§ 203, 304(c U.S. Copyright Office, Notice of Termination, U.S. Copyright Office https://www.copyright.gov/recordation/termination.html.

[8] Yuvaraj, Joshua, ‘It’s Me, Hi, I’m The Problem, It’s Me’: Re-Recording as an Alternative to Statutory Copyright Reversion (November 29, 2024). The University of Auckland Faculty of Law Research Paper Series 2024, Journal of Intellectual Property Law and Practice, Volume 19, Issue 12, 2024[10.1093/jiplp/jpae091], Available at: https://academic.oup.com/jiplp/article/19/12/884/7913103

[9] IPRS v. Eastern Indian Motion Pictures Association (https://indiankanoon.org/doc/243280/ )

[10] Sec. 17 Copyright Amendment Act, https://copyright.gov.in/Documents/Notification/Copyright_Amendment_2012.pdf.

[11] Ibid.

[12] Indian Performing Right Society Limited v. Rajasthan Patrika Pvt. Ltd. Accessible here.

[13] Sec 38 of Indian Copyright Act (https://www.indiacode.nic.in/show-data?abv=CEN&statehandle=123456789/1362&actid=AC_CEN_9_30_00006_195714_1517807321712&sectionId=14552&sectionno=38&orderno=50&orgactid=AC_CEN_9_30_00006_195714_1517807321712)

[14] Javed Akhtar Issues Legal Notice To Armaan & Amaal Malik, (https://www.masala.com/bollywood-news/javed-akhtar-furious-with-ghar-se-nikalte-hi-sends-legal-notice-to-t-series-and-malik-brothers)

[15] Mannu Bhandari v. Kala Vikas Pictures Pvt. Ltd. And Anr. (https://indiankanoon.org/docfragment/331111/?big=3&formInput=bhandari )

Image Credits:

Photo by omid armin on Unsplash

There are two different copyrights for musical works in the US. The first is for the musical work itself, which constitutes the underlying composition, and the second persists in the master, which is the final recorded version. The U.S. Copyright Act of 1976 states that, in terms of sound recording, the owner has the right to duplicate the sound recording in the form of “phonorecords or copies that directly or indirectly recapture the actual sounds fixed in the recording.”[1] However, the clause is silent on new recordings that independently recreate the same musical work.[2] For example, the direct sampling of an original sound recording constitutes infringement, but creating a new recording or re-performance of the same music does not.

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Playing Music at the Workplace: A Quick Guide for Organisations

Did you know that playing music at the workplace amounts to public performance and requires a licence? Well, don’t be surprised, because you’re not the only one unaware of this fact. Many companies find themselves in the same confusion. 

CDs, DVDs, or subscriptions to streaming platforms like Spotify or Apple Music only cover personal listening. They do not allow public playback. Under copyright law, you must obtain permission from the copyright holders or their representatives to play music publicly.

That said, many organisations, especially those organising employee engagement or recreational activities, often use music without the proper licences. The irony is that these licences are usually fairly simple and reasonably affordable to obtain. However, if you skip them and get caught, it can end up costing a fortune, not to mention potential legal issues.

In this article, we decode the do’s and don’ts for organisations that utilise music at the workplace.

Licensing Bodies in India

In India, music licensing is fragmented across multiple authorities, which often causes confusion and compliance gaps. Depending on the rights involved, separate licences may be necessary.

  1. Sound Recording: Obtain a licence from Phonographic Performance Limited (PPL India), Novex Communications, or Recorded Music Performance Ltd. (RMPL) to play songs owned by these entities.
  2. Rights in Underlying Musical and Literary Works: Obtain a licence from the Indian Performing Right Society (IPRS) if the rights holders (authors and composers) are members of IPRS.
  3. Rights of Singers (As Part of Performers): Obtain a clearance certificate from the Indian Singers’ and Musicians’ Rights Association (ISAMRA), formerly known as the Indian Singers Rights Association (ISRA), for playing songs sung by singer members.

When obtaining a licence, ensure the licensing authority actually holds the rights to the works you are using and that the licence covers your intended use.

A 2023 agreement between ISAMRA and the Indian Music Industry allows ISAMRA to receive a portion of public performance revenue from sound recordings collected by PPL India, which is then distributed to performers. PPL India’s revised tariffs are partly designed to help its members meet their financial obligations to ISAMRA, preventing any additional fees or legal actions against PPL’s licensees by ISAMRA. 

Organisations should note that tariffs for background music depend on the size of the premises (in sq. ft.). Factors such as the number of employees are not explicitly listed on the licensing bodies’ websites. Licences for corporate events, however, fall under a separate category and are different from background music licences.

It is also worth noting that while registration is mandatory for any entity engaged in the business of issuing licences under the Copyright Act, 1957, not all players, such as Novex, are registered societies. This is a space to watch closely as court rulings continue to shape the landscape. Click here to read our blog post on this subject.

Challenges Around Tariff Schemes

Persons aggrieved by copyright societies’ tariff schemes may appeal to the commercial court, which may, before issuing an order on the matter, fix an interim tariff after hearing the parties. Furthermore, if a licence is offered on unreasonable terms, it may constitute a refusal to permit performance in public, in which case a compulsory licence may be granted.

The Need for a Centralised Licensing System

A centralised digital music licensing registry is expected to be launched soon in collaboration with rights societies, following the first meeting of the Joint Working Group on promoting the live events industry, convened in August 2025. This aims to address the overlapping music rights bodies and non-transparent tariff structures. 

