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In This Issue [No.130]                                                                            August 10, 2005 Supreme Court High Courts RBI Ministry of Commerce & Industry Ministry of Finance SEBI International Cases and News Site Links Roundup Archives Free Trial Contact us To keep you informed about the latest Legislative and Regulatory information manupatra.com publishes this e-roundup highlighting the recent changes brought about by the Notifications/Acts/Bills /Ordinances etc. About manupatra.com ../ provides comprehensive and easy to use legal and related information over the Internet .Our database covers Central Laws , Judgments of Supreme Court and High Court (full text of the judgments from 1950 onwards ), Orders of Tribunals , Bills , Notifications, Circulars and more Key features of manupatra are Content is derived from reliable primary and secondary sources Database is updated on a daily basis Electronic Ready Reckoner to view the judgments under a particular section of an Act / Subject Powerful search engine with user friendly interfaces Search in any one court/year or multiple courts/year Hyper-linking of documents Updated modules on WTO, Anti Dumping, Arbitration, Investment Destinations Abroad, Capital Markets, Taxation, Environment, Cyber & IT Laws, IPR, Corporate Laws, Industrial Policies, Foreign Trade, Forex & Banking and more     For subscription to manupatra.com or for more details please log onto ../ or call us at 0120 2531811 or send an email to : contact@manupatra.com If at any stage you wish to stop receiving the e-roundup please click here to unsubscribe. Supreme Court  Jacob Mathew Vs. State of Punjab and Anr. MANU/SC/0457/2005 With this landmark Judgment the Supreme Court conclusively settled the ongoing debate on the criminal culpability of professionals particularly doctors for negligence. Referring to the BOLAM’s case and a plethora of authorities, the court observed that negligence in the context of medical profession necessarily calls for differential treatment .To prosecute a medical professional it must be shown that in the given facts and circumstances the accused doctor did or failed to do something, which no medical professional in his ordinary senses would have done or failed to do. The court held that the degree of negligence required under criminal law is much higher than under civil law and stressed that for criminal culpability the element of mens rea must be shown to exist. Exonerating the appellant from the charge under Sections 304/34, IPC the court observed that where negligence is not gross an action may lie under civil law but not under criminal law. Indian Drugs and Pharmaceuticals Ltd. and Anr. Vs. R.K. Shewaramani MANU/SC/0453/2005 This appeal was filed against the judgment of the High court where it set aside an order of termination on the ground that, while two departmental proceedings were already pending another action taken under Rule 30A of Industrial Drugs and Pharmaceuticals Ltd. Conduct Discipline and Appeal Rules, 1978 is not valid without having dropped earlier proceedings. The Supreme Court in this appeal reversed the said decision and held that the management is competent to initiate fresh departmental proceedings during the pendency of an earlier proceeding even if it is on the basis of an amended Rule which came into force after initiation of earlier proceedings. S.D.O. Grid Corporation of Orissa Ltd. and Ors. Vs. Timudu Oram MANU/SC/0445/2005 This appeal challenged an order of the High Court granting compensation for death caused due to electrocution, in exercise of it’s powers under Article 226. The appellant had denied any negligence and no finding was recorded in impugned order of the High Court regarding the negligence of appellant. Further the Writ Petition was filed after an inordinate delay of ten years which delay had not been explained. In result the Supreme Court held that the High Court had acted under Article 226 without appreciating the nature of it’s jurisdiction and set aside the impugned order. High Courts Madhya Pradesh Adarsh Kumar Patel v Board of Secondary Education Madhya Pradesh , Bhopal and another The question that arose in this case was whether a student who is allowed readmission in higher secondary for improvement of division and is also allowed to attend classes can be denied admission as a 'regular student' especially in the light of the fact that such marks and marks sheet are relied on for determining the merits of the person in future, it being an important examination? It was observed that the Board had already permitted the student to attend regular classes and to appear in the next examination of higher secondary for the improvement of division but deprived him of the status of 'regular student'. It was held that if such recourse is permitted , it will deprive a regular student to appear in the examination for improvement of division and will frustrate the policy of respondent Board itself to provide this facility. Moreover, this is a matter of common knowledge that the division in higher secondary affects the career of a student in future , it being an important examination. Otherwise also, marks sheet of higher secondary is taken into consideration to ascertain the merits of the person. Hence, Board was directed to treat the petitioner as regular student and to issue marks--sheet accordingly. Dr.