29 March, 2009

New software for policy holders:CONSUMER RIGHTS

THE Insurance Regulatory and Development Authority (IRDA) has decided to tighten its supervisory control over the way companies handle complaints. At a workshop organised recently to discuss ‘consumer grievance management’ in the insurance industry, the IRDA unveiled a new software that it plans to introduce for the purpose. The software not only provides for immediate transfer of the complaints registered with the authority to the insurers concerned, but also ensures online tracking of the progress of the complaint by both the complainant and the regulator. This would not only render the entire process of grievance redress transparent, but also ensure better scrutiny by the regulator.
In addition, the data generated by the software will help the regulator assess the quality of service provided by the insurers and also identify grievance-prone areas that require the intervention of the regulator. The IRDA regulation on the protection of policy holders’ interest mandates that every insurer puts in place an effective mechanism for speedy redress of complaints. If clients are not satisfied with the redress offered by the in-house system of the insurer, then they have an option to lodge a complaint with the insurance Ombudsman.
The IRDA, too, receives a number of complaints from customers, which are forwarded to the insurers, but there is no system in place to automatically track the progress of these complaints or know the ultimate result, except to send reminders to insurers and wait for a response from them. Similarly, the regulator is dependent to a large extent on the inputs or statistics sent by the insurer to assess the quality of grievance redress offered by the insurers.
It is for this reason that the authority has come up with a software that will facilitate better regulation of complaint redress. In due course, it plans to bring into this network, the resolution of complaints by the Ombudsmen, too, so that there is complete integration of the entire grievance redress mechanism of the industry. Speaking at the workshop, the IRDA chairman, J. Hari Narayan, made it clear that policy holders’ protection was the first priority of the authority and every effort would be made to ensure this. Focusing on the clients’ right to information, education and complaint redress, Narayan reminded the insurance industry that attending to complaints was not just an ethical or professional duty, but also part of the contract paid for by the customer or the policy holder. The grievance cell of the insurance regulator (complaints to the regulator can be sent online or by post or even over telephone) received, during 2007-2008, 4286 complaints, as against 2479 the previous year.
Broadly, categorising the complaints, Hari Narayan said they related to (a) marketing practices of insurers; (b) structure and terminology of the policy instruments; and (c) claim settlement. While the third category of complaints were mostly quasi-judicial in nature and were to a large extent handled by the Ombudsmen, the first category, pertaining to market practices, was entirely within the control of the insurer, and the regulator would exhibit zero tolerance for unfair marketing practices.
The IRDA regulation on the protection of policy holders’ interest also mandates that the insurance companies provide to every policy holder, along with the policy document, details of the in-house complaint redress mechanism, and also that of the insurance Ombudsman.
Last month, in a circular sent to all life insurers, the regulator expressed unhappiness over the way this mandate was being followed (or not followed). Saying that the required information was not being properly communicated to the policy holders, the regulator prescribed a specific format for insurers to follow, so that clients got the right information. Accordingly, every insurer now has to provide, along with the policy document, details of the address, phone number and e-mail ID of the grievance cell or the office of the insurer where the complaint can be sent.
Source:- http://www.tribuneindia.com/2009/20090329/spectrum/rights.htm
29 March 2009
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Reconciling the spouses:Looking beyond the SC ruling on divorce