Such an initiative for the overall music licensing regime in the country, and not just for live events, can undoubtedly simplify matters for businesses.

On the global stage, similar systems are already in place. For example, in the UK, music managed by PPL (representing performers and record companies) and PRS (representing songwriters, composers, and publishers) can be accessed through a single licence called ‘TheMusicLicence’. This licence permits the legal playback of music for employees in offices or workplaces via radio, TV, other digital devices, and live performances. Previously, UK businesses and organisations needed to acquire separate music licences from PPL and PRS. 

In New Zealand, the OneMusic joint licensing initiative, a collaboration between APRA AMCOS (representing songwriters, composers, and music publishers) and Recorded Music NZ (representing recording artists and record labels), simplifies the licensing process for businesses.

Penalties for Infringement

Playing music at the workplace without a valid licence constitutes copyright infringement. This may lead to both civil and criminal liability.

  • Civil remedies include injunctions, damages, and accounts of profits.
  • Criminal penalties can include imprisonment for between six months and three years, as well as fines ranging from INR 50,000.00 to INR 2,00,000.00.

In the case of a company, liability extends not only to the organisation but also to individuals in charge of and responsible for the conduct of business on behalf of the company.

Things Organisations Should Keep in Mind

  • Include music usage in your HR or internal compliance policies, ensuring no music is played without proper authorisation.
  • Understand the rights involved and the applicable licence category before making payments to avoid paying excessive fees.
  • Be truthful in your declarations, as inaccurate information about music usage can result in additional fees.
  • If music has already been used without a licence, proactively contact the relevant society to regularise your use. Most are business-friendly and open to resolving matters in a mutually amicable manner.
  • If you receive a demand notice, consult your legal team before responding. Most cases don’t go to court, as owners usually seek licence fees without incurring additional costs; however, matters can escalate if negotiations fail or the notice is ignored.
  • If you’re regularising past infringements, expect to pay an additional amount towards damages.

Final Thoughts

While this post focuses on licences for playing music at the workplace, organisations should also be aware of other considerations. For instance, the type of music played could potentially lead to harassment claims, and using music in marketing or social media content may require separate permissions.

The good news is that you don’t need a licence for royalty-free music or works in the public domain, which can be a simple and safe alternative for many organisations.

By keeping informed, knowing your rights, and consulting copyright or licensing experts, employers can stay compliant and steer clear of unnecessary risks.

Image Credits:

Photo by milindri on Canva

Organisations should note that tariffs for background music depend on the size of the premises (in sq. ft.). Factors such as the number of employees are not explicitly listed on the licensing bodies’ websites. Licences for corporate events, however, fall under a separate category and are different from background music licences.

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India’s New Online Gaming Law: Play or Pause?

India’s online gaming sector is staggering under back-to-back blows. The enactment of the Promotion and Regulation of Online Gaming Act, 2025, which prohibits online money games, has already unsettled the sector; now, the GST Council has compounded matters by proposing to raise GST on online money gaming, betting, casinos, gambling, horse racing, and lottery from 28% to 40%.

The new law has caused ripples across the $3.7-billion Indian online gaming industry, which relies heavily on real money games. Opposition has been swift, with cases filed in the Karnataka, Delhi, and Madhya Pradesh High Courts. This led the Centre to file transfer petitions before the Supreme Court to consolidate all cases, which the Court allowed on September 8.[1]

Article 246 deals with the allocation of legislative powers between the Centre and States, as categorised into three lists under the Seventh Schedule. States alone can legislate on matters pertaining to sports, betting and gambling under Entries 33 and 34 of List II of the Seventh Schedule. While certain states have adopted the Public Gambling Act of 1867, enacted by the erstwhile British rulers, others have developed their own gambling legislation.[2] Certain states like Telangana, the first in India to impose a ban, have outlawed online real-money gaming, while others, such as Tamil Nadu and Sikkim, have chosen to regulate it.

This fragmented regulatory landscape arguably strengthened the case for a uniform national framework. Still, opposition-ruled states, including Karnataka and Tamil Nadu, are preparing to challenge the Act in the Apex Court, citing encroachment on state powers.

This raises difficult questions:

  • Did Parliament have the competence to enact the 2025 law?
  • Can entries in the Union List, such as forms of communication including wireless, telecom and broadcasting (Entry 31) or inter-state trade and commerce (Entry 42), legitimately support it?
  • Does the Act contradict judicial precedent affirming a fundamental right to trade in games of skill?
  • If online money games are banned, why propose a GST hike?
  • Even if courts strike down the ban, what survival prospects does the industry have under a 40% tax regime?

These questions are only the tip of the iceberg. In this piece, we focus on the timeline of key developments, the core features of the new Act, and the regulatory dilemmas it creates.

