The BLC Brief: September 2026
Here's an update from the world of law and compliance in the month of September 2026.
Employment & Labour
1. Provident fund wage ceiling raised from ₹15,000 to ₹25,000
The Union Cabinet approved a higher statutory wage ceiling for provident fund coverage, applicable from 17 September 2026. Employees earning up to ₹25,000 a month now fall within mandatory PF, pension and deposit-linked insurance cover, and pension contributions are computed on the higher base.
What it means: A wider band of the workforce comes within mandatory social security cover, with a corresponding effect on payroll costs and salary structuring across industry.
2. Gratuity authority cannot decide a principal employer's liability for contract workers
In ONGC v. Suryakand D. Lad (September 2026), the Supreme Court held that where the employer-employee relationship is itself in dispute, the Controlling Authority under the gratuity law can only compute gratuity for established employees and cannot adjudicate the liability of a principal employer.
It was decided in a matter where workers engaged through contractors had claimed gratuity directly from ONGC, and where the Bombay High Court had fastened that liability on ONGC after the Controlling Authority and the Appellate Authority had taken opposite views.
What it means: Read with the Supreme Court's earlier decision in Municipal Council, represented by its Commissioner, Nandyal Municipality, Kurnool District, A.P. v. K. Jayaram and Ors. (16 December 2025), the ruling effectively settles the position on this question. The interface between contract labour and full-time employees will be interesting to watch going forward: gratuity for a contractor's worker is not the company's remit, while for its own employees it remains so.
Banking & Finance
3. Banks can use SARFAESI for loans bought from NBFCs
In Kotak Mahindra Bank v. Trupti Sanjay Mehta (2 September), the Supreme Court held that a bank may invoke SARFAESI to recover a secured loan acquired from an NBFC that was not itself covered by the Act, since what matters is the status of the holder of the debt at the time of enforcement and not that of the original lender.
It was decided in a matter where housing loans advanced in 2009 by an NBFC not notified under SARFAESI were assigned to the bank in 2012-13, and where the DRT, the DRAT and the Bombay High Court had all rejected the bank's enforcement action on that ground.
What it means: Assignment of a secured loan to a bank can change the enforcement regime that applies to it, which bears on both the pricing of NBFC portfolios and the position of borrowers.
4. No forcible or night-time repossession of financed vehicles
In Hari Dutta Sharma v. State of U.P. (16 September), the Supreme Court held the repossession and sale of a financed vehicle unlawful for breach of the contractual notice requirement and RBI safeguards. It directed closure of the loan accounts, refund of the sale proceeds with interest and ₹10 lakh in compensation, and asked the RBI to ensure compliance with its recovery guidelines.
It was decided in a matter where a commercial truck financed by an NBFC was taken at 1:00 a.m. by persons who broke its steering lock, after the borrower had defaulted, and was later sold for less than the outstanding dues.
What it means: Recovery practices, including the conduct of recovery agents, are under closer judicial scrutiny, and default by the borrower does not excuse a departure from due process.
Arbitration
5. Pre-2015 employee-arbitrator appointments survive: Delhi High Court
In DMRC v. Pankaj (30 September), a Division Bench of the Delhi High Court held that Section 12(5) of the Arbitration Act, which deals with the ineligibility of persons having a specified relationship with a party, such as its employees, to act as arbitrator, and has been in force from 23 October 2015, cannot be applied retrospectively to invalidate the appointment of an arbitrator made before that date, and restored the award.
It was decided in a matter where the sole arbitrator, appointed in March 2015 under a parking licence agreement, was a serving officer of DMRC, and where the award of about ₹40 lakh in DMRC's favour had been set aside on the basis that such an appointment violated the post-2015 position under the Arbitration Act.
What it means: Awards arising from older arbitrations stand on firmer ground against this line of challenge, while unilateral appointment clauses in current contracts remain open to it.
6. The venue of an arbitration is not automatically its seat
In Mahanadi Coalfields v. GSCO Infrastructure (23 September), the Supreme Court held that the conduct of hearings at a place, or the appointment of the arbitrator there, does not make that place the juridical seat in the absence of agreement, and restored the challenge to the award for decision on merits.
It was decided in a matter where the contract, for work at a mining project in Sundargarh, had no arbitration clause, the arbitrator was appointed by the Orissa High Court without designating a seat, and hearings were held at Cuttack. The challenge to the award was filed at Sundargarh and had been dismissed on the footing that Cuttack was the seat.
What it means: Where the seat is not expressly agreed, the question of which court supervises the arbitration remains open to dispute, quite apart from the merits.
Insolvency
7. NCLT can recall an insolvency admission obtained by fraud
In Greenopolis Welfare Confederation v. Rakesh Kumar Gupta (30 September), the Supreme Court held that the NCLT has jurisdiction to recall an admission order vitiated by fraud, but that it must separately decide whether the insolvency process should continue for the benefit of other creditors and homebuyers.
It was decided in a matter where insolvency of the developer of the Greenopolis housing project was admitted on an operational creditor's petition alleged to be collusive and based on a fictitious debt, and where the NCLT had found fraud but considered itself powerless to recall its order, a view the NCLAT reversed.
What it means: Fraud in initiating insolvency can be undone at the admission stage, but the collective nature of the process means recall does not automatically end it.
Intellectual Property
8. Which court hears trade mark suits: question sent to a larger bench
In I.S.D.S. v. Khemka Food Products (21 September), the Supreme Court referred to a larger bench the question whether a court below the District Court, notified as a Commercial Court, can hear trade mark infringement suits despite Section 134 of the Trade Marks Act, which deals with the institution of infringement suits before a court not inferior to a District Court, noting conflicting precedents on how the Commercial Courts Act interacts with special statutes.
It was decided in a matter where the infringement suit had been filed before a Civil Judge (Senior Division) at Jamshedpur, notified as a Commercial Court; that suit now stands stayed.
What it means: The forum for trade mark infringement suits remains unsettled in States where commercial courts sit below the District Court level, until the larger bench decides.
If any of these touches your business, we would be glad to talk it through.
This update is for general information only and is not legal advice.
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