Virendra Kumar
In a recent ruling of the Supreme Court in Vishnu Dutt Sharma v. Manju Sharma by Justice Markanday Katju and Justice V.S. Sirpurkar. The Bench has ruled that divorce cannot be granted under the provisions of the Hindu Marriage Act 1955 on ground of irretrievable breakdown of marriage.
A perusal of the apex court order in this case, however, reveals that it bears some disturbing dimensions that tend to disrupt the well-established legal order. First, the ruling deviates from the direction hitherto provided by the Supreme Court itself in a number of judicial decisions, particularly a relatively recent judgement rendered by a three-Judge Bench of the Supreme Court in Naveen Kohli v. Neelu Kohli (2006). In this case, the Bench examined the whole gamut of Section 13 of the Hindu Marriage Act, especially the numerous nuisances of the matrimonial ground of cruelty.
On totality of facts, reversing the decision of the Allahabad High Court, the Bench granted the divorce petition of the appellant husband despite strong opposition by the respondent wife.
The underlying principle that emerges from this judgement is that if it is not possible to reconcile the spouses after long separation (10 years in this case) on the basis of some ‘workable solution’, it is better to dissolve such a marriage.
The apex court affirmed the earlier decisions that took the similar position: see, Sandhya Rani v. Kalyanram Narayanan (1994), Chandrakala Menon v. Vipin Menon (1993); and Kanchan Devi v. Promod Kumar Mittal (1996).
While laying down this principle of justice, the Bench also took the opportunityto recommend the Union of India to seriously consider bringing an amendment inthe Act of 1955 for expressly incorporating irretrievable breakdown principle as aground of divorce.
Reading irretrievable breakdown principle into the provisions of Hindu Marriage Act, pending its express incorporation into the Act, is a right, nay an indispensable constitutional obligation, of the apex court. Under Article 141 read with Articles 142 and 144 of the Constitution, ‘for doing complete justice in any cause or matter pending before it,’ the Supreme Court may pass any order, and all authorities are mandated to act in aid of the orders so passed. Therefore, the apex court cannot be taken to usurp the legislative function; it rather facilitates legislation by showing the desired direction.
If this construction and comprehension of the constitutional provisions is correct, it does not seem to be right in our respectful submission to say, as stated by the Katju-Sirpurkar Bench, that all those cases of the apex court that provided the relief of divorce on the principle of irretrievable breakdown of marriage, in the absence of clear and categorical provision will not be treated as judicial precedents.
Jurisprudentially, only those judicial decisions that break new grounds for doing ‘complete justice’ in the course of resolving conflict problems could truly be treated as ‘precedents’. On the contrary, a judgment rendered by the court, in which ‘full justice’ has been done by literally adhering to the clear statutory standards, hardly needs to be cited as ‘precedent’.
Thus, it sounds strange to state that, even while dealing with a ‘stale marriage’,evidenced by a separation period of more than 15 years (in the instant case,wife Manju stayed with her husband Vishnu Dutt for about 25 days in 1993-94,and thereafter till 2009 they never lived with each other), the court should besaying that such marriage could not be dissolved on the basis of irretrievablebreakdown of marriage because that would amount to ‘amending the Act, whichis a function of the legislature’.
If this proposition is accepted, that would simply imply that the judicial function as envisaged by Articles 141 and 142 is merely mechanical and not creative. There is yet another inherent reason for invoking the irretrievable breakdown principle while deciding disputes under the Hindu Marriage Act. In Vishnu Dutt Sharma case, on bare reading of Section 13 of the Act, the Katju-Sirpurkar bench found in a ‘crystal clear’ manner that ‘no such ground of irretrievable breakdown of marriage is provided by the legislature for granting a decree of divorce.’
However, in our submission, if the provisions of Section 13 are read with those ofSection 23 (2) of the Act, we would instantly hear the clear resonance of theirretrievable breakdown principle. Under sub-section (2) of Section 23, beforegranting any relief under the Act, the court in the first instance, in every casewhere it is possible so to do, to make every attempt to bring about reconciliationbetween the parties.
In this attempt, the court’s core concern is not to find who is guilty or who is innocent, but to explore the possibility of reconciling the spouses caught in conflict. This indeed is the application of irretrievable breakdown principle. If the inevitable conclusion is that reconciliation is not possible, then the court should consider its dissolution in terms of the provisions of Section 13 as expounded by the three-Judge bench in Naveen Kohli.
Besides, Section 13 of the Act is not completely void of irretrievable breakdown principle. In 1964, its ambit was widened by introducing Section 13 (1A), empowering the court to grant divorce decree to ‘either party’ to marriage if there has been no resumption of cohabitation for a period of one year or more after passing the decree of either judicial separation or restitution of conjugal rights.
This added provision, it seems, was not brought to the attention of the Katju-Sirpurkar Bench. This might have prompted them to realise the futility of the marriage in which there was no resumption of cohabitation for such a long period as of 15 years, against the value attached by the legislature to a relatively much shorter period of ‘one year or more’.
The writer is a former Professor and Chairman, Department of Laws, andUGC Emeritus Fellow, Panjab University, Chandigarh

Source:- http://www.tribuneindia.com/2009/20090329/edit.htm#2 29 March 2009
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SC: Leaders to pay for damage to property

The Supreme Court on Wednesday said it would consider making leaders pay for damage caused to public and private property during agitations by their activists. A Bench comprising Justices Arijit Pasayat, LS Panta and P Sathasivam said this while reserving its verdict on the issuance of guidelines for protecting property. The compensation would be decided on the basis of the recommendations made by the two committees headed by Justice KT Thomas and senior counsel Fali Nariman.The court received the draft guidelines framed by Amicus Curiae Rajiv Dhawan and vetted by the Solicitor General GE Vahanvati.
Under the draft guidelines, the police would be required to video record violent incidents and getting bail by those involved in such agitations would be difficult. Compensation would be awarded on the basis of the actual value of the property and not on its book value.
The guidelines would be in force till these are incorporated in the Prevention of Damage to Public Property Act. The case had been filed in the wake of the Gujjar reservation agitation that had hit Rajasthan, Haryana and other states.
Source:- http://www.tribuneindia.com/2009/20090329/nation.htm#16 29 March 2009
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28 March, 2009