Timeline of Key Events

  • May 2022: Ministry of Electronics and Information Technology (MeitY) sets up an Inter-Ministerial Task Force (IMTF) for online gaming regulation.[3]
  • September 2022: The IMTF report, inter alia, suggests a central-level law for online gaming, the creation of a dedicated regulatory body to determine whether a game qualifies as a game of skill or of chance, and the setting up of a three-tier dispute resolution mechanism.
  • December 2022: MeitY designated as the nodal ministry for online gaming.
  • April 2023: Meity notifies the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Amendment Rules, 2023, requiring online gaming intermediaries to follow due diligence requirements and host only permissible online games (see detailed analysis here and here).
  • April 2024: Telecom Regulatory Authority of India’s (TRAI) consultation paper on inputs for formulation of the National Broadcasting Policy, 2024, seeks stakeholder views on online gaming regulation, local game developer support, and safeguards against harms.
  • April 2025: Proposal being finalised to denote online real-money gaming companies as “reporting entities” under the Prevention of Money Laundering Act, 2002.
  • August 2025: The Promotion and Regulation of Online Gaming Act, 2025, receives presidential assent (August 22).

Highlights of the New Law

The key elements of the Act are as follows:

  • Applicability: It extends to the whole of India and also asserts extraterritorial jurisdiction, applying to services offered from outside India if they target Indian users. This provision is critical in a globalised digital economy, where gaming platforms often operate across borders and enforcement challenges are compounded by jurisdictional gaps.
  • Enforcement Date: The Act will come into force on the date the central government may appoint by notification in the Official Gazette.
  • Recognition of E-sports and Online Social Games: Section 3 requires the central government to take steps to recognise and register e-sports as a legitimate competitive sport with the designated Authority/agency and to promote the ecosystem via standards, training academies, research centres, incentives, and coordination with states and sports bodies. Under Section 4, the government is mandated to undertake the development of online social games via registration mechanisms, distribution support, age-appropriate access, awareness programs, and state/institutional coordination. Social games may charge access or subscription fees. Still, they cannot involve staking money or “other stakes,” nor be treated as online money games or e-sports, preserving a non-gambling, non-wagering category the government can actively promote.
  • Prohibition and Penalties: The Act introduces strict prohibitions with corresponding penalties:
  • Online Money Games: Offering, aiding, abetting, inducing, or otherwise engaging in the offering of online money games or online money gaming services is prohibited under Section 5. Any person who offers online gaming service in contravention of this provision will be punished with imprisonment of up to three years, or a fine of up to Rs 1 crore, or both.
  • Advertisement: Section 6 imposes a categorical ban on any form of advertisement which directly or indirectly promotes or induces participation in online money games. This prohibition extends across all media, including digital platforms, television, print, and influencer-led campaigns. Any person who makes or causes to make an advertisement in any media, in contravention of this Section, will face imprisonment for a term which may extend to two years or a fine which may extend to Rs 50 lakh or both.

For sponsors and advertisers, this translates into a fundamental shift in compliance obligations. Celebrity endorsements, branded content, and promotional tie-ups with gaming platforms offering money-based formats are now legally impermissible. The language of the provision is broad enough to capture not only explicit advertisements but also subtle forms of brand association and affiliate marketing.

This has significant implications for marketing agencies, OTT platforms, and sports franchises that have previously relied on sponsorship revenue from gaming companies. The Act effectively severs the commercial link between regulated media and monetised gaming, forcing advertisers to recalibrate their strategies and seek partnerships within the permissible segments, namely e-sports and social games.

In the long term, this could lead to a cleaner advertising environment. However, in the short term, it causes uncertainty and revenue disruption for stakeholders who have built business models around the visibility and virality of online money gaming platforms.

  • Transfer of Funds: Section 7 targets banks, financial institutions, or “any other person” facilitating transactions towards payment for any online money gaming service.” This means that any agencies acting as payment facilitators, wallets, or processors also risk exposure if they route funds to such services. Any person who engages in any transaction or authorisation of funds in contravention of this Section will face imprisonment for a term which may extend to three years or a fine which may extend to Rs 1 crore or both.

Subsequent offences carry enhanced penalties.

  • Online Gaming Authority: According to Section 8, the central government may, by notification, constitute an Authority or designate any existing Authority or Authorities or any agency which may be vested with powers to categorise games, determine whether a game qualifies as an online money game, and issue binding directions to platforms and service providers. The Authority also serves as a grievance redressal body, capable of responding to complaints and initiating inquiries.
  • Blocking: Section 14 allows the government to block access to offending platforms under the Information Technology Act, 2000, ensuring technical enforcement against offshore and anonymous operators.
  • Search and Seizure: Officers authorised under Section 15 are empowered to conduct searches and seizures, including in virtual digital spaces, and to arrest individuals without a warrant. These powers are comparable to those found in legislation dealing with cybercrime and financial fraud, underscoring the seriousness with which the government views online money gaming.

Challenges Ahead

Some of the challenges that arise are as follows:

  • Definitional Rigidity in E-Sports Classification
  • Absence of Criteria to Determine Whether a Game Qualifies as an Online Money Game
  • Jurisdictional and Extraterritorial Enforcement
  • Financial Compliance and Payment Gateways
  • Privacy and Search Powers under Section 16
  • Ambiguity Around One-Time Access Fee

Now, let us delve into these in detail:

  • Definitional Rigidity in E-Sports Classification

The definition of “e-sport” under Section 2(1)(c) is highly prescriptive and may inadvertently exclude several popular competitive games from qualifying under the Act. The requirement that the online game must be:

    • part of a multi-sports event,
    • recognised under the National Sports Governance Act, 2025,
    • registered with the designated Authority under Section 3, and
    • determined solely by physical dexterity, mental agility, or strategic thinking,

creates a cumulative threshold that many mainstream titles, especially emerging or indie games, may not meet. This could lead to regulatory exclusion of games that are otherwise widely accepted as e-sports globally. This would also discourage development of esports competition circuits from the grassroots level for new and developing games, where smaller tournament organisers only cover one esports, let alone for other esports.