( Mrs.) Geeta Reinboth v. Mrs. J. Clairs through L.R. Cheryl Brohier Gosens and others The question that arose in this case was whether a person who is not citizen of India can claim immovable property through right of ‘inheritance’ or is he barred by Section 31 of the FERA? It was held what the plaintiffs are claiming is their share through ‘inheritance’ which cannot be curtailed or forbidden by Section 31 of the FERA prohibiting to ‘hold’ the property. Section 31 of the FERA cannot be stretched to the extent so as to include the prohibition to the right of inheritance. Moreover, vide Notification No. GSR 456(E) a general permission has been granted by the Reserve Bank of India to foreign citizens of Indian Origin to acquire by way of purchase or inheritance and dispose off by way of sale any immovable property , not being agricultural land/ farm house/ plantation property situated in India. The plaintiffs were held to be entitled to the benefits of Notification. Even otherwise, the right accrued to the plaintiffs on the basis of ‘inheritance’ cannot be denied by taking aid of Section 31 of FERA. Gujarat Commissioner of Income Tax v Gujarat Carbon Ltd. The question that arose in this case was whether expenditure on account of ‘presentation of articles’ as also expenditure on account of ‘sales expenses’ would be hit by the provisions of s. 37(2A) of Income Tax Act, 1961? It was held that the term ‘hospitality ‘ normally cannot be included in the ordinary meaning of the term ‘entertainment’, but falls within the enlarged meaning given to the words by Explanation 2 to Section 37(2A). The expenditure incurred on ‘presentation of articles’ cannot be termed to be entertainment ordinarily because it connotes something which is beneficial for physical or mental well-being but is not essential or indispensable for human existence. Hence, expenditure incurred towards ‘presentation of articles’ would not fall within the meaning of the term ‘entertainment’ or ‘hospitality’. However the other expenditure of ‘sales expenses’ would fall within the meaning of the term ‘entertainment expenditure’ as the said expenditure has been incurred for extending hospitality to various persons as detailed in the assessment order viz. guests of the company. Bihar Ram Babu Kumar v State of Bihar and Ors. In this case, on the death of the father who was a government employee , the petitioner was given compassionate employment . But as soon as it was noticed that the mother of the petitioner was also a government employee, petitioner’s appointment was terminated without notice who ,then, moved the court. It was held by the Court that if both the husband and wife are in Government service and one of them dies, the benefit of employment on compassionate ground will not be available to the dependent of the family. Chennai Siva Hygenic Products Pvt Ltd. Vs. Commissioner of C.Ex, Madurai In the present case, the appellants were duty bound to pay duty on specific date under Rule 8 of Central Excise Rules, 2002. But they have not paid the duty on the due date and cleared the goods without payment of duty, so penalty was imposed. The appellants claimed that since they had deposited the duty along with the interest before the issuance of show cause notice, no penalty could be imposed under Section 11 AC of the Central Excise Act, 1944. It was held in the instant case that since the duty was paid by appellants on being pointed out by the Departmental officers, their claim of paying the duty voluntarily was not correct, so the imposition of penalty is justified. RBI APDIR External Commercial Borrowings (ECB) Circular No. A.P. (DIR Series) Circular No.05 Dated 01.08.2005: Reserve Bank of India (RBI), has vide this circular, reviewed guidelines for External Commercial Borrowings (ECB). The Reserve Bank of India (RBI) has modified norms for External Commercial Borrowings (ECB) after taking into consideration the concerns raised by the policy allowing NGOs to raise ECBs. As per new norms ECBs with minimum average maturity of five years by non-banking financial companies (NBFCs) from multilateral financial institutions, reputable regional financial institutions, official export credit agencies and international banks to finance import of infrastructure equipment for leasing to infrastructure projects would be considered by the Reserve Bank under the Approval Route. RBI would also consider Foreign Currency Convertible Bonds (FCCB) by housing finance companies under the Approval Route. Comprehensive and revised ECB guidelines are set out in the Annex to this circular. Foreign Direct Investment in Petroleum Sector and Air Transport Services Circular No. A.P. (DIR Series) Circular No.04 Dated 29.07.2005: Vide the above circular, the Government of India has further liberalized the Foreign Direct Investment (FDI) limit in the Petroleum sector and Air Transport Services (Domestic Airlines) under the Automatic Route .FDI upto 100 per cent has been permitted under the Automatic Route in Petroleum Product Marketing, Oil Exploration in both small and medium sized fields and Petroleum Product Pipelines. In Air Transport Services (Domestic Airlines) sector, FDI upto 100 per cent has been permitted under the Automatic Route by Non-Resident Indians (NRIs) and