RBI to expand cheque truncation system

Following the success of the pilot cheque truncation system (CTS) project in the National Capital Region, the Reserve Bank of India is planning to expand the same to other centres in the country as well.
The RBI is planning to expand CTS outside the NCR to 6-7 other centres as well, said Ms Shyamala Gopinath, Deputy Governor, RBI. At present, around 70 per cent of the cheques by volume in NCR are cleared through the CTS. CTS would next be implemented in Chennai, she said while addressing the Banking Tech summit organised by the Confederation of Indian Industry.
Truncation is the process of stopping the flow of the physical cheque issued by a drawer to the drawee branch. The physical instrument is truncated at some point en-route to the drawee branch and an electronic image of the cheque is sent to the drawee branch along with the relevant information such as the MICR fields, date of presenting and so on. The need to move the physical instruments across branches is done away under CTS thereby reducing the time required for payment of cheques, the associated cost of transit and delay in processing etc., leading to speeding up the process of collection or realisation of the cheques.
Cheque truncation speeds up collection of cheques and therefore enhances customer service, reduces the scope for clearing related frauds, minimises cost of collection of cheques, reduces reconciliation problems, eliminates logistics problems etc.
There is a need to integrate the high value cheques to the electronic mode, the Deputy Governor said and added that the RBI is planning to bring out an approach paper soon to find out ways for the integration.
Source:-Business Line(25-Mar-09)
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Banks get service tax relief on deposit insurance premium

Revenue authorities have done banks a good turn towards the close of the financial year. By clarifying that the deposit insurance premium, collected by the Deposit Insurance and Credit Guarantee Corporation (DICGC), is not taxable, the authorities have saved banks, which ultimately would have borne this burden, from paying taxes totting up to a few thousand crore rupees.
The Commissionerate of Central Excise and Service Tax, Large Taxpayer Unit, Mumbai, in its missive to the Corporation in early January 2009 had underscored the fact that deposit insurance activity is liable to service tax (at 12.36 per cent) with effect from May 1, 2006. The Corporation, which is the sole provider of deposit insurance services for banks, in turn, cautioned banks through a circular in January that "in case service tax is applicable on the deposit insurance premium, then all banks may have to pay the same at short notice, over and above the premium being paid as per the relevant rate." After the DICGC took up the matter with the Commissionerate, the latter cleared the air saying "the charges collected by DICGC are not taxable under the taxable service of ''General Insurance Service''.
According to RBI data, banks had deposits aggregating around Rs 34,42,000 crore as of end-September 2008. If the authorities had pressed their claim then a rough, back-of-the-envelope calculation shows that banks collectively would have had to shell out around Rs 4,250 crore towards service tax on deposit insurance for just the first half of the year. The impact on banks could have been several times this amount if revenue authorities demanded arrears from May 2006.
All registered insured banks (commercial banks, including branches of foreign banks in India, regional rural banks, local area banks, and co-operative banks) are required to pay to the DICGC deposit insurance premium at the rate of 10 paise a year for every deposit of Rs 100 at half-yearly intervals. Governed by the DICGC Act, 1961, the corporation insures bank deposits such as savings, fixed, current, and recurring up to Rs 1 lakh a depositor/bank. The premium paid by the insured banks to DICGC is required to be absorbed by the banks themselves; for depositors, the benefit of this service is free of cost.
Source:- Business Line(25-Mar-09)
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SEBI plans stricter corporate governance norms for related-party deals

The Securities and Exchange Board of India (SEBI) is likely to tighten corporate governance norms pertaining to related-party transactions, and practice of nominating independent directors and auditors by promoters.
Some examples of such transactions include loans to group companies, standing guarantee to loans taken by group companies, purchase or sale of products within group companies, purchase or sale of products to companies in which the director of the parent company has an interest. Industry players say corporates, for long, have side-stepped the legal framework to engage in a web of transactions with group subsidiaries controlled by the management.
"It''s an unhealthy practice of diversion of funds from the main company to a non-core business activity of a subsidiary at high valuations, at the cost of minority shareholders...there is a need to make disclosures and approvals of such related-party transactions more stringent," said a person close to the development.
At present, related-party transactions are covered under accounting standards, Clause 49 of the listing agreement and under Companies Act. All related-party transactions are expected to be disclosed by the parties, especially directors.
In the case of appointment of independent directors, many companies have constituted nomination committees -- some entirely of independent directors and in others, a combination of non-independent and independent directors. Many companies have not set up nomination committees, as it is not mandatory under Clause 49. However, Clause 49 mandates nomination of auditors by an audit committee. It stipulates that the audit committee should constitute a minimum of three directors, with the majority being independent directors. Recommendations of the audit committee/board have to be approved by shareholders. "
According to the rule book, independent directors or auditors are to be appointed by shareholders. However, in most companies, they are appointed by promoters, and approved by shareholders.
Source:-Economic Times(25-Mar-09)
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SEBI doubles FX futures limits