Mandatory registration with the Authority/agency under Section 3 would further add to the problems for international game developers who hold tournaments across the world or indie developers from abroad who may have fringe audiences in India having to separately register their game with the Authority/agency in India to receive protection under this Act instead of having an automatically opted in scope of recognition for their game based on the inherent characteristics of the esports element within the game itself.

Moreover, the exclusion of any game involving betting, wagering, or other stakes, even if such features are external to the core gameplay, may disqualify platforms that host legitimate tournaments but also offer ancillary monetised features. The lack of flexibility in recognising evolving formats of competitive gaming may hinder innovation and limit India’s ability to align with international e-sports standards.

  • Absence of Criteria to Determine Whether a Game Qualifies as an Online Money Game

The Act empowers the Authority under Section 8 to decide whether a game qualifies as an online money game, either on application or suo motu. However, the criteria for such classification are not fully detailed in the Act and are to be set by future regulations. This leads to uncertainty for platforms offering hybrid formats or games with optional monetisation features. Without clear procedural safeguards or definitional thresholds, the classification process may be prone to inconsistent or discretionary enforcement.

Additionally, the Authority is empowered to issue binding directions and handle complaints, but the Act does not specify timelines, appeal mechanisms, or procedural transparency for these determinations. This could lead to operational unpredictability for developers and service providers.

  • Jurisdictional and Extraterritorial Enforcement

While the Act asserts extraterritorial jurisdiction over services targeting Indian users, enforcement against offshore platforms remains a practical challenge. Blocking access under Section 14 (via the IT Act) may be technically feasible, but pursuing criminal liability or financial penalties against foreign entities is likely to be constrained by jurisdictional limitations and a lack of mutual legal assistance frameworks.

  • Financial Compliance and Payment Gateways

Section 7 prohibits banks, financial institutions, and “any other person” from facilitating transactions toward online money gaming services. While this provision is aimed at cutting off financial flows to prohibited platforms, it places a significant compliance burden on payment gateways, wallets, and intermediaries.

The lack of clarity on what constitutes “facilitation” or “authorisation” of funds may expose legitimate fintech operators to liability, especially in cases where transactions are routed through third-party APIs or bundled services. Without detailed guidance or safe harbour provisions, financial service providers may adopt overly cautious approaches, potentially affecting unrelated gaming or entertainment transactions.

  • Privacy and Search Powers under Section 16

Section 16 of the Act grants sweeping powers to authorised officers to enter and search “any place,” including digital environments, and arrest individuals without a warrant if they are reasonably suspected of committing or about to commit an offence under the Act. The term “any place” is expansively defined to include:

“…any premises, building, vehicle, computer resource, virtual digital space, electronic records or electronic storage device…”

Moreover, officers are permitted to override access controls and security codes to gain entry into digital systems and devices.

While these powers are intended to facilitate enforcement against online money gaming services, they raise significant privacy concerns. The provision lacks:

    • Clear procedural safeguards;
    • Judicial oversight or prior authorisation;
    • Limitations on scope or duration of access; and
    • Data protection protocols for seized digital content.

In the absence of a dedicated data protection law or binding privacy framework, such broad powers risk infringing on user privacy, especially where personal devices, cloud storage, or encrypted communications are involved. The potential for overreach is heightened by the lack of specific thresholds for what constitutes “reasonable suspicion”.

It is obvious that most online games are almost certainly played on the player’s personal devices, and the risk of unwanted examination of personal devices creates grave data privacy concerns. This may invite constitutional scrutiny under Article 21 (right to privacy) and could conflict with principles laid down in Justice K.S. Puttaswamy (Retd) v. Union of India,[4] particularly regarding proportionality and necessity in state surveillance.

  • Ambiguity Around One-Time Access Fee

The Act permits online social games to charge a “one-time access fee” or subscription fee under Section 2(i), provided such payments are not in the nature of stakes or wagers. However, the term “one-time access fee” is not defined in the Act. It is also unclear whether this fee can be charged repeatedly for re-entry or re-access, or whether it must be a single, non-recurring payment per user per game.

This ambiguity could lead to compliance risks for platforms offering paid downloads or episodic content, including app stores like Google Play or Apple App Store. If interpreted broadly, even standard paid games may fall within the scope of registration and regulation under the Act. Without clarification in the Rules, platforms may face uncertainty about whether repeated payments for access violate the prohibition on staking or wagering.

The lack of guidance also risks inconsistent enforcement and may deter developers from offering premium content or educational games with gamified access models. A clear definition or FAQ from the Authority will be essential to avoid overreach and ensure legitimate monetisation models are not inadvertently penalised.

Concluding Thoughts

The Promotion and Regulation of Online Gaming Act, 2025, marks a significant milestone in India’s approach to the online gaming sector. For the first time, the law directly addresses the fractured regulatory landscape and establishes a national framework over a domain that has so far operated within legal grey areas. By recognising e-sports and social games while simultaneously banning money-based formats, the Act aims to draw a clear boundary between innovation in gaming and the dangers of gambling-like play.

At its heart lies a categorical prohibition on real-money games, accompanied by strict penalties and a complete ban on their advertising and financial facilitation. This effectively severs the commercial lifeline of an industry that has until now been built and funded overwhelmingly by real-money games, including various games such as rummy and poker that were traditionally considered games of skill and were hence legal.

