Legislative and Regulatory Update

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In This Issue

[No.144]                                                                    December 30, 2005

Supreme Court
High Courts
Ministry of Personnel, Public Grievances and Pensions
RBI
Ministry of Finance
Ministry of Health and Family Welfare
International Cases and News

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Supreme Court

  • Harkirat Singh Vs. Amrinder Singh

An appeal was directed against the Order of the High Court of Punjab & Haryana in an Election Petition which allowed preliminary objection raised by the respondent that the petitioner had failed to disclose material facts as to corrupt practice constituting the cause of action in the election petition. The sole issue involved in this case was that whether the high Court was justified in dismissing election petition on the ground that it did not disclose cause of action.

The apex Court opined that an election petition must contain a concise statement of 'material facts' as allowing election petition involves serious consequence of nullifying elections. In the present case as all material facts are stated in accordance with provisions of the Representation of Peoples Act, 1951 the election petition suffers from no infirmity and the same could be allowed. The Order of High Court was liable to be set aside since the High Court was wrong in dismissing the election petition on the ground that material facts had not been set out in the election petition.

  • Kankavali Shikshan Sanstha and Ors. Vs. M.R. Gavali and Ors.

An appeal was filed against the judgment of the High Court of Bombay, which directed the reinstatement of the respondent in the service with continuity of service and back wages. The High Court held that the appointment of respondent No: 1was as per Rule 9 (9) of Maharashtra Employees of Private Schools Rules 1981 (Rules) and that the appointment in the reserveed category was justified.

The apex Court upholding the reasoning rendered by the High Court held that in terms of the provisions of Rule 9(9)(a) as no other candidate belonging to ST was available the appointment of respondent No: 1 who belonged to backward class (OBC) was justified. Hence respondent No: 1could be appointed on regular basis as the rule enjoins year to year appointment only if a available candidate does not belong to a backward class.

  • Siddartha Tubes Ltd. Vs. Commissioner of Central Excise, Indore (MP)

A civil appeal was filed under Section 35 L(b) of Central Excise Act, 1944 against declining of appellant’s claim of deduction of service charges and costs of sockets from assessable value of pipes by the authorities. The sole question involved in this case was whether the department was right in including the cost of sockets and the value of service charges in the assessable value of pipes.

The Supreme Court held that the service charges were includible in the assessable value because they were not in the nature of trade discount. As the deduction of service charges of the nature indicated in this case does not fall within the deductions contemplated by Section 4(4)(d)(ii), they are not in the nature of trade discount. A trade discount is admissible as deduction only if the discount is given to a consumer or the trader. In the present case, service charges were paid to a selling agent for services. In the circumstances, service charges were includible in the assessable value of. pipes.

  • State of U.P. Vs. Neeraj Awasthi and Ors.

The present appeal arose from judgment of the High Court of Allahabad disputing the jurisdiction of said Court to issue a direction for framing a scheme for regularization of the employees of the U.P. State Agricultural Produce Market Board.

The apex Court set aside the judgment delivered by High Court and issued certain guidelines as to making of appointments as per provisions of The Uttar Pradesh Krishi Utpadan Mandi Adhiniyam, 1964. The Court held that the appointments had to be made by the Board and Marketing Committees as per rules and regulations framed under the Act. The Board had no jurisdiction to frame any scheme for regularization in the pith of the statutory regulations operating in the field and any such legislation involving appointment and laying down of conditions of service would require prior sanction of state.

High Courts

Delhi

  • Rajesh Chaudhary v. Nirmala Chaudhary

A writ petition was filed challenging the dismissal of application seeking permission to ascertain paternity of the minor child of petitioner and respondent. The sole issue involved in this case was whether estranged wife claming maintenance for herself and the child can be denied interim maintenance while the complex issue of DNA testing on an allegation of illegitimacy of the child awaits determination.

The court held that it was unjust for delaying maintenance until the final disposal of application of maintenance and till disposal of application of determination of DNA test. Hence the writ petition was dismissed.

Allahabad

  • Sadhana Srivastava v. Arvind Kumar Srivastava

An appeal was preferred against judgment of Family Court which allowed the application for divorce filed by husband. The main issue was whether the false allegations of having illicit relationship and extra marital affairs made by wife against husband amounts to cruelty and divorce on same ground was also justified.

The court held that the false criminal proceeding initiated against the husband, arrest and confinement in prison of the entire family including husband amounts to mental cruelty. Hence the court held that the husband is entitled to a decree of divorce under section 13(1)(i-a) of the Hindu Marriage Act. The appeal filed by the wife was liable to be dismissed.

Madras

  • The Deputy Superintendent of Police v. W.D.Sekaran and another

A writ petition was filed against order of Tamil Nadu Administrative Tribunal, which quashed the charge memo against the respondent referring to acquittal of respondent in a criminal case. The sole issue was whether the initiation of departmental proceedings after acquittal by criminal court grounded on same set of facts was permissible or not.