Traders and brokers can now have a higher exposure in the currency futures market. Market regulator SEBI on Tuesday doubled the gross outstanding limit to $10 million for small traders, $50 million for brokers. However, the limits for banks -- the biggest participants in the market so far -- have been left untouched at $100 million.
However, banks are still not active in the segment since they have access to the over-the-counter (OTC) forex market that is much more efficient.
The change in regulations follow repeated pleas from market particpants saying that the existing limits were inadequate to effectively hedge their foreign currency exposure risks. Traders expect the move to deepen the market, by way of higher trading volumes.
Source:-Economic Times(25-Mar-09)
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Realty FDI investors locked for three years, rules FIPB

Foreign investors in Indian real estate cannot sell their stakes to another foreign investor before three years, the Foreign Investment Promotion Board (FIPB), the body that clears such proposals, has said.
With this, FIPB has overruled a provision in FDI policy that exempts foreign players from the rule in cases where fund transfer is from one non-resident to another. Till now, this three-year lock-in was applicable only on foreign investment in real estate and not on investors.
The FIPB view is contrary to the stand taken by the department of industrial policy and promotion (DIPP), the nodal agency that formulates FDI rules in the country. DIPP''s view is that a foreign investor can repatriate funds if it offloads its stake to another foreign investor as the actual investment in a project would remain intact and only its ownership would change. However, FIPB has ruled that an investor can''t sell its investment even to a foreign player before the end of three years.
"Though Press Note 2 of 2005 has an enabling clause to permit sale of investment between two non-residents before the end of lock in, it has not been allowed so far," a senior official in the commerce and industry ministry said.
The issue came up in the last FIPB meeting, when the board took up private equity fund 2I Capital''s request to sell its investment in a Delhi-based real estate firm to a Mauritius-based fund.
The company had sought approval for transferring 1.9 crore shares in the Indian real estate company to the Mauritian company. According to the company''s proposal, the fund transfer involved no repatriation of funds but physical transfer of shares from one investor to another.
The company, however, had assured the board that it would continue to comply with the requirements of the PN 2 of 2005. Though DIPP had recommended giving permission for sale of 2I Capital''s shares to ICP Investments, FIPB rejected it. DIPP argued the sale of shares was permissible between two non-residents within the lock-in period, but FIPB rejected it.
Under PN 2, the government allows up to 100% FDI in real estate projects with certain conditions like a three-year lock-in on investments, minimum capitalisation of $5 million and a minimum project size of 10 hectares.
Source:-Economic Times(25-Mar-09)
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NBFCs may get breather on capital adequacy

Non-banking finance companies (NBFCs) that do not accept deposits could get some more time to meet higher capital adequacy ratio requirements with the Reserve Bank of India (RBI) considering a proposal to relax the provisions.
The roadmap prepared by the RBI required NBFCs who do not take deposits to achieve a capital-to-risk-assets (CRAR) ratio of 12 per cent by April 2009, as against 10 per cent at present. In fact, the CRAR was proposed to be enhanced further to 15 per cent from April 2010.
Last week, the finance companies met RBI officials and sought an additional year to move to the higher CRAR requirements on the grounds that they are unable to raise funds to meet the revised capital adequacy ratio.
NBFC executives also said that they have demanded a separate window from RBI to enable them to undertake commercial vehicle finance. At present, a special refinance window has been opened through which systemically important non-deposit taking finance companies can raise funds against commercial paper and non-convertible debentures to correct their asset-liability mismatch.
RBI has already taken a series of measures to help the non-deposit taking NBFCs to tide over the economic downturn. In October, these NBFCs were allowed to increase their capital funds by issuing perpetual debt instruments (PDIs), which would be eligible for inclusion in Tier-I capital to the extent of 15 per cent of total Tier-I capital.
Besides, they were temporarily permitted to raise short-term foreign currency borrowings, subject to meeting certain conditions. Further, RBI had reduced the standard asset provisioning requirements for these companies from 2 per cent to 0.4 per cent.
Source:-Business Standard(25-Mar-09)
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SC quashes law on unregistered partnership