upto 49 per cent by others. RBI Foreign Exchange The Foreign Exchange Management (Current Account Transaction) Amendment Rules, 2005 Notification No. GSR512 (E) Dated 27.07.2005: The Reserve Bank of India, vide this notification, has further amended Foreign Exchange Management (Current Account Transactions) Rules, 2000 to bring fore The Foreign Exchange Management (Current Account Transaction) Amendment Rules, 2005.The amendments relate to Schedule I and Schedule II. These rules shall come into force on the date of their publication in the Official Gazette. Ministry of Commerce & Industry DGFT DFCE Certificate under Served from India Scheme to Customs House Agents Policy Circular No.19 (RE-2005)/2004-2009 Dated 05.08.2005: The Directorate General of Foreign Trade, has clarified that Service Providers like Customs House Agents, etc. shall be entitled for benefits under Served From India Scheme for the services exclusively rendered by them and for which the foreign exchange earnings are received and retained by them on this account. Further the remittances received in free foreign exchange by Service Providers cannot be treated as their service charges because the services are rendered by other Service Providers like Port Trust, Cargo Handlers, etc. And, for knowing the eligibility condition to avail benefit under Served From India Scheme Para 3.6.4.2 of Foreign Trade Policy (2004-09), has to be referred. Ministry of Finance Economic Affairs Post Office Savings Account (Second Amendment) Rules, 2005 Notification No. GSR509 (E) Dated 27.07.2005: The Central Government, vide this notification, has brought forward the, Post Office Savings Account (Second Amendment) Rules, 2005 amending the Post Office Savings Account Rules, 1981. These rules shall come into force on the date of their publication in the Official Gazette. The amendments were made in Rule –5 and Rule –6 of the Post Office Savings Account Rules, 1981 CBEC Customs Reduction in Export Documentation – Abolition of Various Declarations Circular No. 34/2005 Dated 05.08.2005:Vide the above circular, CBEC has decided to abolish number of declarations presently being filed by the exporters for exports under drawback and various export promotion schemes. This decision was taken on the recommendation of the Sub-Committee that was a multi disciplinary group and consisted of representatives from the Customs, DGFT, RBI, Federation of Indian Export Organisations (FIEO) and Delhi Exporters Association. However certain declarations although abolished in respect of exports under EDI, will continue to be filed at non-EDI stations until such time that these stations are brought under EDI Seizure of Goods Entered for Exportation on Account of Misdeclaration of Quantity, Value Etc. – Provisional Release Instructions – Reg Circular No. 33/2005 Dated 02.08.2005: Vide the above circular CBEC has decided that except for prohibited/contraband goods, the seized goods should be released provisionally and allowed to be exported on execution of a bond for an amount equivalent to the value of seized goods and probable fine and penalty which might be imposed. However, no export benefits shall be allowed in such cases until the matter is finally decided, and the bond to be executed for provisional release shall contain a clause to this effect. CBDT The Finance Act, 2005 – Provisions Relating to Banking Cash Transaction Tax Circular No. 6/2005 Dated 25.07.2005: Vide the above circular, the Government has decided that transactions of withdrawal of cash from an account maintained by a scheduled bank or non-scheduled bank (including a cooperative bank) with a scheduled bank will not be liable to Banking Cash Transaction Tax (BCTT). Similarly, the transactions of receipt of cash from any scheduled bank on encashment of term deposits in the name of a scheduled bank or non-scheduled bank (including a cooperative bank) will also not be liable to BCTT. SEBI Depositories & Custodian Maintenance of Books of Accounts and Other Documents Circular No. SEBI/MRD/DEP/Cir-16/2005 Dated 04.08.2005:Vide the above circular, Depositories and Depository Participants are advised to preserve the originals of the documents, both in electronic and physical form, copies of which have been taken by CBI, Police or any other enforcement agency during the course of any investigation till the trial is completed. It was considered necessary to safeguard the interest of investors in securities and to promote the development of, and to regulate, the securities market. The Depositories are also advised to make amendments to the relevant bye-laws, rules and regulations for the implementation of the above decision immediately. Secondary Market Division Maintenance of Books of Accounts and Other Documents Circular No. SEBI/MRD/SE/Cir-15/2005 Dated 04.08.2005: The Board, vide this circular has advised the Stock Exchanges to preserve the originals of the documents, both in electronic and physical form, copies of which have been taken by CBI, Police or any other enforcement agency during the course of any investigation till the trial is completed. The Stock Exchanges are also advised to make amendments to the relevant bye-laws, and Listing Agreement for the implementation of the above decision immediately. International Legal Cases and News Cases Arbitration Centurion Air Cargo, Inc. v. UPS, Co