The Act’s promise of clarity and transparency also comes with new uncertainties. Its rigid classifications, broad enforcement powers, and unresolved gaps leave critical questions for industry players, financial intermediaries, and even regulators themselves. Offshore platforms will remain a persistent enforcement headache, while advertisers, sponsors, and fintech operators will need to recalibrate their models and policies to remain compliant.

Ultimately, the Act reflects the central government’s determination to bring order to the rapidly expanding online gaming sector. Still, its long-term success will depend less on the text of the statute and more on how its provisions are operationalised in practice. Clear rules, proportional enforcement, and continued dialogue with industry will be essential to ensure that India strikes the right balance between protecting consumers and fostering growth in its digital gaming economy.

References:

[1] T.P.(C) Nos. 2484-2486/2025.

[2] 276th Report of the Law Commission of India, titled “Legal Framework: Gambling and Sports Betting including in Cricket in India”; available here.

[3] Ministry of Electronics and Information Technology, Government of India, “Lok Sabha Unstarred Question No. 210: Online Gaming Industry,” December 7, 2022; available here.

[4] AIR 2018 SC (SUPP) 1841.

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The Act’s promise of clarity and transparency also comes with new uncertainties. Its rigid classifications, broad enforcement powers, and unresolved gaps leave critical questions for industry players, financial intermediaries, and even regulators themselves. Offshore platforms will remain a persistent enforcement headache, while advertisers, sponsors, and fintech operators will need to recalibrate their models and policies to remain compliant.

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Buyback Fraud: SAT's Take on Compliance Officer’s Liability

In a crucial ruling, the Securities Appellate Tribunal (SAT) held that the appellant, who served as both company secretary and compliance officer, was not liable for the conduct of the company in connection with the buyback of its equity shares without adequate free reserves.[1]

This decision overturned an earlier order by the Adjudicating Officer (AO) of the Securities and Exchange Board of India (SEBI), who had determined that the appellant misled investors by signing the buyback announcement.

We now examine the background of the case and the significance of the Tribunal’s ruling.

Brief Background

In this case, the appellant served as the company secretary during FY 2009-10 and 2010-11, two of the three FYs in which the company’s accounts, which he attested, were later found to be fraudulently understated.  He also attested the company’s public announcement in May 2011 regarding a buyback of equity shares, despite inadequate free reserves, which misled investors and shareholders about the company’s valuation and free reserves.

In its March 2022 order, the AO made certain specific allegations against the appellant, imposing a penalty of Rs. 10 Lakhs. Firstly, under Section 215 of the Companies Act, 1956, the company secretary was not merely required to attest the accounts but was required to verify if the audited accounts had contained all the assets and liabilities or other facts needed to be incorporated in the accounts. Secondly, as a statutory official of the company, he should have exercised utmost due diligence, checked the veracity of the buyback offer document and its legal compliances before authenticating and signing.

SEBI argued that because there was non-compliance with Section 77A of the Companies Act, 1956, and provisions of the SEBI (Buy Back of Securities) Regulations, 1998 (Buyback Regulations), the compliance officer was an ‘officer in default’ and liable for penal action.[2]

SAT’s Initial Order and the Subsequent Remand

SAT initially set aside SEBI’s order, saying that the appellant was not required to enquire into the veracity of the buyback offer documents.[3] It pointed to Regulation 19(3) of the Buyback Regulations and held that the compliance officer’s role was limited to redressing the grievances of the investors. According to the Tribunal, the obligation to comply rested with the Board of Directors, not the compliance officer.

This prompted SEBI to approach the Supreme Court. The Court observed that under Regulation 19(3), companies are mandated to nominate a compliance officer and an investors’ service centre to (a) ensure compliance with the Buyback Regulations, and (b) redress the grievances of investors. The Apex Court ruled that there was a ‘patent error’ on the part of the Tribunal in interpreting that the role of the compliance officer was limited to redressing the grievances of investors. It said that the Tribunal missed the crucial point that the compliance officer is also required to ensure compliance with the Buyback Regulations, as expressly stipulated under Regulation 19(3). With this, the Court set aside the Tribunal’s decision and remanded the matter for fresh consideration.[4]

SAT’s Final Decision After Reconsideration

After taking a fresh look, SAT once again set aside the penalty. This time, it explained why in more detail. It noted that the public buyback announcement itself clearly said that the Board of Directors was responsible for the information it contained. The Tribunal also pointed out that the audited accounts had already been certified by a qualified chartered accountant and approved by the Board of Directors.

It found fault with the AO’s finding that the appellant ought to have verified whether those accounts contained all the assets and liabilities. The Tribunal said this isn’t the duty of either the company secretary or the compliance officer.

SAT acknowledged the Supreme Court’s point that compliance officers are responsible for ensuring compliance. But it also said SEBI did not point out any specific charge or violation. Merely stating that he signed the public announcement and thereby misled investors was not enough to show a specific violation.

Wrapping Up

The SAT’s ruling is a valuable reminder about the scope of a compliance officer’s role. Yes, they have to ensure compliance with the regulations. But they do not have to sit in judgment or appeal over audited accounts or take on the role of auditors. The decision also underscores the need for clarity when bringing charges against the officers of the Company. Regulators must identify specific violations and clearly outline the basis for any penalties, especially given the serious consequences involved. For both regulators and companies, this case reinforces the importance of assigning responsibility in a fair and well-defined manner, aligned with each role’s actual scope and function.