The court allowing the writ petition held that departmental proceedings can be continued even after the decision of the criminal court. The acquittal by criminal court was not to be taken as constraint to proceed with disciplinary proceedings. The tribunal went in error in quashing the charge memo.

Calcutta

  • TCI Finance Ltd. v. Calcutta Medical Centre Ltd. and another

An appeal was preferred against judgment of division bench directing parties to place contention before executing Court with regard to claim of tenancy made by respondent No:1. The core issue to be determined was whether the executing court could decide the question of tenancy.

The Court allowing the appeal held that the executing court could not decide the question of tenancy as they are not supposed to go beyond the original decree. The court set aside the impugned order of the Division Bench and stated that direction given by the executing court to decide the question of tenancy was legally impermissible. 

Ministry of Personnel, Public Grievances and Pensions

Personnel and Training

  • All India Services (Death-cum-Retirement Benefits) Third Amendment Rules, 2005

Notification No: GSR727(E) Dated 19.12.2005. The Central Government vide the said notification has amended the All India Services (Death-cum-Retirement Benefits) Rules, 1958 which shall be deemed to have come into force with effect from the 30th August, 2004. These rules may be called the All India Services (Death-cum-Retirement Benefits) Third Amendment Rules, 2005. As per this amendment in Rule 22(B) for clause (ii) of sub-rule 3, the following shall be substituted, namely:-"(ii) in the case of a son or unmarried daughter till such son or daughter attains the age of 25 years or upto the date of his/her marriage, whichever is earlier;(ii a) in the case of a widowed/divorced daughter till her remarriage, subject to the income criterion as prescribed by the Central Government from time to time."

RBI

DBOD

  • Guidelines for Bank Finance to Employees/ Employee Trusts for Purchasing Banks’ Own Shares

Circular No: DBOD No.Dir.BC.51/13.07.05/2005-06 Dated 27.12.05. The Reserve Bank of India Vide the said circular clarified that banks are not allowed to extend advances including to their employees/ Employee Trusts set up by them for the purpose of purchasing their (banks’) own shares under ESOP/ IPO or from the secondary market. This prohibition will apply irrespective of whether the advances are unsecured or secured.

RPCD

  • Scheme to Cover Loans for General Purposes under General Credit Card (GCC)

Circular No: RPCD.CO.No.RRB.BC.59/03.05.33 (F)/2005-06 Dated 27.12.2005. The Reserve Bank of India Vide the said circular decided that banks can introduce a General Credit Card (GCC) Scheme for issuing GCC to their constituents in rural and semi-urban areas, based on the assessment of income and cash flow of the household similar to that prevailing under normal credit card. Under the scheme, there would not be any insistence on security and the purpose or end-use of the credit. Interest rate on the facility may be charged, as considered appropriate and reasonable. The limit may be periodically reviewed and revised/cancelled depending on track record of the account holder. And in order to target women as beneficiaries of bank credit, they may be given a preferential treatment under the GCC Scheme.

Ministry of Finance

Economic Affairs

  • The General Insurance (Rationalisation and Revision of Pay Scales and Other Conditions of Service of Supervisory, Clerical and Subordinate Staff) Second Amendment Scheme, 2005

Notification No: SO1793(E) Dated 21.12.2005. The Central Government Vide the said notification has introduced a scheme to the General Insurance (Rationalisation and Revision of Pay Scales and other Terms and Conditions of Service of Supervisory, Clerical and Subordinate Staff) Scheme, 1974 which shall be deemed to come into force on the 1st day of August, 2002 save as otherwise provided. This Scheme may be called the General Insurance (Rationalisation and Revision of Pay Scales and other Conditions of Service of Supervisory, Clerical and Subordinate Staff) Second Amendment Scheme, 2005. This Scheme shall be applicable to all employees who were in whole-time service in Supervisory, Clerical and Sub-ordinate Staff cadres of the Corporation or Company as on, or after, the 1st day of August 2002.

Revenue

  • The Narcotic Drugs and Psychotropic Substances (Amendment) Rules, 2005

Notification No: GSR736(E) Dated 22.12.2005. The central Government vide the said notification has amended the Narcotic Drugs and Psychotropic Substances Rules, 1985 which shall come into force on the date of their publication in the Official Gazette. These rules may be called the Narcotic Drugs and Psychotropic Substances (Amendment) Rules, 2005. As per this amendment, in Rule 36, in Sub-rule (2A), after the words ''Pholcodine and their respective salts", the words' 'from Indian opium, if the Central Government determines that such licence is necessary in public interest and is in consonance with India's obligations under International treaties, conventions or protocols'' shall be added.