In the above case, the US 11th Circuit Court of Appeals ruled that an arbitrator's order is binding on the parties unless they expressly agree that the same order will be binding only after an affirmation from the court. Intellectual Property Rights Strike Holdings, LLC v. UC Strikes, LLC In the above case, the United States District Court For the Eastern District of Pennsylvania denied plaintiff's motion for a preliminary injunction on the ground that the plaintiff had not sufficiently demonstrated a likelihood of success on its trademark infringement claim. Moreover, the trademark used by the defendant and the plaintiff was not very similar and the defendants adduced evidence that the mark used by them was one that was widely used in the industry and that the plaintiff had not proved that they have a strong marketplace presence. McBee v. Delica Co., Ltd The US 1st Circuit Court in the above case held that trademark infringement under the Lanham Act can occur if a trademark is used without permission in a commercial sense. The Court held that the subject matter of jurisdiction under the Lanham Act was proper only if the activities complained of  had a substantial effect on United States commerce. The court held that while the trial court had jurisdiction over the plaintiff’s claim for an injunction barring the respondent from selling its good in the US,  the claim was devoid of merit because the sales made by the respondent in the US were induced by the plaintiff for the purpose of the litigation in the present case. Criminal Law People v. Hill The California 2nd Appellate District Court in the above case held that the allegations by a defendant which merely contradict the statements of civilian witnesses are not sufficient to establish good cause for discovery of information relevant to dishonesty in officers' personnel files. Ventura v. Atty. Gen., State of Florida, In the above case the US 11th Circuit Court of Appeals upheld the trial court’s decision of denial of plaintiff's petition for  habeas corpus relief over his claim that the state prosecutor's knowing failure to correct a key government witness's false testimony that he received no consideration in exchange for his testimony violated his due process rights. News US senate passes a bill granting immunity to gunmakers With the aim of providing gunmakers unprecedented immunity in liability lawsuits filed by gun-crime victims, US senate has passed a bill called “Protection of Lawful Commerce in Arms Act”. It will be very difficult to hold gunmakers, dealers or importers responsible in civil lawsuits filed by gun-crime victims and their families under the new legislation, which is closely linked with long-time debate on gun control in the US society. Following a reform defeat, Japanese Prime minister moves to dissolve parliament A proposed legislation to split up and sell the country’s postal service was voted down by the Japanese parliament, following which Prime Minister Junichiro Koizumi move to call snap elections that can shake ruling party grip on power. Voting down of the proposed legislation is a major setback to the prime minister's longtime quest to privatise the postal savings and insurance businesses and open their massive deposits to private investors. The proposed legislation would have created world’s largest private bank, but opposition was strong among opposition party and LDP lawmakers who said the measure would cut postal services to rural areas and lead to layoffs. German lawmakers challenge the early elections as “illegal and dishonest” Challenging Chancellor Gerhard Schroeder's move to hold early parliamentary elections, after deliberately having lost the vote of confidence, which lead the President to dissolve the parliament, the German lawmaker has filed a suit with the nation’s highest court challenging the move as both illegal and dishonest. The court will take up the issue next month just five weeks before the day of ballot. Wal-Mart demands to dismiss class action discrimination suit Citing that charges raised by the six lead plaintiffs are not typical or common of class, attorneys of Wal-Mart has asked the US court of appeals for the ninth circuit to dismiss a class action lawsuit that claims as many as 1.6 million female employees were discriminated against for pay and promotion by the company which is one of the world’s largest private employers. Wal-Mart’s attorneys are also objecting to the size of the class certified, which is the largest in the US history and would violate its due process rights and has demanded that its independent stores which operate independently should be sued as such. The court however has rejected their claim and has approved a statistical formula for paying damages if discrimination is proven. Disclaimer (1) While all reasonable care has been taken to ensure that the information provided in the "round up" and on the website is fair and accurate the company and its promoters and employees shall not in any way be responsible for the consequences of any action taken on the basis of reliance upon the contents of this "round up". (2) This is not a Spam mail. You have received this mail because you have either requested for it or someone must have suggested your name under our various referral programs. 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