References:

[1] V Shankar v. Securities and Exchange Board of India (Appeal No.283 of 2022); the order dated May 5, 2025, can be accessed here.

[2] The case was assessed under the laws and regulations in force at the time, namely the Companies Act, 1956, and the SEBI (Buy Back of Securities) Regulations, 1998, which have since been replaced by the Companies Act, 2013, and the SEBI (Buy-Back of Securities) Regulations, 2018.

[3] Click here to access the Tribunal’s order dated November 1, 2022.

[4] Click here to access the Supreme Court’s decision dated February 8, 2023.

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Photo by redrhino78 on Canva

The SAT’s ruling is a valuable reminder about the scope of a compliance officer’s role. Yes, they have to ensure compliance with the regulations. But they do not have to sit in judgment or appeal over audited accounts or take on the role of auditors. The decision also underscores the need for clarity when bringing charges against the officers of the Company. Regulators must identify specific violations and clearly outline the basis for any penalties, especially given the serious consequences involved. For both regulators and companies, this case reinforces the importance of assigning responsibility in a fair and well-defined manner, aligned with each role’s actual scope and function.

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Legal Uncertainties of Unregistered Copyright Societies in India

The recent PPL-Azure dispute[1] has brought copyright societies back into focus. Interestingly, the rule requiring registration of copyright societies has been around since 1994, when the Copyright Act, 1957, was amended. That was over three decades ago, and yet, there continues to be significant uncertainty around the interpretation and enforcement of Section 33 (provisions pertaining to registration of such societies).

As a result, stakeholders have developed varying interpretations, contributing to a complex legal landscape that is gradually taking shape through ongoing judicial proceedings.

A Little Background

Here is a brief overview of how the law surrounding copyright societies has evolved over the years.

Before 1994: The Performing Rights Society Era

Prior to the 1994 amendment, what are now called copyright societies were referred to as performing rights societies. Here is how things worked back then:

  • What they were: Performing rights societies were societies, associations or other bodies that handled the business of issuing or granting licences for the performance of works protected by copyright.
  • No need to register, but statement of fees or royalties had to be filed: These societies were not required to register, but they did have to publish and file with the Registrar of Copyrights statements of all fees, charges or royalties proposed to be collected for the grant of licences.
  • What happened if they did not file: If a society failed to prepare, publish and file such statements, it could not enforce any civil or criminal remedies for infringement without the Registrar’s consent.
  • Royalty regulation: If someone objected to the fees, charges or royalties, the Copyright Board could step in, hold an inquiry, and modify the fees if needed.

1994 to 2012: Introduction of Registration Requirement

The 1994 amendment brought in a structured regime for copyright societies. Key features of this phase include:

  • No actual definition: The law did not define copyright societies beyond saying that a society is one that is registered under Section 33(3).
  • Registration becomes mandatory: To carry on the business of issuing or granting licences in respect of copyrighted works or any other rights under the Act, registration was now required.
  • No consequences for not registering: The law said you cannot run this kind of business without registering, but it did not spell out what happens if someone does.
  • No fee regulation: The earlier system, where the Copyright Board could alter royalty rates, was dropped. This gave copyright societies more freedom to decide their tariff structures.

After 2012: Trying to Fix the Gaps

The 2012 amendment was a response to growing concerns about a lack of transparency and disputes involving tariff rates. Here is what changed:

  • Still no proper definition: Even with the new amendments, the law did not clarify what precisely a copyright society is.
  • Still no action in case of non-registration: The issue of unregistered entities was again left unaddressed.
  • Tariff schemes must be published: Societies were now required to publish their tariff rates. Failing to do so could lead to suspension or cancellation of registration.
  • Appellate oversight introduced: People who disagreed with the published rates could now approach the Copyright Board (later replaced by the Appellate Board and subsequently by the Commercial Court) to have them reviewed.

Unregistered Entities: The Unsolved Puzzle

Section 33(1): Interpreted Differently

Section 33(1) says that any person or association of persons carrying on the business of granting licences in respect of copyrighted works has to do so in accordance with the registration granted under Section 33(3). That sounds simple, but it has given rise to several questions. Courts have not always agreed on what the words ‘person’, ‘business, or ‘in accordance with’ actually mean.

For example, in Novex Communications v. Trade Wings Hotel,[2] the Bombay High Court said the term ‘person’ does not include the owner of copyright. But, the Division Bench of the Delhi High Court in the Azure case noted that owners do fall within its ambit.

The meaning of ‘business’ is also debated. Undoubtedly, it covers a broad scope of activities and can be said to refer to a systematic or organised course of activity with a view to making profits. The Madras High Court in Novex Communications v. DXC Technology[3] had observed that once the grant of licence moves from the owner in his individual capacity and transcends into the realm of business, the registration requirement is triggered.

And then there is the phrase ‘in accordance with’. In the Azure case, the Division Bench interpreted this to mean that the association of persons issuing or granting licences must either be a registered copyright society or a member of a registered copyright society.

But this interpretation raises problems, especially when you look at the Copyright Rules, 2013. Rule 45 states that membership in a copyright society is open to authors and other rights owners. It does not contemplate one copyright society becoming a member of another. Furthermore, Rule 46(2), which sets out the conditions for granting permission to carry on copyright business, explicitly prohibits the sub-licensing or transfer of royalty collection or distribution rights to any other person or copyright society.