The Supreme Court has quashed the law which debarred a partner of an unregistered firm in Maharashtra from filing a suit for dissolution of such a firm.
The apex court also held as illegal the law prohibiting the partner to sue for accounts of the dissolved firm or realise properties of such dissolved firm, unless the duration of the firm was only six months or its capital was up to Rs 2,000.
"In our opinion sub-section 2A of section 69 (of the Indian Partnership Act, 1932) inserted by the Maharashtra Amendment violates Articles 14, 19(1)(g) and 300A of the Constitution of India," said a bench comprising Justice Markandey Katju and Justice GS Singhvi. The court said, "a partnership firm, whether registered or unregistered, is not a distinct legal entity, and hence the property of the firm really belongs to the partners of the firm. Sub-section 2A virtually deprives a partner in an unregistered firm from recovery of his share in the property of the firm or from seeking dissolution of the firm."
"Sub-section 2A virtually deprives a partner of a firm from his share in the property of the firm without any compensation. Also, it prohibits him from seeking dissolution of the firm although he may want it dissolved," court said.
The court further said that the law was clearly unreasonable and arbitrary since by prohibiting suits for dissolution of an unregistered firm, for accounts and for realisation of the properties of the firm, it creates a situation where businessmen will be very reluctant to enter into an unregistered partnership out of fear that they will not be able to recover the money they have invested in the firm or to get out of the firm if they wish to do so. There is no legal requirement, unlike in England, which makes registration of a firm compulsory, rather in India it is voluntary. Both registered and unregistered are legal though of course registration and non registration have different legal consequences, court noted in its judgment.
The bench set aside Bombay High Court order. It said, "The high court was of the view that the object of the Maharashtra Amendment was to induce partners to register and it was intended to protect third party members of the public. We cannot see how sub-section 2A of section 69 in any way protects the third party members of the public. It makes it virtually impossible for partners in an unregistered firm to dissolve the firm or recover their share in the property of the firm. Hence it is totally arbitrary."
The apex court said that the primary object of registration of a firm is protection of third parties who were subjected to hardship and difficulties in the matter of proving as to who were the partners. Under the earlier law, a third party obtaining a decree was often put to expenses and delay in proving that a particular person was a partner of that firm. The registration of a firm provides protection to the third parties against false denials of partnership and the evasion of liability. Once a firm is registered under the Act the statements recorded in the register regarding the constitution of the firm are conclusive proof of the fact contained therein as against the partner.
Source:-Economic Times (24-Mar-09)
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RBI unveils details of bonds buyback auction

RBI said its proposed 100 billion rupees ($2 billion) buyback of bonds on Wednesday would include five securities.
The securities are: 7.38 percent 2015 bond; 8.24 percent 2018 bond; 7.94 percent 2021 bond; 8.24 percent 2027 bond and 8.33 percent bond maturing in 2036, it said in a statement late on Monday.
There will be no security-wise notified amount and it may purchase higher than the total notified amount due to rounding effects.
The buybacks, which have totalled 366 billion rupees since they started in February, are aimed to bring down rising yields and revive investor appetite.
Source:-Economic Times(24-Mar-09)
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Auditors may have the last word on a/cs

The era of qualified company accounts is about to close. Companies will have to restate their financial statements if auditors raise objections to any figure in annual accounts, if the government accepts a proposed recommendation of the Institute of Chartered Accountants of India (ICAI). Annual reports would contain financial statements that fully satisfy the auditor''s scrutiny.
This far-reaching proposal has been cleared by a special group set up by ICAI, which has been asked by the government to submit recommendations for improving financial reporting of companies. The ICAI will shortly transmit its recommendations on the subject to the government.
According to the proposal, a company that does not restate its accounts as suggested by the statutory auditor would be barred from paying dividends or raising loans. At present, an auditor''s scepticism about any portion of the accounts presented by a company is tagged along with the annual report and an investor has to work hard to correlate every auditor qualification with the number or numbers under challenge.
If the ICAI special group''s proposal goes through, this torture would be a thing of the past. Accounts would become more transparent, and the auditor would be taken far more seriously than at present by companies. The proposal forms part of a slew of measures to be suggested by the ICAI to the government so as to improve financial reporting standards in the country, said institute''s president Uttam Prakash Agarwal. The proposals could be implemented through amendments to the ICAI Act, a move, which has been mooted in the wake of the Satyam financial crisis. The proposed change would allow all stakeholders to get a easier grasp of a company''s balance sheet, as they will not have to correlate various numbers with the audit report. The proposal, which is being made in an attempt to make companies ''seriously act on auditors'' disagreements rather than merely acknowledging such disqualifications without any changes made to that effect is, however, not new in India.
Source:- Economic Times (20-Mar-09)
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SEBI proposes longer trading sessions

