The BLC Brief: October 2026
Here's an update from the world of law and compliance in the month of October 2026.
Data Protection
1. MeitY corrects two provisions of the DPDP Act
The Digital Personal Data Protection (Removal of Difficulties) Order, 2026, in force from October 6, 2026, corrects two provisions of the DPDP Act under Section 43, which empowers the Central Government to remove difficulties in implementing the Act. Section 9(1) now refers to personal data “of a child or of a person with disability” who has a lawful guardian, and Section 10(2)(c)(ii) to a “data audit”.
What it means: Section 9(1) now applies the requirement of verifiable guardian consent to the personal data of a person with disability who has a lawful guardian, on the same footing as a child. Businesses processing such data, such as healthcare, insurance and education platforms, should therefore treat it as a separate requirement, and not merely as part of the regime for children. Entities likely to be notified as Significant Data Fiduciaries should also plan for a periodic data audit, which is distinct from their financial audit.
Companies Act
2. Step-down subsidiary can be merged into its listed parent without issuing shares: NCLT Mumbai
On October 26, 2026, the Hon'ble NCLT, Mumbai Bench sanctioned a scheme under Sections 230 to 232 of the Companies Act, 2013, which deal with compromises, arrangements and amalgamations, merging Samvardhana Motherson Auto System, a step-down wholly owned subsidiary, directly into the listed Samvardhana Motherson International, with no shares issued and the transferor's capital cancelled.
It was sanctioned in a matter where the meetings of the listed parent's shareholders were dispensed with, and the scheme was filed with the stock exchanges for disclosure only.
What it means: The order shows that, where every company in the chain is wholly owned, a step-down subsidiary can be merged directly into its listed parent without issuing shares, and that the NCLT treated it on the same footing as a direct wholly owned subsidiary, both in dispensing with meetings and in accepting a disclosure-only filing with the stock exchanges. With the Companies (Compromises, Arrangements and Amalgamations) Amendment Rules, 2025, notified in September 2025, which amended Rule 25(1A) to allow a merger of a holding company, listed or unlisted, with its unlisted subsidiary through the fast-track route under Section 233, a merger of this kind may now also be taken up under that route, subject to the approvals that Section 233 itself requires.
Foreign Exchange
3. New FEMA framework for export and import transactions in force; proceeds to be realised within nine months
The Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026, in force from October 1, 2026, bring exports and imports under one set of regulations, and require export proceeds to be realised within nine months (twelve months in the case of rupee-denominated contracts, or in the extended cases authorised by AD banks).
What it means: The period is shorter than the fifteen months in the regulations as first notified in January 2026, so contracts with overseas buyers, particularly those allowing long credit periods, should be checked against it. Older cases that needed RBI approval can now be taken up directly with the authorised dealer bank.
Insolvency
4. CoC cannot withdraw a resolution plan once it is placed before the NCLT
In Bank of India v. S.M. Kamal Pasha (October 26, 2026), the Supreme Court held that once a resolution plan approved by the committee of creditors is placed before the NCLT, it cannot be withdrawn, and that improved profitability alone is no ground to refuse approval under Section 30(2) of the IBC, which sets out what a resolution plan must provide for.
It was decided in a matter where the CoC sought to withdraw a ₹172.55 crore plan after the debtor's cash grew from about ₹30 crore to ₹165 crore during the delay.
What it means: Creditors cannot step back from a plan because the debtor's position improves while it awaits approval, just as the resolution applicant cannot withdraw if the position worsens. This gives bidders certainty, but leaves creditors bearing the risk of long delays before the NCLT.
Arbitration & Contracts
5. No compound interest unless the contract provides for it: Allahabad High Court
In State of U.P. v. Apex Construction Company (October 24, 2026), a Division Bench of the Allahabad High Court held that a tribunal cannot award compound interest unless the contract provides for it, and substituted simple interest while upholding the rest of the award.
It was decided in a matter where a road contractor had been awarded about ₹1.57 crore with interest at 14% compounded annually from 2009. Although the award was challenged in its entirety, the Hon'ble High Court found the interest component severable and modified only that part.
What it means: An arbitral tribunal draws its powers from the contract, and cannot award interest on interest unless the contract allows it. A contractor or supplier who expects compounded interest on delayed payments should therefore provide for it expressly. By correcting only the interest portion, the Court spared the parties a fresh round of proceedings over the whole award.
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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