Ministry of Health and Family Welfare

Health

  • The Drugs and Cosmetics (8th Amendment) Rules, 2005

Notification No: GSR735 (E) Dated 21.12.2005. The central Government Vide the said notification has amended the Drugs and Cosmetics Rules, 1945 which shall come into force on the date of their publication in the Official Gazette. These rules may be called The Drugs and Cosmetics (8th Amendment) Rules, 2005.As per this amendment in Schedule O, Part I the following shall be substituted namely the Provisions Applicable to Black Fluids and White Fluids whereby the standards for disinfectants shall conform to the Indian Standards specification (IS 1061:1997) laid down from time to time by the Bureau of Indian Standards.

  • The Drugs and Cosmetics (7th Amendment) Rules, 2005

Notification No: GSR734(E) Dated 21.12.2005. The central Government Vide the said notification has amended the Drugs and Cosmetics Rules, 1945 which shall come into force on the date of their publication in the Official Gazette. These rules may be called the Drugs and Cosmetics (7th Amendment) Rules, 2005. As per this amendment in Schedule K, Serial Number 34 shall be inserted mentioning the class of drugs which includes Production of Oxygen 93 per cent USP, produced from air by the molecular sieve process, by a hospital or Medical Institute for their captive consumption.

International Legal Cases and News

Cases

Banking Law

  • Lockhart v. United States

Petitioner’s social security payments were with held to off set the students loan taken by him 10 years back. Petitioner argued that the offset of debt was time barred under Debt Collection Act of 1982 and that the Social Security Act provides that the benefits be exempted from attachment or other legal processes. Held, that the State may offset the students’ loan, which has been outstanding for the past 10 years against the social security benefits. The Higher Education Technical Amendments had removed the 10-year limit that would have otherwise barred the offset.

Criminal law

  • US v. Gougis

The defendants were convicted for conspiracy and for an attempt to keep cocaine for the purpose of distributing it. They were also charged for the theft of government property. The defendants contended that their conviction was not correct, as the evidence produced was inadmissible and insufficient and the court erred in relying on them. The court upheld their conviction, none of the defendants objected at the district court. Their sentences were remanded to their Booker claim of error

Labour and Employment law

  • Maher v. GSI Lumonics, Inc.

Suit filed against the employer allegeing that there was discrimination on the basis of age and thus his services terminated. Summary judgement granted by the district court in favour of employer on grounds of res judicata.

The court affirmed the summary judgement granted by the district court stating that the plaintiff could have claimed benefits of diversity jurisdiction under the state law in the earlier suit. Now the issue is barred by res judicata and no equitable exception applies.

News

  • US court declares Minnesota law to be invalid

Under the ruling made by 8th circuit, a Minnesota law intended to protect wireless customers is declared invalid as it is preempted by the federal law. Minnesota enacted its Wireless Consumer Protection Act in 2004, which included provisions that forbids wireless service providers from implementing changes in the terms and conditions of subscriber contracts that could result in higher rates or an extended contract term unless the provider obtains written or oral consent from the subscriber. The federal provision prohibits state and local governments from regulating rates of wireless providers, although it does allow local governments to regulate other terms and conditions of their service. Cellco Partnership has filed a suit against the state attorney general in the U.S. District Court for the District of Minnesota, asserting that the law was preempted by the federal Communications Act of 1934. The appeals court agreed with Cellco that the provision constituted impermissible rate regulation and was preempted by federal law.

  • Russia passes bill which imposes restrictions on NGOs

With the aim to increase the state control over non-governmental organizations (NGOs) by implementing strict registration requirements, imposing financial oversight on their operations, and providing for dissolution if an organization participates in activities deemed to deviate from the groups' explicit mission statement, the Federal Council, Russia’s upper house in parliament has passed the bill on NGOs that would also lessen restrictions on civil advocacy groups. Sponsors of the legislation said it was necessary to stem terrorism and extremism by ensuring the government's ability to monitor groups that could be fronts for radicals.

  • Florida court declares ‘Sunshine in litigation law’ constitutional

A state appeals court in Florida has ruled that ‘Sunshine in litigation Act’ which prohibits court orders that conceal a public hazard is constitutional because it is rationally related to a reasonable government objective. The court said that the goal of protecting the public from hazards can only be accomplished by disallowing confidentiality orders which protect information related to the hazard after a verdict and judgment have been entered against the manufacturer of a hazardous product, the panel stated regarding the act's constitutionality.

  • Lawyers outside the ambit of Banking Statute's Privacy Provisions in Columbia

The District of Columbia Circuit has upheld that the privacy provisions of the Gramm-Leach-Bliley Act, which apply to financial institutions, do not apply to attorneys. The Gramm-Leach-Bliley Act requires financial institutions such as banks, credit reporting services, accountants and stockbrokers to notify their clients of their privacy policies annually and to provide clients with an opportunity to "opt out" of the privacy practices. A customer's failure to opt out allows the institution to share certain personal information about that person with other companies. The court held that the Attorneys would only be subject to regulation under the law if they were "institutions" and were "engaged in the business of financial activity.