The Securities and Exchange Board of India (SEBI) is examining the option of extending trading hours on the financial exchanges to align these with international markets -- a move that drew mixed response from market participants.
"It is important to align Indian markets as far as possible with those of the international markets to facilitate the assimilation of any economic information that may flow in from other global markets," the market regulator said in a discussion paper released today. It has asked for feedback from market players by April 10.
Trading hours for the equity cash market and exchange-traded derivatives market in India are from 9:55 am to 3:30 pm, shorter than those for currency futures and commodity futures. But some exchanges in other countries have much longer trading hours for the futures segment, sometimes extending even up to 23 hours, the SEBI discussion paper pointed out.
SEBI said an extension of trading hours could enable the domestic market to take advantage of movements in international markets, make markets more efficient and attract trading interest.
Source:-Business Standard(20-Mar-09)
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Tax defaulters may find water pipe dry

The city's civic body can disconnect water supply to premises to recover unrealised taxes, the Calcutta High Court today observed.
"That water supply is an essential service cannot be used as a pretext to prevent disconnection of supply lines if a consumer defaults on his tax payment," a division bench comprising Justices Asim Banerjee and Prasenjit Mondal stated in its order.
In 2001, when the Kolkata Municipal Corporation (KMC) had been disconnecting water lines of properties including some big hotels and other companies for tax default, a firm, Nilambar Finvest Company, had moved the High Court saying that the Corporation could not do it as water supply was an essential service.
As per KMC Act 275(i)(aa), it can disconnect water supply in case of tax default, KMC lawyer Ashok Das Adhikari had claimed. However in 2002, Justice Bhaskar Bhattacharya had declared the provision unconstitutional.
Challenging the order, KMC moved the division bench of the court. The bench today set aside the 2002 judgement ordering that the civic body could apply the provision to recover tax from defaulters.
Source:-Business Standard (18-Mar-09)
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Relief for export units as CBDT untangles tax net

The Central Board of Direct Taxes (CBDT) has instructed income-tax officials to allow export-oriented units (EOUs) approved by development commissioners to claim tax exemption, ending the uncertainty over tax benefits to EOUs.
"It has been decided that an approval granted by the development commissioner in the case of an export-oriented unit set up in an export processing zone will be considered valid, once such an approval is ratified by the board of approvals (BoA) for EOU scheme," said a CBDT communiqué sent to income-tax officials.
The BoA has representatives from various ministries including commerce, revenue and home, among others.
Earlier, income-tax authorities had denied tax benefits to entities approved by development commissioners. Following this, the ministry of commerce and industry took up the issue with the revenue department. Industry organisations including the Export Promotion Council for EOUs and SEZs had also made representations to the revenue officials.
EOU is defined as "hundred percent export-oriented undertaking" approved by the board appointed by the central government under the Industries Development and Regulation Act, 1951.
EOUs are eligible for tax exemption under Section 10B of the Income-Tax Act. The exemption was first introduced in the Finance Act, 1981, and substituted by the Finance Act, 2000.
Subsequently, the power to approve EOUs was delegated to development commissioners who are administrative heads of export processing zones. The BoA could later ratify the EOUs approved by commissioners. However, tax authorities in same cases did not recognise the approval given by development commissioner and began denying tax benefits on this ground.
In some instances, tax authorities had not just demanded tax due but also imposed penalty on them. Exports from EOUs stood at Rs 1,42,211 crore, or 23% of the country''s total exports, in 2007-08. There are about 2,500 EOUs in the country.
Source:-Economic Times(18-Mar-09)
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27 March, 2009

Evidence in an enquiry-procedure for its recording

Contributed by Deepak Miglani Adv.
According to Wikianswers.com “Enquiry means asking a question or wanting to know about something”. The evidence in an enquiry can be recorded in a narrative form of a statement. But it is advisable to record it in questions and the answers form for proper analysis of the evidence.
This procedure of relating to holding enquiries is lengthy and complicated for a layman. But it has to be followed as closely as possible, if the management intends to exercise its right of punishing delinquent employees without fear of its being upset later on by an industrial tribunal, or being made a subject-matter of an industrial dispute. However it does not means that unless the above procedure is followed strictly, the decision of the management, punishing an employee is bound to be upset. If rules and procedure are not properly followed, it is material enough to vitiate the enquiry proceedings . As a matter of fact, a fair opportunity is given to the accused workman(1) to remain present at the enquiry;(2) to examine his own witnesses; and (3) to cross-examine the witnesses of the employer. Minor irregularities will not vitiate the enquiry proceedings,which should be avoided. The persons holding domestic enquiries are usually not well versed in law. Rigid observance of the rules and procedure prescribed by the Code of Criminal Procedure,1973 or the Evidence Act,1872 cannot be expected of them.
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19 March, 2009