First Proviso to Section 33(1): Licensing in Individual Capacity

The first proviso to Section 33(1) specifies that the copyright owner will continue to have the right to grant licences in his individual capacity, provided that such exercise of right is consistent with his obligations as a member of a registered copyright society.

In Novex Communication v. Lemon Tree Hotels[4] and the Trade Wings case, courts took this to mean that a person who is the deemed owner of sound recordings by virtue of Section 18(2) (i.e., as an assignee) had the absolute right to grant licences for exploitation of sound recordings without needing to register as a society. These rulings relied on Section 30 of the Act, which allows a copyright owner to grant licences.

In Trade Wings, it was observed that Section 33(1) did not curtail the power of the owner to grant any interest in the copyright by licence under Section 30 and that Sections 30 and 33 operated in separate chapters of the Copyright Act, i.e., Chapter VI (Licences) and Chapter VII (Copyright Societies).

But the Division Bench of the Delhi High Court, in Azure, raised doubts about this approach. It said that such an interpretation would reduce the main part of Section 33(1) to redundancy and also frustrate Chapter VII of the Act in its entirety. The Court pointed out that the words “or in respect of any other rights conferred by this Act” contained in Section 33(1) implied that the right conferred by Section 30 is also made subject to Section 33(1).

One way to understand this proviso is that it makes clear an owner doesn’t lose all licensing rights by becoming a member of a copyright society. For example, a music label might assign performance rights to a society but retain the right to license ringtone usage independently.

Second Proviso to Section 33(1): Specific Work Categories

The second proviso to Section 33(1), introduced in 2012, says that when it comes to literary, dramatic, musical, and artistic works embedded in films or sound recordings, the business of issuing licences must be carried out only through a registered copyright society.

This has added another layer of confusion. The main part of Section 33(1) already talks about “any work” under copyright, so why name specific categories? Some argue that this was intended to close existing loopholes and delineate more precisely the areas warranting closer regulatory scrutiny. But it has also given unregistered entities room to argue that the restriction only applies to the underlying works, not the sound recordings themselves.

Conclusion: The Law is Clear Except When It Is Not

It is amply clear that the law expects copyright licensing, when carried out as a business, to go through registered copyright societies. But in practice, that clarity tends to vanish just when it is most needed.

Due to vague wording, undefined terms, and the absence of consequences for non-registration, we now have a system that allows unregistered entities to operate openly. Not necessarily because the law permits it, but because it does not say much about what happens if they do.

The recent Azure case brought these complexities to the forefront. The Delhi High Court’s direction to pay an unregistered entity (PPL) using the tariff rates of a registered society (RMPL)—and the Supreme Court’s stay of that direction—highlight the challenges courts face in applying the law to real-world disputes.

Section 33(1), as it stands, leaves many questions unanswered. Its layers of provisos and unclear language allow multiple readings, each with its own implications. When interpretation varies significantly, it becomes challenging for any regulatory framework to provide consistent guidance.

Perhaps, what we need is not just clarity in the text of the law—but consistency in how it’s interpreted and applied across cases. Until then, key questions remain open: How should unregistered entities be treated? What safeguards protect all stakeholders? And how can the law evolve to provide both flexibility and certainty? These questions necessitate ongoing dialogue among legislators, courts, and industry to find a balanced approach forward.

References:

[1] Phonographic Performance Limited v. Azure Hospitality Private Limited & Ors. [CS(COMM) 714/2022]. Though interim directions have been issued in the matter, the main suit is still pending before the Delhi High Court.

[2] 2024 SCC OnLine Bom 252.

[3] 2021 SCC OnLine Mad 6266.

[4] 2019 SCC OnLine Del 6568.

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Section 33(1), as it stands, leaves many questions unanswered. Its layers of provisos and unclear language allow multiple readings, each with its own implications. When interpretation varies significantly, it becomes challenging for any regulatory framework to provide consistent guidance. Perhaps, what we need is not just clarity in the text of the law—but consistency in how it’s interpreted and applied across cases. Until then, key questions remain open: How should unregistered entities be treated? What safeguards protect all stakeholders? And how can the law evolve to provide both flexibility and certainty? These questions necessitate ongoing dialogue among legislators, courts, and industry to find a balanced approach forward.

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WIPO’s IAP: Unlocking the Patent System for All

Innovation thrives around the world, with everyday people finding innovative solutions to local challenges. However, despite this creativity, many innovators struggle to access the necessary support to protect their ideas. Without the means to navigate the patent system or hire expert help, their potential often goes untapped.

A recent study highlighted the inequality among patent inventors in the US, with the paper noting that if women, racial minorities, and people from low-income backgrounds invented at the same rate as high-income white men, the overall invention rate in the country would quadruple.[1] Another 2017 study revealed that individuals from high-income families were about nine times more likely to file a patent than those from low-income families and nearly four times more likely than those from middle-income backgrounds.[2]

The disparities are even starker in developing countries. The limitations faced by developing countries in legal infrastructure and human resources to handle complex patent claims not only restrict access to patent protection but also deepen the divide in the distribution of innovative technologies across the globe.[3] Limited financial resources and high costs involved in engaging with the global patent system often lead to technological dependency on developed economies.[4]

WIPO’s Inventor Assistance Program

Launched on October 17, 2016,[5] after pilot runs in Colombia, the Philippines, and Morocco, the World Intellectual Property Organization’s (WIPO) Inventor Assistance Program (IAP) was created to support inventors and small enterprises with limited finances in securing patent protection.