Prior Sanction of leave is imperative

Deepak Miglani

Employee cannot remain absent from the organization without prior sanction of the leave. Before an employee goes on leave , he should obtain sanction for it advance. It is all the more important to do so when the leave rules of the establishment provide that casual leave may be granted without causing interruption to the work. In other words, no worker can proceed on privilege leave without first applying for it and obtaining its sanction. When the standing orders of an industrial establishment provide that for extension of any leave , an application should be made to that effect before the expiry of the leave already granted. If it is not done, the management has the right to refuse extension of leave if the application for it is not received in advance in accordance with rules. If employee remain unauthorized absent , a action of indiscipline can be taken against him/her by following the proper procedure of law. He/she can be terminated for this conducted.
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15 March, 2009

SMEs continue to enjoy exclusive manufacturing rights

Micro and small enterprises will continue to enjoy exclusive manufacturing rights over 21 items such as PVC pipes, rolling shutters,steel furniture, padlocks, laundry soaps and utensils. The government has deferred its earlier plan to allow manufacturing of these items by large firms from April 1.
According to an official in the ministry of micro, small and medium enterprises, the government deferred its plan to free the products as this would have exposed small and medium enterprises to tough competition from large firms.
"The issue of reservation or de-reservation of manufacturing items from the small and medium sector list is examined on a continual basis by the an advisory committee. The committee has decided against any de-reservation in 2009-10 due to the current economic downturn," he said, requesting anonymity.
Freeing manufacturing items from the reserved list would mean large firms can also manufacture these products without fulfilling export obligation.
The ministry decided to continue protecting small manufacturers for some more time ignoring recommendations of its own sponsored study.
Source:-(06-Mar-09),Economic Times

11 March, 2009

Pre-1923 Publication not in Copyright Public Domain [United States]

In Societe Civile Succession Richard Guino v. Renoir, (9th Cir., December 2008), the court held that works first published in France no later than 1917 without a U.S.-style copyright notice were never subject to U.S. copyright under the 1909 Copyright Act, and therefore could not have fallen into the public domain in the U.S.
This holding is particularly interesting because, as the Ninth Circuit noted, "[t]he year 1923 is significant because the 1976 Act . . . and the 1998 Copyright Extension Act operate together to create a bright line rule for which works are now in the public domain: works published before January 1, 1923 are generally in the public domain." This rule is even noted in Copyright Office Circular 22 which states
. . . the U.S. copyright in any work published or copyrighted prior to January 1, 1923, has expired by operation of law, and the work has permanently fallen into the public domain in the United States. For example, on January 1, 1997, copyrights in works first published or copyrighted before January 1, 1922, have expired; on January 1, 1998, copyrights in works first published or copyrighted before January 1, 1923, have expired. Unless the copyright law is changed again, no works under protection on January 1, 1999, will fall into the public domain in the United States until January 1, 2019.
The works at issue were sculptures by the famed artist Renior and one of his assistants Richard Guino.
Source:-http://law-wire.blogspot.com/2009/03/pre-1923-publication-not-in-copyright.html

Major Relief For Info Seekers :Delhi HC aligns its RTI rules with CIC guidelines

KEY CHANGES:-
  • ‘Affected Party’ clause done away with. An RTI applicant will now not be required to show how info sought affects him
  • ‘Public Domain’ clause removed. HC will now have to also furnish info that is not available elsewhere
  • In case info sought is not in court’s jurisdiction but pertains to other authorities, PIO to respond within 5 days

After drawing heavy criticism for framing RTI rules that went against the parent Act, the Delhi High Court, in a major climbdown, has amended some of the rules.
Most notably, it has done away with the requirement that RTI applicants show how they are an ‘‘affected party’’ while seeking information, a caveat forbidden by the Act.
HC’s rules on information sharing have been repeatedly held to be ‘‘in direct conflict with RTI Act’’ by the Central Information Commission in its rulings.
In its amendment exercise, HC has deleted Clause 4 (IV) of RTI rules that permitted it to allow access of information only to ‘‘affected persons’’ and deny to those who don’t explain their locus on why such an information is required.
HC has also tinkered with Section 5 (A) that exempted it from revealing any information which is ‘‘not already in the public domain’’. This meant HC could deny information to a seeker on the ground it was available elsewhere, a rule frowned upon by transparency advocates.
The third key allignment lies in Rule 4 (I) that till now gave the court’s public information officer a luxury of 15-20 days to respond to an RTI plea, which sought information beyond his jurisdiction. He has to now inform the applicant within five days and return the plea.
The CIC had repeatedly taken a dim view of these sections. Speaking to Times City, Chief Information Commissioner Wajahat Habibullah welcomed the move. ‘‘I have been adjourning cases related to Delhi HC because we were waiting for the rules to be brought in allignment with the RTI Act, as had been promised. This is heartening news,’’ the CIC said.
Source:- The Times of India 6 March 2009 Delhi P 3

YOUR RIGHT TO KNOW is going to be curbed by J&K RTI law

Contributed by Deepak Miglani
According to draft J&K RTI law, outsider can not access information. The draft Jammu and Kashmir Right to Information bill, likely to be tabled in the state legislative council this week, has some key anomalies, say RTI activists. The bill was cleared by the legislative assembly on Monday. This draft bill does not allow Indian citizens living o u t s i d e J&K access to information on public agencies within the state. Incidentally, J&K residents can use the central Act to get information on central ministries but the central legislation is not applicable in the state. Under the draft bill, English, Urdu and Hindi are the languages in which an applicant can file his or her appeal. The J&K Government has put the draft bill in their website but the suggestion given by the activist has been ignored.

04 March, 2009

MODE FOR PAYMENT OF GRATUITY

Contributed by Deepak Miglani Adv.

Section 4 of the Payment of Gratuity Act,1972 provides the procedure for pay to an employee. The said section contemplates that gratuity payable under the Act should be paid in cash, or if so desired by the payee, in demand draft or bank cheque to the eligible employee, nominee or legal heir, as the case may be.
The second provision to sub-section (1) of the Section 4 of the Act further lays down that in case of death of the employee, gratuity payable to him should be paid to his nominee or , as the case may be , to the guardian of such nominee or , if no nomination has been made, to his heirs.
A further obligation of the employer is to intimate the details of payment to the controlling authority of the area while making payment of the gratuity amount.
Where, however, the eligible employee, his nominee, legal heir or the guardian of the nominee, as the case may be , so desires and he amount of gratuity payable is less than one thousand rupees, payment may be made by postal money order after deducting the postal money order commission thereof from the amount payable.

03 March, 2009

SC refuses to denotify forest areas :Dismisses PIL Saying It Will Not Allow Haryana To Become A Desert

A day before Haryana auctions mining leases, many of which fall within the eco-sensitive Aravali zone, the Supreme Court sent a stern warning to the government: It will not tolerate any mining activity in the notified forest zones that would lead to desertification of the state.
With Hooda government planning to auction mining leases on Tuesday despite a status-quo ordered on mining activity in Aravali hill areas by SC, a PIL by NGO ‘Nyay Bhoomi’ attempted a virtual sacrilege by asking the apex court to reverse its 1992 order, by which it had declared a large chunk of land in Faridabad district as forest land, prohibiting mining and a host of non-forest activities.
What irked a Bench comprising Chief Justice K G Balakrishnan and Justice P Sathasivam was the repeated plea on behalf of the NGO that the 1992 order had deprived locals from enjoying the benefits of their right over their land and carry out legitimate non-forest activities. ‘‘There is no forest there and hence the apex court should not have declared it as forest’’ — this argument repeated many a times by the NGO set the ball rolling in the Chief Justice’s court. ‘‘If the relief sought by the PIL is granted, then all that is left of forests in Haryana will be destroyed. The Aravalis will be destroyed and the state would turn into a desert,’’ said the Chief Justice.
‘‘Once the forest is denotified, anyone can do anything and Aravali hills will face destruction. The entire area would be shorn of greenery and major parts of Harayana will turn into a desert,’’ said an anguished CJI.
Realising that it would not succeed in convincing the Bench to change its approach on protection of the fast depleting green cover, the NGO decided to withdraw its PIL. But even this general plea, made by most of the PIL petitioners when faced with opposition from the court, was sternly declined by the Bench which dismissed the petition. ‘‘If we allow withdrawal of this PIL, we are sure some other mine operator would come with the same plea again. We will not allow it to be withdrawn,’’ the Bench said.
Prior to the hearing on the PIL, an application filed on behalf of Som Sethi, a mining lease holder, was mentioned before the Bench by senior advocate Mukul Rohtagi seeking stay of Tuesday’s auction of mining leases.
Rohtagi said that as the Supreme Court was dealing with the matter, it would be prudent on the part of the Haryana government to suspend the auction and await the outcome of the hearing scheduled for March 18. However, the Bench said that it would deal with the matter then.
Recently, the SC had given relief to people who owned houses and commercial establishments in Aravali hill areas of Faridabad by assuring them that their properties, though located in the eco-fragile green zone, would not face demolition for the time being.
The house owners in Faridabad district were living in the constant fear of bulldozers razing their properties soon after it became public that the SC appointed central empowered committee (CEC) has recommending demolition of all encroachments into demarcated green zone.
A three-judge Bench headed by the Chief Justice had said any action on the basis of CEC report, without hearing all parties and stake holders, would not be in accordance with the principles of natural justice. Having said so, it ordered status quo. This means while there would be no demolition, no one can carry out additional constructions. The same would apply to mining too.
Source:- The Times of India 3 March 2009 P.13 Delhi