The program is rooted in the belief that every inventor—regardless of socioeconomic background—should have the opportunity to protect their inventions based on merit. Further, many patent applications were being rejected due to procedural issues stemming from applicants’ unfamiliarity with the complex filing process and their inability to afford legal counsel.

The IAP addresses these barriers by matching qualified inventors with experienced patent professionals who volunteer their expertise to guide them through the patent process.

Currently, the IAP operates in ten countries: Chile, Colombia, Ecuador, Kenya, Morocco, Pakistan, Peru, the Philippines, Singapore, and South Africa.

IAP’s Key Features

Here are the key features of the program:

  • Beneficiaries’ Eligibility: To receive support, beneficiaries must be residents of a participating country, possess basic knowledge of the patent system, and meet income and invention-related eligibility requirements set by their country.[6]
  • IAP Online Platform: This platform serves as the program’s digital infrastructure and is used by beneficiaries, volunteers, country focal points, and WIPO.
  • Governance: As the program’s central governance body, the IAP Steering Committee provides strategic direction, guidance, and support. It also approves new participating countries, monitors IAP implementation, etc.
  • Support Provided under IAP: The pro bono services provided by volunteers (including patent attorneys, agents, search specialists, etc.) to beneficiaries may include:
    • drafting and filing patent applications;
    • managing patent applications and corresponding with patent offices during further prosecution process; and
    • providing guidance for commercializing patents.

The services cover national filings in the beneficiary’s own country and other selected jurisdictions, including through the Patent Cooperation Treaty (PCT) system.

  • No Direct Financial Assistance: No direct financial assistance is offered under the program, with beneficiaries being responsible for the official costs associated with a patent application and any out-of-pocket costs necessary to complete the application.
  • Services Not Included: Patent litigation services and commercialization services are not included under the program. Further, the services are limited to patents and utility models and the associated application processes and do not extend to other types of IP rights.
  • Volunteers Assigned to a Specific IAP Application: There is no limit on how many applications can be supported for an IAP beneficiary. However, volunteers are assigned to a specific IAP application, and the beneficiary cannot ask the volunteer to help with another application without going through the selection process.
  • Role of Participating Countries: Apart from building the local IAP framework, participating countries are required to recruit local volunteers and consider options to enhance the affordability of patent protection for the IAP beneficiaries.

Patents Granted through IAP Support

As of March 2024, 50 patents have been granted with support under the program.[7] Beneficiaries have been able to protect their inventions, including life-changing inventions such as a brain-controlled lower limb prosthesis and artificial nerve guidance for the treatment of peripheral nerve injuries.

Is India Likely to Join the IAP?

To join the IAP, countries should, inter alia, have a low rate of patent filings by local innovators and a limited success rate of local innovators using the patent system. However, India’s patent activity suggests otherwise.

In 2023, the Indian Patent Office received 90,298 patent applications and processed 93,401, with 76,053 patents granted—a significant volume compared to current IAP member countries.[8] For context, the same year saw far fewer applications in countries like Chile (3,251), Ecuador (433), and South Africa (10,729).

Given these figures, it seems unlikely that India will join the IAP in its current form. It may be worth mentioning that the Government of India is running a somewhat similar program wherein startups can reach out to attorneys registered with the Indian IP Office’s SIPP program to seek their help in patent/trademark services at no cost, as the Government bears the same under the SIPP scheme.

Conclusion

WIPO’s program undoubtedly plays a vital role in bridging the gap between innovation and access to patent protection, particularly for under-resourced inventors and small enterprises in developing countries. By providing access to pro bono services, the program ensures that promising innovations—regardless of origin or income—have a fair chance to be protected and brought to life.

While the program continues to make a meaningful impact in the ten participating countries, its model may not be universally applicable. Nonetheless, the IAP remains a powerful example of how targeted support can drive inclusive innovation and promote a more equitable global intellectual property system.

References:

[1] https://www.science.org/doi/10.1126/science.adj2911

[2] https://sgp.fas.org/crs/misc/IF12259.pdf

[3] https://www.researchgate.net/publication/390707777_Future_Trends_in_Biotechnology_Patents_Impact_of_Nano-Biomedicine_and_Artificial_Intelligence_on_the_Patent_Landscape

[4] https://www.researchgate.net/publication/388677256_Intellectual_Property_and_Innovation_A_Critical_Assessment_of_Patent_Law_and_Economic_Growth

[5] https://www.wipo.int/pressroom/en/articles/2016/article_0013.html

[6] https://www.wipo.int/documents/d/inventor-assistance-program/docs-en-iap_guiding_principles.pdf

[7] https://www.wipo.int/en/web/inventor-assistance-program/w/news/2024/inventor-assistance-program-celebrates-50-granted-patents

[8] https://www.wipo.int/edocs/pubdocs/en/wipo-pub-941-2024-en-world-intellectual-property-indicators-2024.pdf

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WIPO’s program undoubtedly plays a vital role in bridging the gap between innovation and access to patent protection, particularly for under-resourced inventors and small enterprises in developing countries. By providing access to pro bono services, the program ensures that promising innovations—regardless of origin or income—have a fair chance to be protected and brought to life.

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